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EXIM Bank Approves Over $1 Billion in Transactions to Boost U.S. Exports and Jobs

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Global Trade Daily, Imports/Exports, News, United states news

EXIM Bank Approves Over $1 Billion in Transactions to Boost U.S. Exports and Jobs

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The Export-Import Bank of the United States (EXIM) recently approved more than $1 billion in transactions across five key deals aimed at supporting American exports and securing an estimated 4,000 U.S. jobs. The Board of Directors sanctioned these agreements to align with EXIM’s mission of bolstering U.S. businesses and meeting charter mandates.

Key transactions included a $225 million commitment to Morocco’s Royal Air Maroc for aircraft exports by Boeing, supporting 1,100 jobs in South Carolina and Ohio. Another significant deal saw a $637 million commitment to Korean Air Lines for the export of aircraft to South Korea, expected to secure around 3,000 jobs across four U.S. states.

The Board also introduced a Non-Binding Resolution to enhance financing for critical minerals and rare earths in response to increasing Congressional interest. This aligns with EXIM’s China and Transformational Exports Program, which is also backing a $98 million loan for Romania’s RoPower Nuclear S.A., expected to support 400 U.S. jobs in the nuclear energy sector.

Further approvals included a $297 million energy efficiency project in Iraq, managed by Stellar Energy Americas, Inc., benefiting 600 U.S. jobs, and a $313 million co-financing agreement with Finland’s Finnvera to support the export of Nokia goods for India’s 5G network expansion.

EXIM’s President and Chair, Reta Jo Lewis, emphasized the bank’s commitment to U.S. exporters and job creation while expanding its support for critical minerals and transformational exports.

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Global Logistics, Global Trade Daily, International Trade

USTR Finalizes Section 301 Tariff List After 4-Year Review

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On September 13, 2024, the U.S. Trade Representative (USTR) announced that it has finalized the modifications to the Section 301 trade actions following the completion of its four-year statutory review in May 2024. As described in a prior post, on May 22, 2024 USTR released a draft list of imported goods for which it proposed to increase Section 301 duty rates. USTR’s proposal was intended to target “certain products from China in strategic sectors,” including lithium-ion batteries, electronic vehicles, solar power, steel, and aluminum, semiconductors, medical equipment and shipping. USTR also proposed limited exclusions to the Section 301 tariffs for imported equipment dedicated to U.S. manufacturing activity, as well as 19 exclusions for solar panel manufacturing equipment.

Read also: USTR Increases Tariffs on Aircraft Parts and Certain Wines and Distilled Spirits from France and Germany

Following the release of its proposed list of Section 301 tariff increases, USTR requested comments on whether each targeted product and sector was adequately covered by the proposed list, and whether the rates of additional duty should be higher for certain products. With respect to the proposed exclusions, USTR requested comments on whether the subheadings proposed should be eligible for consideration in the machinery exclusions process, and whether any subheadings were omitted. USTR also requested comment on the scope of the 19 proposed exclusions for solar panel manufacturing equipment.

Products Subject to Additional Section 301 Duties

The final list of products just issued by USTR largely adopts the draft list released in May, with several updates “to strengthen the actions to protect American businesses and workers from China’s unfair trade practices following the review of more than 1,100 comments from the public.” The list is organized as follows:  

  • Annex A contains an informal table of the tariff increases under the 14 product groups specified by the President and the 382 subheadings and 7 statistical reporting numbers, the tariff rates, and years for tariff increases.
  • Annex B contains the 14 temporary exclusions for solar manufacturing equipment.
  • Annex C contains the HTSUS modifications to impose additional duties, to increase rates of additional duties, and to exclude certain solar manufacturing equipment from additional duties.
  • Annex D contains the Importer Certification for ship-to-shore cranes entering under the exclusion.
  • Annex E contains a list of HTSUS subheadings eligible for consideration of temporary exclusion under the machinery exclusion process.

Changes from the proposed list include adding 50 percent tariffs to subheadings 2804.61.00 and 3818.00.00 covering polysilicon and wafers, which are critical for manufacturing solar cells and semiconductors. Other changes from the proposed list include:

  • Increasing the 25 percent tariff on facemasks to 50 percent in 2026;
  • Increasing the 25 tariff on medical gloves to 50 percent in 2025 and to 100 percent in 2026;
  • Increasing the 50 percent tariff on syringes and needles to 100 percent in 2024, but excluding enteral syringes through January 1, 2026; and
  • Increasing duties on ship-to-shore cranes in 2024 but allowing for exclusions for cranes that fulfill contracts executed prior to May 14, 2024, and that enter the United States prior to May 14, 2026.

Steel and Aluminum

With respect to steel and aluminum, USTR determined that it is appropriate to use the same scope of products covered by the Section 232 investigations that were defined by Presidential proclamation. See Proclamation 9704 of March 8, 2018 (Adjusting Import of Aluminum into the United States), and Proclamation 9705 of March 8, 2018 (Adjusting Imports of Steel into the United States). After consideration, USTR determined not to increase Section 301 tariffs on subheadings covering upstream and downstream products related to steel and aluminum that are outside the scope of the Section 232 investigations, despite comments urging USTR to impose additional tariffs on these subheadings.

