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Civil War in Syria: How Conflict Erodes Trade

Syria

Civil War in Syria: How Conflict Erodes Trade

Syria has a turbulent history. Numerous nations, factions and leaders have wrestled for control of the country at turns over the last 100 years. The present conflict, a civil war raging for eight years now, has drastically affected Syria’s trade by destroying infrastructure, displacing its productive workforce, and weakening business confidence in the region. The World Bank estimates the current conflict has produced a cumulative loss in Syria’s GDP at $226 billion as of 2017, an amount equal to four times Syria’s GDP in 2010.

Syrian Trade Throughout History

The region now called Syria was home to one of the most ancient civilizations on earth. Evidence of early trade relations dates as far back as 10,000 BC. Many of the greatest human achievements had their origins in the area known as the Cradle of Civilization. Its location on the Silk Road enriched Syria with wealth and strategic importance during the Roman Empire.

Throughout the 20th century, Syria experienced French control, uprisings, nationalization, regional wars, and conflict among rival factions. The economic outlook for Syria seemed to be improving in the 1990s and early 2000s. The World Bank considered it a fast-growing, lower-middle-income country. Syria’s main exports were crude and refined oil and information and communications technologies. Syria also enjoyed a healthy travel and tourism industry.

Impacts of the Civil War

The civil war has either eliminated or drastically reduced all of Syria’s main trading industries, exacerbating the suffering for Syrian civilians. In 2010, exports totaled around $19 billion. By 2016, they had fallen to $555 million. Syria’s ranking as a global exporter fell from 88th in 2011 to 141st in 2015.

Syria trade profile post civil war

Sanctions, Destruction and Displacement

A consequence of the conflict, Syria is subject to numerous sanctions by the United States, Canada, European Union, Arab League and Turkey. These include embargoes on investment, blocks on trade in key industries such as oil, financial services and precious metals, and the freezing of assets. The aim of such sanctions is to pressure Syrian leaders to end the conflict, but average Syrians also suffer the economic fallout.

As in any war, destruction is rampant. Mortar fire and airstrikes have damaged and demolished key infrastructure for trade. Bridges, grain silos, roads and other economically significant assets are strategic targets for both sides. Access to fuel and electricity is limited, denying Syrian businesses the productive factors necessary to produce goods to trade as well as the means to transport them. Schools, food sources and medical buildings have also been targeted. As of 2017, seven percent of housing stock has been destroyed, and 20 percent damaged. Trade necessarily takes a back seat when citizens struggle to have their basic physical needs met.

Given the dire circumstances, over half the country’s pre-war population has been displaced either internally or externally. According to recent estimates, over five million refugees have fled Syria. It’s a human tragedy with immediate and long-term implications. As the workforce collapses, goods are no longer able to be produced, and trade grinds to a halt.

Syria trade exports drop 92%

Distrust, Uncertainty and Disassociation

Businesses are wary to engage in nations experiencing conflict. The Syrian Civil War is complex and associated with a corrupt regime causing suffering for its citizens. International sanctions create a legally uncertain environment. Even if it is possible to engage in trade with Syrian firms, there is no guarantee that in a month or a year it will still be possible — new sanctions may be imposed or the factory producing the goods could be targeted. These risks substantially raise the cost of engaging in trade with Syria.

Adding to Syria’s economic woes is the curtailment of economic development assistance. The World Bank Group ceased all Bank operational activity with Syria at the onset of the war. Previously it provided technical assistance and advisory services on private sector development, human development, social protection and environmental sustainability. Although not directly related to trade, much of this support helps local businesses and the economic health of communities.

Why Trade Matters for Syria

Any kind of conflict can have negative effects on trade, directly by destroying factors of production and dislocating people, and indirectly by causing uncertainty and breaks in connectivity with global supply chains. Reduced trade invariably damages the economy, causing individual suffering which can foment more unrest. Nations become trapped in a vicious cycle.

This seems undoubtedly to be the case in Syria, where the destruction of trade has meant economic suffering that aggravates the humanitarian crisis. The longer conflict persists, the deeper the separation from global society, and the harder it will be to rebuild the economic mechanisms and institutions necessary to increase trade and encourage economic growth.

__________________________________________________________________

Alice Calder

Alice Calder is a graduate research assistant at George Mason University, currently pursuing her MA in Applied Economics. Originally from the UK, where she received her BA in Philosophy and Political Economy from the University of Exeter, living and working internationally sparked her interest in trade issues as well as the intersection of economics and culture.

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

cotton bed

EU Cotton Bed Linen Market – Italy, Portugal, and Germany Account for 70% of Total Production

IndexBox has just published a new report: ‘EU – Bed Linen Of Cotton – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

The revenue of the cotton bed linen market in the European Union is estimated at $10.4B in 2018, an increase of  12% y-o-y. 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). Over the period under review, bed linen of cotton consumption, however, continues to indicate a strong expansion. The most prominent rate of growth was recorded in 2017 with an increase of 35% against the previous year. Over the period under review, the bed linen of cotton market reached its peak figure level in 2018 and is likely to see steady growth in the near future.

Consumption By Country in the EU

The countries with the highest volumes of bed linen of cotton consumption in 2018 were Italy (50K tonnes), Germany (46K tonnes) and France (45K tonnes), together accounting for 53% of total consumption. These countries were followed by the UK, Spain, the Netherlands, Sweden, Austria, Portugal, Belgium, Greece and Denmark, which together accounted for a further 37%.

From 2007 to 2018, the most notable rate of growth in terms of bed linen of cotton consumption, amongst the main consuming countries, was attained by Austria, while the other leaders experienced more modest paces of growth.

In value terms, the UK ($7.4B) led the market, alone. The second position in the ranking was occupied by France ($819M). It was followed by Germany.

The countries with the highest levels of bed linen of cotton per capita consumption in 2018 were Austria (970 kg per 1000 persons), Sweden (882 kg per 1000 persons) and Italy (836 kg per 1000 persons).

From 2007 to 2018, the most notable rate of growth in terms of bed linen of cotton per capita consumption, amongst the main consuming countries, was attained by Austria, while the other leaders experienced more modest paces of growth.

Market Forecast 2019-2025 in the EU

The bed linen of cotton market is expected to start a downward consumption trend over the next seven years. The performance of the market is forecast to decrease slightly, with an anticipated CAGR of -0.6% for the seven-year period from 2018 to 2025, which is projected to depress the market volume to 253K tonnes by the end of 2025.

Production in the EU

In 2018, the production of bed linen of cotton in the European Union amounted to 92K tonnes, lowering by -6.1% against the previous year. In general, bed linen of cotton production continues to indicate a moderate descent. The growth pace was the most rapid in 2016 when production volume increased by 9.2% year-to-year. Over the period under review, bed linen of cotton production attained