Exclusions

USTR added five additional subheadings that “appear to include machinery used to physically alter goods in the manufacturing process” which are:

  • 8421.21.00 (Machinery and apparatus for filtering or purifying water);
  • 8421.29.00 (Filtering or purifying machinery and apparatus for liquids, nesoi);
  • 8421.39.01 (Filtering or purifying machinery and apparatus for gases, other than intake air filters or catalytic conv. for internal combustion engines);
  • 8428.70.00 (Industrial robots); and
  • 34 8443.19.30 (Printing machinery, nesoi).

The USTR determined not to add subheadings outside of Chapters 84 and 85 or subheadings that only include parts, accessories, consumables, or general equipment that is unable to physically change a good.

USTR also determined not to adopt five of the 19 proposed exclusions for solar panel manufacturing equipment, for which commenters noted that alternate sources for the machinery were available both domestically and in Europe, and other commenters noted that “excluding Chinese equipment would disincentivize companies to purchase from alternative sources and negatively impact burgeoning supply chains.”

Tariff increases in 2024 take effect on September 27, 2024, although exclusions for solar equipment are retroactive to January 1, 2024 and expire in May 31, 2025.

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Global Trade Daily, International Trade, News, United states news

BIS Issues New Guidance to Combat Russia Diversion Risks and Highlights Recent Enforcement Actions

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Recently, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued new guidance to exporters intended to further assist BIS in its efforts to crack down on third-party diversion to Russia.

Specifically, BIS’s recent guidance outlines the various mechanisms it has employed—outside of its usual public screening lists (i.e., the Unverified List, Entity List, Military End-User List, and Denied Persons List)—to notify companies and universities about parties that present risks of diversion to Russia. According to BIS, it has obtained information supporting the below-described notifications through a variety of sources, including information from the exporting community, government data, news reports, and other open-source resources. The specific mechanisms utilized by BIS to help prevent exporters from unknowingly exporting items to parties of concern include:

1. “Supplier List” Letters identify parties presenting diversion risks that are not on public screening lists but have been identified by BIS as having exported to or facilitated transactions with destinations or end users of concern. BIS may send “Supplier List” letters to companies and institutions that have had no prior dealings with the foreign parties identified therein. Further, BIS encourages recipients of such letters to carefully examine transactions with the named parties for any potential red flags.

2. Project Guardian Requests advise companies and institutions to monitor or “be on the lookout” for transactions with specific parties or for inquiries about specific items. BIS may also advise recipients to deny or suspend any such transactions or inquiries and to contact the local Export Enforcement field office for guidance.

3. “Red Flag” Letters indicate to companies that one of their customers may have engaged in possible violations of the Export Administration Regulations (“EAR”) regarding the same item a company previously exported to that customer. “Red Flag” letters indicate a “high probability” that a future export violation may occur based on the customer’s reexport or transfer history. Recipients of “Red Flag” letters should conduct additional due diligence to be certain they can overcome the red flag identified by BIS before proceeding.

4. “Is Informed” Letters impose licensing requirements on specific items destined to specific entities or destinations, in addition to specific U.S. person activities. Companies and universities must comply with these requirements to avoid violating the EAR, as non-compliance with an “Is Informed” letter is equivalent to non-compliance with any other export licensing requirement for enforcement purposes. While BIS has reemphasized the use of such letters, they are not new.

Importantly, BIS will consider as an aggravating factor in any enforcement action a company or university’s decision to proceed with a transaction (without obtaining an export license) when the company or university knew or had reason to know or believe that a red flag exists which could not be affirmatively addressed or explained.

Screening Against Trade Integrity Project Website

Beyond the above notifications, BIS also increased due diligence expectations for exporters dealing with Common High Priority List (“CHPL”) items, which the U.S. government and its allies have identified as items Russia seeks to procure for its weapons programs. For transactions involving CHPL items, BIS strongly recommends screening against the list provided by the Trade Integrity Project (“TIP”), a non-government U.K. entity that monitors military and dual-use trade with Russia and has identified parties in third countries with a recent history of exporting CHPL items to Russia. For transactions involving CHPL items and parties identified on the TIP list, BIS states that companies should conduct additional due diligence to spot potential red flags before proceeding with any such transactions.

Recent BIS Enforcement Actions

In addition to the new guidance, BIS released an updated version of its Don’t Let This Happen to You! report, which includes case examples of recent BIS criminal and administrative enforcement actions. New actions involve violations of the antiboycott regulations, firearm exports, exports related to China and Iran, non-compliance with a BIS settlement agreement, as well as a voluntary self-disclosure from a university. BIS urges exporters to review this publication to understand the types of activities and missteps that lead to enforcement actions and to avoid violations of the EAR.

For example, according to BIS, Cryofab, Inc., a New Jersey-based manufacturer of cryogenic equipment, violated the EAR by exporting gas storage containers and related tools to a nuclear research facility in India without the required export license. BIS stated that Cryofab failed to screen the facility, Bhabha Atomic Research Center (“BARC”), against the BIS Entity List, on which BARC was designated, and did not seek or obtain the required licenses for its transactions. BIS ordered Cryofab, which BIS noted to be an experienced exporter, to pay a civil penalty and to have an independent consultant complete an external audit of its export controls compliance program.

In addition to companies, BIS has increasingly focused its efforts on universities and research institutions, which more often now must ensure they have effective export compliance programs in place, whether due to the involvement or employment of foreign national researchers, global exchange programs, or other international touchpoints that are now common in higher education.

In its report, BIS also highlighted a recent settlement with Indiana University involving the export of genetically modified fruit flies classified under ECCN 1C353 to research institutions and universities around the world without the required export licenses. Notably, Indiana University voluntarily disclosed the violations to BIS, which stated that the university’s disclosure and cooperation resulted in a non-monetary penalty. Instead, BIS imposed a suspended one-year denial order on its export privileges for certain ECCN Category 1C items, required export compliance training to relevant administrators, and required the university to deliver presentations on the circumstances of its violations to relevant forums.

BIS’s cases demonstrate the various ways companies and institutions may run afoul of the EAR, with examples covering China, Russia, Iran, and the rest of the world, as well as licensing requirements imposed by controls related to national security, military end-users, and others. The two aforementioned actions highlight the importance of carefully reviewing all items and parties to a transaction for any licensing requirements or other prohibitions, in addition to the potential benefits of disclosing any actual or apparent violations once they become known.

 

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Global Logistics, Global Trade Daily, International Trade, News

Global Goods Trade Rebounds in Q3 2024, But Geopolitical Risks Loom: WTO Report

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Global goods trade continued its recovery in the third quarter of 2024, according to the latest World Trade Organization (WTO) Goods Trade Barometer report. This marks a rebound from the sluggish performance seen in 2023, with quarter-on-quarter trade growth averaging 0.7% over the last two quarters, translating to an annualized growth rate of 2.7%. This aligns closely with the WTO’s earlier forecast of a 2.6% increase in trade volume for the year.

Read also: WTO Chief Warns of Rising Protectionism and Its Threats to Global Trade

The WTO noted that trade growth started to pick up in late 2023, gaining momentum in the first half of 2024, with a 1% increase in Q1 and a 1.4% rise year-on-year. This recovery followed a period of weak demand caused by high inflation and elevated interest rates in key markets.

However, the report highlighted that trade growth has been uneven across regions. Europe’s performance lagged behind expectations, while other regions showed stronger-than-expected results. The WTO may revise its regional trade forecasts in an upcoming report expected in October.

The Goods Trade Barometer indicated that most key trade components are trending positively. Indices for automotive products (103.3), container shipping (104.3), and air freight (107.1) all surpassed trend levels. However, electronic components fell below trend to 95.4, and new export orders, a reliable trade predictor, have started to decline, sitting at 101.2.

While the recovery in global trade is promising, the WTO warned that geopolitical tensions, regional conflicts, and shifting monetary policies pose risks to the outlook. Export orders have also weakened, adding to uncertainties.

The next WTO forecast, expected in mid-October, will offer more clarity on how these risks could affect trade for the remainder of the year. The OECD and IMF have projected global trade growth of around 2.3% to 3.3% for 2024 and 2025, driven by expectations of easing inflation and lower interest rates in advanced economies. However, both organizations acknowledge that challenges remain, with real interest rates likely to stay above neutral levels for the near term.

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Global Logistics, Global Trade Daily, International Trade

How Traders Can Enhance Their Focus Capability?

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For traders, maintaining sharp focus and mental clarity is crucial to making quick and effective decisions. Whether you’re trading stocks, forex, or cryptocurrencies, the ability to concentrate amidst fluctuating market conditions can be the difference between success and missed opportunities. Enhancing focus can be achieved through a combination of lifestyle adjustments, strategic habits, and, for some, exploring alternative methods. Here’s a comprehensive guide on how traders can boost their focus and performance.

Read also: LLC vs. Sole Proprietorship: A Critical Decision for Traders

1. Prioritize Sleep and Rest

Adequate sleep is foundational for cognitive function, including focus, memory, and decision-making. Lack of sleep can lead to impaired concentration and increased stress, which can negatively impact trading performance.

Tips for Better Sleep:

  • Establish a Routine: Go to bed and wake up at the same time every day, even on weekends.
  • Limit Screen Time: Reduce exposure to screens at least an hour before bedtime, as blue light can interfere with sleep quality.
  • Create a Relaxing Environment: Keep your bedroom cool, dark, and quiet, and consider using white noise or calming scents like lavender to enhance relaxation.

2. Manage Stress Effectively

Trading can be a high-pressure activity, and chronic stress can severely impair focus and cognitive function. Developing effective stress management techniques can help traders stay calm and focused.

Stress Management Techniques:

  • Mindfulness and Meditation: Practices like meditation can help reduce stress and improve attention. Even just a few minutes a day can make a significant difference.
  • Breathing Exercises: Deep breathing exercises can help calm the mind and reduce anxiety, making it easier to concentrate on trading tasks.
  • Physical Activity: Regular exercise, such as walking, yoga, or strength training, can help reduce stress hormones and boost mood, indirectly supporting better focus.

3. Optimize Nutrition for Cognitive Function

What you eat has a direct impact on your brain function. A balanced diet rich in nutrients can help support sustained focus and energy levels throughout the trading day.

Nutritional Tips:

  • Eat a Balanced Diet: Focus on whole foods like fruits, vegetables, lean proteins, and healthy fats. Omega-3 fatty acids, found in fish and flaxseeds, are particularly beneficial for brain health.
  • Stay Hydrated: Dehydration can impair cognitive function, so make sure to drink plenty of water throughout the day.
  • Limit Sugar and Processed Foods: These can cause energy crashes and affect concentration. Opt for snacks like nuts, seeds, or dark chocolate for sustained energy.

4. Incorporate Breaks and Time Management

Long periods of intense focus can lead to mental fatigue, reducing your overall productivity. Incorporating regular breaks can help refresh your mind and maintain your focus over extended periods.

Tips for Effective Breaks:

  • Use the Pomodoro Technique: Work for 25 minutes and then take a 5-minute break. This cycle helps maintain high levels of concentration without burnout.
  • Step Away from the Screen: During breaks, step away from your trading desk, stretch, or take a short walk to clear your mind.
  • Set Clear Boundaries: Define specific times for trading and breaks to avoid mental exhaustion and ensure consistent focus during trading hours.

5. Explore the Use of Delta 9 THC for Enhanced Focus

For some traders, exploring alternative methods like Mushroom Chocolate can offer potential benefits for focus and stress reduction. It may help some individuals to relax and maintain focus. Just be sure that you are choosing the right brand to buy your health product. This way you can keep yourself away from any low-quality products.

6. Set Clear Goals and Stay Organized

Having clear trading goals and a well-organized plan can significantly enhance your focus. When you know exactly what you’re aiming for, it’s easier to maintain concentration and avoid distractions.

Tips for Goal Setting and Organization:

  • Define Your Trading Plan: Outline your trading strategy, including entry and exit points, risk management, and the types of trades you’ll focus on.
  • Set Daily and Weekly Goals: Break down your overall trading objectives into smaller, manageable goals. This makes the process less overwhelming and helps keep you on track.
  • Review and Adjust: Regularly review your trading performance and make adjustments to your plan as needed. This continuous improvement process can help keep your mind sharp and focused on your goals.

7. Minimize Distractions

Distractions can derail even the most focused trader. Identifying and minimizing potential distractions can help you stay on task and maintain a high level of concentration.

Ways to Minimize Distractions:

  • Create a Dedicated Trading Space: Set up a specific area for trading that is free from common distractions like television, family members, or other unrelated activities.
  • Use Focus Tools: Consider using focus apps or browser extensions that block distracting websites during trading hours.
  • Turn Off Notifications: Silence non-essential notifications on your phone and computer to reduce interruptions.

8. Develop a Pre-Trading Routine

Having a pre-trading routine can help you mentally prepare for the trading day ahead. This routine can include reviewing market news, analyzing charts, or simply taking a few moments to set your intentions for the day.

Pre-Trading Routine Ideas:

  • Market Review: Spend some time reviewing the latest market trends, economic news, or technical indicators that may influence your trading strategy.
  • Visualization: Visualize your trading success and go through your planned trades in your mind to build confidence and clarity.
  • Calming Techniques: Engage in a brief meditation, listen to calming music, or practice deep breathing to enter the trading session with a focused and relaxed mindset.

Conclusion: Elevating Your Focus as a Trader

Enhancing focus as a trader involves a holistic approach that includes good sleep, nutrition, stress management, strategic breaks, and sometimes even exploring alternative options like Delta 9 THC. By making small adjustments to your routine and being mindful of how you manage your time and energy, you can significantly improve your focus, which is essential for trading success. Remember, what works for one trader might differ for another, so it’s important to find a personalized approach that aligns with your lifestyle and trading goals.

 

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Global Trade Daily, International Trade, News, United states news

Diplomacy, Business, National Fervor Evident at Malaysia’s Independence Day Celebrations in New York 

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Malaysia celebrated its 67th anniversary of independence from the erstwhile British colonial power at New York’s historic Bowling Green Park on August 30, amid national fervor with a flag-hoisting ceremony before a motley crowd of Malaysians, businesspeople, international consular corps and New York City officials. But the event also provided some with opportunity to privately talk about the opportunities unfolding in Malaysia for U.S. businesses. 

Read also: New York State Senator Presents Proclamation on Malaysia’s 66th National Day 

The presence of the first runner up in the Miss Malaysia Universe contest of 2002, Christina Chelliah, added glamour to the event, with some attendees thronging for a photo opportunity with her.  Sporting her tiara, Chelliah told Global Trade Magazine  that she has been an attorney by profession and worked in New York. “I like to project my country’s rich culture besides highlighting its potential as a modern and thriving economy that can be a strong partner for the United States,” she said. 

Chelliah, appointed Malaysia’s international tourism ambassador, competed in the Miss Global 2014 contest, being Malaysia’s first ever Miss Global contestant, competing against 100 other contestants. But the Miss Global organization also noticed her entrepreneurial skills and awarded her the title of Miss Enterprise. 

Chelliah said she always wanted to pursue a solid education, and studied law.   She had already worked in Malaysia as a corporate lawyer.  

Subsequently, she sat for the bar examination in the U.S., successfully passing it and being admitted to the New York State Bar in December 2019. 

Today, she practices litigation in mergers and acquisitions. Additionally, she teaches part-time at an online law school.

Chelliah, who worked as a Malaysian consultant attorney for various international law firms in New York City, was sworn in as a Special Master of the Supreme Court of New York in March 2022 and was also admitted to the Law Society of England and Wales in June 2022.

But her passion for modeling and acting remained undiminished.  Her ethnic looks make her a sought-after international model, having been featured in ads in New York, London and Malaysia for brands such as Levi’s Jeans, IT Cosmetics, AVON, Wella, Nokia and GNC Live Well to name a few.  Indeed, she has appeared in television shows such as “Law and Order SVU,” “Person of Interest,” and “The Following,” besides commercials for JC Penney, Condé Nast, the New Jersey Lottery, etc.

Some of the diplomats attending Malaysia’s flag-hoisting ceremony at the Bowling Green venue also seen talking to her.  Diplomats from Australia, Indonesia, Thailand, Turkey, etc. were among the guests; Dilip Chauhan, the deputy commissioner for international affairs in the New York City mayor’s office, felicitated Malaysia in the absence of Mayor Eric Adams who could not personally attend the event.

The newly-arrived Turkish consul general in New York, Muhittin Ahmet Yazal, got a rousing reception by a section of the crowd when it was announced that Malaysia’s flag-hoisting ceremony was his “first important engagement” since he assumed office on August 20, 2024. “This demonstrates the importance Ankara attaches to its external ties with Malaysia and others in the region,” one of the guests remarked. 

Fahmad Rifqi Ramulo, Indonesia’s consul for economic affairs, highlighted the region’s trade and economic potential.  “We are keen to promote our trade and economic ties with the entire world, and particularly the United States.  Both Indonesia and Malaysia are members of the ASEAN (Association of Southeast Asian Nations) community,” he said in a conversation. The ASEAN region has been aggressively promoting its economic ties with the U.S., highlighting the business opportunities at various venues, including at international trade shows in New York and other states.  Representatives of Malaysia’s investment and trade promotion agencies were also present at the event, as also Malaysia’s permanent representative to the United Nations, Ambassador Dr. Ahmad Faisal Muhamad.

Amir Farid Abu Hasan, Malaysia’s New York-based consul general, who recently assumed the rotational presidency of the Society of Foreign Consuls in New York for a year, and has become a key figure in the consular corps’ diplomatic activities in New York and the other neighboring states, welcomed the guests and highlighted the significance of Malaysia’s independence day; he handed over citation awards to Malaysian community representatives for their services to Malaysia and helping promote Malaysia’s interests in various fields. 

In an interview with Global Trade Magazine, Amir highlighted the developmental progress Malaysia has made since independence.  “We are pursuing the Madani spirit … Madani, for Malaysians, has the same significance as the pursuit of progress and development through rooting out practices that could obstruct such progress,” he explained.  Amir has also, together with his counterparts from other countries, represented the interests of the Society of Foreign Consuls and their countries collectively vis-a-vis the New York Administration.  

The SFC in New York represents the world’s largest consular corps, compromising consulates, consulates general and honorary consulates based in New York; it works with the U.S. Department of State’s Office of Foreign Missions and the NYC Mayor’s office for the United Nations, the consular corps and protocol, arranging forums and seminars on topical subjects of interest to the international diplomatic community and also New York City. 

A U.S. based businessman, who insisted on remaining anonymous and had quietly watched the flag-hoisting ceremony, told this writer on the sideline of the event that his company had been consulting an Asian business associate to explore the possibility of setting up an operation in Malaysia’s Kulim Industrial Park where a number of foreign companies enjoy tax benefits and other incentives.  “I cannot say anything beyond that … many U.S. companies are gradually diversifying their operations and looking at alternative sites in Asia,“ he said, emphasizing that the availability of raw materials, shipping connectivity, supply chain networking, etc., were important factors for selecting an alternative site. 

Manik Mehta is a New York based journalist specializing in foreign affairs/diplomacy, United Nations, global economics, trade, supply chains, etc.

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Global Trade Daily, Imports/Exports, International Trade, United states news

“Tariffs Are on the Table for U.S. Importers, Whatever the Election Outcome” 

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In an era of shifting global trade dynamics and geopolitical uncertainties, U.S. importers and corporations face complex decisions regarding their manufacturing strategies. The ongoing trade tensions between the United States and China, coupled with the potential for tariffs regardless of election outcomes, have prompted many companies to reevaluate their reliance on Chinese manufacturing. However, the decision to onshore, nearshore, or reshore operations is far from straightforward, as evidenced by cases like Foxconn’s decision to invest $137.5 million in China in July 2024. Foxconn will be building a new HQ in Zhengzhou, China.

Read also: Top 25 Container Ports In The United States

To navigate this challenging environment, companies must get involved in a comprehensive analysis that spans multiple functions. At the forefront of this analysis is a thorough cost assessment. 

Labor costs, often a primary driver for offshoring in the past, must be carefully examined. Companies need to compare not only current wage rates but also long-term trends in labor costs across potential destinations. It’s crucial to consider that while wages in some alternative locations may be lower than in China, differences in productivity and quality could offset these savings.  

End-to-end supply chain must be analyzed and optimized. The costs of raw materials and components can vary significantly between regions, and companies must ensure reliable suppliers are available in potential new locations. Transportation and logistics costs and disruptions such as weather, possible wars, strikes, as well as any Force Majeure are other critical factors, as changes in manufacturing location and the above-mentioned events can dramatically impact shipping expenses and lead times to end markets.

Tax implications also play a significant role in the decision-making process. Corporate tax rates, available incentives, and the overall impact on a company’s tax liability must be carefully evaluated for each potential location. In some cases, special economic zones or tax breaks for relocating businesses could tilt the balance in favor of a particular option.

Operational considerations extend beyond costs. Supply chain resilience has become a top priority for many businesses in the wake of recent global disruptions. Companies must assess the vulnerability of potential locations to natural disasters, geopolitical risks, and other potential disruptions. Diversifying manufacturing across multiple locations can enhance overall resilience, but it also introduces new complexities that must be managed.

The regulatory environment in potential new locations is another crucial factor. Stability and predictability in regulations can be as important as the regulations themselves. Companies need to consider not only current requirements but also potential future changes that could impact their operations.

Workforce considerations go beyond cost. The availability of skilled labor, the need for training or upskilling, and employee turnover rates all factor into the equation. A cheaper workforce that lacks necessary skills or experiences high turnover could ultimately prove more costly than a more expensive but stable and skilled labor pool.

Market access is a strategic factor for companies thinking about relocating and should play a pivotal role in relocation decisions. It is a key consideration to evaluate how different manufacturing locations might impact their ability to serve key markets efficiently. Trade agreements can provide significant advantages in certain locations and should be factored into the decision-making process.

Global trade agreements such as the USMCA, ASEAN, and the RCEP, may affect the USA’s  

importers’ decisions as to whether they should keep manufacturing in the USA, or manufacture in China, or in other countries in Southeast Asia, or in Mexico. The global trade and business environments are constantly evolving, requiring continuous reassessment of manufacturing location strategies. Companies should consider hybrid approaches from different strategies. Such approaches could include features of those different strategies thereby providing a balance between efficiency, resilience, and risk mitigation.

Intellectual property protection is another critical strategic consideration, particularly for companies with valuable proprietary technologies or processes. The strength of IP protections varies significantly across regions, and companies must assess what additional measures might be necessary to safeguard their innovations in different locations.

Brand perception can also be significantly impacted by manufacturing location decisions. While “Made in America” labels might resonate positively with some consumers, others might be more price sensitive. Companies need to carefully consider how relocation might affect their brand image and whether there are potential brand risks or benefits associated with different locations.

The long-term geopolitical outlook is an increasingly important factor in today’s volatile global environment. Companies must assess the political stability of potential locations and consider how changing geopolitical dynamics might affect their operations in different regions of the world in the long term. 

Financial analysis is paramount to any relocation decision. This includes not only a detailed assessment of relocation costs and projected ROIs, but also scenario analysis to understand how different tariff scenarios or other potential changes might impact costs in each location. Companies need to compare these projections against the baseline of maintaining current operations in China.

Implementation considerations are equally important. The complexity and the time it takes to transfer operations to a new location must be carefully analyzed. Companies should have a plan in place that minimizes or eliminates production disruptions as well as the effects that the production transfer will have on existing supplier and customer contracts commercially and legally.

Quality assurance is another critical factor. Companies must ensure that they can maintain or improve production standards in new locations, which may require significant investments in quality assurance systems. For companies adopting a multi-location strategy, ensuring consistent quality across different sites adds another layer of complexity.

Customer impact must also be carefully considered. Changes in manufacturing location can affect service levels, lead times, and the ability to offer customized products. Companies need to assess how these changes might impact customer relationships and whether they can maintain or improve their competitive position.

Sustainability and ESG (Environmental, Social, and Governance) factors are increasingly important in corporate decision-making. Companies must consider how relocating manufacturing might affect their carbon footprint and whether there are opportunities to improve sustainability in new locations. Social responsibility considerations, including labor practices and community impact, also play a role in these decisions.

Risk management is another crucial aspect of the relocation decision. This includes assessing commercial risks, exchange rate risks, geopolitical risks, and the potential for supply chain disruptions in different locations. Companies need to develop comprehensive risk mitigation strategies for each potential scenario.

Technology and innovation considerations are becoming increasingly important in manufacturing location decisions. Companies need to assess how relocating might affect their access to technological innovations and R&D capabilities. The potential for increased automation in different locations can significantly impact labor costs and productivity projections.

Legal and compliance issues add complexity to the decision-making process. Companies must be very knowledgeable about different legal systems, contract enforcement mechanisms such as arbitration. The complexity of the legal systems may vary drastically which may require a world-class team to understand and to lead.

Cultural aspects, while sometimes overlooked, can have a significant impact on the success of nearshoring and offshoring. International business practices, communication styles, and potential language and dialect barriers must be taken into consideration prior to making and implementing any relocation decision.  

Government relations can play a crucial role in the success of manufacturing operations. Companies need to assess the level of support offered by local governments in potential new locations, including incentives and other forms of assistance. The stability and continuity of these incentives over time are very important considerations.

The existence of competitors requires that relocating companies consider how competitors implemented their relocation and what competitive advantages or disadvantages resulted from the different competitors. The same strategy should apply not only to competitors, but to that industry at large.  The intelligence obtained from industry trends as well as the results achieved or problems faced by competitors provide priceless   Understanding broader industry trends and emerging manufacturing hubs can provide priceless insights into potential opportunities, or a change of course altogether.

Workforce availability, level of experience, training availability and management must be at the forefront of all considerations, and should include not only the present need, but also the future needs of the workforce. This should include the relocation’s effects on employees and on leadership development. Strategies for developing the local workforce are crucial for long-term success.

Laser focus on consumers and the proximity to those consumers offer priceless insights into how the products of the competitors perform and the customers’ response to those products. That said, manufacturers should assess how their relocation will affect the speed of their response to their customers. The speed of their response reflects the manufacturer’s ability to connect their different divisions, especially their product development and manufacturing units to optimize customer service.     

Inventory management strategies may need to be adjusted based on new manufacturing locations. Companies must consider how changes will affect optimal inventory levels and whether lean manufacturing practices can be maintained or improved in new locations.

Partnerships and alliances can play a crucial role in successful relocation strategies. Companies should explore potential strategic partnerships or joint ventures especially in China. These partnerships may facilitate market entry and reduce risks in new locations.

Besides partnerships and alliances, the country’s physical and technological infrastructures are paramount in today’s business environment. Companies need to assess the technological capabilities of new locations, and what investments may be necessary to ensure continuous connectivity. As important, will the new location be able to support new technologies? The answer will have a significant impact on production, and the ability of the company to remain relevant vis-à-vis its competitors.

In conclusion, successful implementation of any relocation strategy requires long term planning, a capable and experienced executive team, as well as continuous monitoring of the global economy and geopolitical events. By asking the right questions, conducting due diligence, and having contingency plans, companies can sail through VUCA and position themselves for long-term sustainability and resilience in a world where complexity and volatility have become the modus operandi. 

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Global Trade Daily, International Trade, News, United states news

BRICS Nations Embrace Economic Independence, Sideline U.S. Dollar in Global Trade

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The BRICS countries—Brazil, Russia, India, China, and South Africa—are increasingly moving away from dependence on the U.S. dollar in international trade, according to Sameep Shastri, Vice Chairman of the BRICS Chamber of Commerce and Industry. Shastri recently discussed this shift in an interview, emphasizing the bloc’s growing preference for conducting trade using their own national currencies, such as the Russian ruble, Indian rupee, and Chinese yuan.

Read also: How the United States Dollar Dominated the Global Trade Space

Shastri noted that this trend is part of a broader strategy towards economic self-reliance within the BRICS nations, challenging the longstanding dominance of Western economies. “We should not be dependent on one single currency,” Shastri asserted, highlighting the need for BRICS countries to strengthen their own currencies and economies.

The BRICS bloc, which expanded earlier this year to include Egypt, Iran, the United Arab Emirates, Saudi Arabia, and Ethiopia, is increasingly positioning itself as a counterbalance to Western economic power. Shastri pointed out the significant influence of Russia, India, and China, describing them as key players among the world’s emerging economies.

“India has become the fifth largest economy, so we are proving to the world that self-reliance is very important now,” Shastri added, emphasizing the strategic and sustainable growth being experienced by BRICS nations. Despite the geographic diversity of its members, BRICS is united in its pursuit of economic independence and influence on the global stage.

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Global Trade Daily, International Trade, News

WTO Chief Okonjo-Iweala Warns of Growing Protectionism Amid Global Trade Challenges

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Ngozi Okonjo-Iweala, head of the World Trade Organization (WTO), warned on Tuesday of the troubling state of global trade, highlighting rising protectionism amid geopolitical tensions and climate crisis. Speaking during the release of the WTO’s annual report, Okonjo-Iweala emphasized the future of trade in services, digitalization, and the green economy.

Read also: WTO’s Okonjo-Iweala Highlights Vital Role of Aid for Trade in Empowering Developing Economies

“These are troubling times for global trade. Amid geopolitical tensions and the backdrop of the climate crisis, we see increased protectionism and unilateral policy measures,” she stated. “After years of talk of decoupling, trade may be starting to fragment along geopolitical lines.”

Despite these challenges, Okonjo-Iweala pointed out potential opportunities for growth and job creation through digitalization. She also highlighted the role of trade in enhancing global food security and pushing towards net-zero emissions.

The WTO’s annual report reviewed the organization’s activities in 2023 and early 2024. The 13th ministerial conference, held in Abu Dhabi from late February to early March, concluded with a temporary extension of an e-commerce moratorium but failed to reach agreements on agriculture and fisheries, reflecting deep divisions among members.

Digital Trade on the Rise

Okonjo-Iweala noted that merchandise trade volumes fell by 1.2 percent in 2023, following a 3.0 percent growth in 2022, as many countries grappled with inflation and high energy prices. However, this decline was partially offset by a 9 percent increase in services trade, driven by a post-pandemic tourism boom. The report indicated that the total value of goods and commercial services trade reached $30.4 trillion last year, nearing record highs, with digital commerce growing significantly faster than traditional trade.

“The future of trade is services, digital, green,” said Okonjo-Iweala, a former Nigerian Finance and Foreign Minister.

Efforts to establish global digital trade rules made progress recently, as numerous nations concluded negotiations with a draft text. However, further discussions are expected, with the United States and several other countries yet to fully commit. The draft includes measures for online consumer protection, digitalization of customs procedures, and recognition of electronic signatures to promote and facilitate digital transactions.

European Union trade chief Valdis Dombrovskis hailed the draft text as “historic,” noting that it represents the first global rules on digital trade. “This will facilitate e-transactions, boost innovation, and integrate developing countries into the digital economy,” he said.

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Global Trade Daily, News

Large International Exhibitor Contingent Showcased Some Interesting New Products at New York Fancy Food Show, Discussed Red Sea Turmoil

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Though the array of food products, including many new culinary creations, showcased at the recent Fancy Food Show in New York was appealing, the large turnout of exhibitors and visitors, particularly from countries in Asia, also discussed in private conversations the effects of the Red Sea turmoil on exports resulting from higher freight costs and longer delivery times.

Read also: Navigating the Long-Term Consequences of the Red Sea Crisis for Retailers  

There were over 2,300 exhibitors from 56 countries spread across 29 international pavilions representing Africa, Europe, North America, South America, and the Oceana region.  Spain was this year’s “partner country”, but there were also very large exhibitor contingents from Italy, Portugal, Tunisia, Morocco, etc.   

The Specialty Food Association (SFA) which organizes the food show, is keen to enhance international participation so that” foreign buyers can establish business with U.S. importers and also U.S, companies can interact with foreign buyers at the show”, according to SFA spokesperson.

Dakir Berrada, the founer/owner of Noor Fes, an olive oil-production company in Fes, Morocco, told the Global Trade that this facility produces organic premium extra virgin olive oil, using fine Moroccan picholine olives grown on the company-owned farm. 

“Our picholine olive oil varieties have won awards at international olive oil competitions.  We have been exporting to Belgium, Scandinavia, etc. but in the U.S. our products are being launched at the Wholefoods with its wide network of some 400 stores in the U.S.,” he said.  “Our organic extra virgin olive oil was one of the five best olive oils chosen at the New York Fancy Food Show in 2023.  Indeed, we like to call our product olive juice rather than olive oil.  Our U.S. office is located in Delaware.”

Trying to explain the sharp rise in olive oil prices, Berrada said: “… prices of other edible oils have risen higher.  Extreme temperatures have affected olive crops in the past two years. But consumers do understand …” he said, adding that there are two kinds of olive oil found in the U.S. market, one being the generic kind, a blending which is of average quality, while the other one is of a higher quality and commanding a higher price.  “Our product is of higher quality … it is FDA certified and is organic.  Since we have an economy of scale, our prices are competitive. Thanks to our U.S. distribution office, the buyer can get shipment almost immediately.  The Red Sea turmoil does not affect our shipments since we ship directly from Casablanca in Morocco to our customers in Europe and North America. The value of our exports is about US$ 15 million to 20 million,” he said.

Turkey’s large exhibitor contingent showcased various products, including olive oil.  Fatih Avan, Assistant General Manager of Verde Yag Besin, an Izmir-based olive-oil company which has been participating at the NYFFS since 2000, observed:  “North America is an important region for international olive-oil producers. This year we hope to increase our global exports to US$  200 million, up from last year’s US$ 120 million  … we export to 55 countries, including the U.S.,” 

But Bekir Sari, Verde’s export sales and marketing director, noted that shipment time to the Far East had doubled – from 35 to 75 days, requiring vessels to sail round the Cape of Good Hope. Freight costs have doubled, in some case, even tripled.  The U.S. market is the fastest growing market for olive oil.  His company is considering setting up a plant in the U.S. because “North America is overall a promising region inherent with growth potential.  Being an important part of a healthy diet, olive oil’s nutritional properties appeal to the increasingly health-conscious  American consumer,” Sari said.

But one novel food item – chocolates made of camel milk – could become visible on the shelves of all U.S. mainstream supermarkets and specialized stores, as some pundits are predicting.  Al Nassma Chocolate LLC, based in Dubai, has been trying to penetrate the world markets, highlighting camel milk as rich in nutrients. 

Al Nassma, which showcased its range of camel-milk chocolates at the NYFFS, is a joint venture between the Dubai Government and Austrians and Germans, said that camel-milk chocolates are known around the world. In an interview with Global Trade, the company’s general manager Martin van Almsick said that camel’s milk is already available in supermarkets in the same way as cow’s milk is.  

“Camel’s milk is low in fact but high in minerals … Al Nassma produces about 100 tons of chocolates a year … since 2009 we’ve been exporting to Japan, Europe, etc. We see considerable interest on the part of buyers, retailers, importers, etc.  We import cocoa beans from Togo and other African countries. Dates are already in big demand in the U.S. and acquire added nutritional value in camel-milk chocolate,” van Almsick explained. 

There are camel dairy colonies in the Middle East, including Camelicious in Dubai and the Al Ain Farms in the Abu Dhabi, the UAE capital.  

Southeast Asian exhibitors also showcased a variety of products, including coffee, candy, organic sugar, ginger candy, etc.  Indonesia’s trade attache in Washington DC, Ranitya (Adis) Kusuma Dewi, told Global Trade that Indonesia’s food exports to the U.S. amounted to $ 5 billion of the total exports of $ 28 billion last year, with food exports up 20% over 2022.  “Our coffee is of many varieties, depending on where it is grown … we have received some good business responses,” she said. 

Datuk Aria Putera Ismail, the CEO/Group President of Malaysia-based SME Bank Group, a state-owned bank promoting the SME sector, with funding from the Ministry of Entrepreneur and Cooperative Development, explained:  “We provide SMEs training and financial services … the funding is used to explore new markets … our 11 SME exhibitors at the show produce snacks, beverages, spices, etc.  The exhibitors have received business enquiries at the show,” he said. 

But he said that some of the prices of products exported had risen sharply, also because of longer shipping schedules.  

The products of Julie’s Mfg. Sdn. Bhd., a leading Malaysian biscuit company, which was independently participating at the show, are already marketed in many Asian ethnic supermarkets, but as Martin Aang, director, said he was trying to market under Julie’s brand in the mainstream supermarkets, many of which sell his products under U.S. brand names. “We had a good last year but freight costs rose sharply due to longer shipping routes,” he said. Julie’s, with $ 100 million turnover, exports to over 90 countries.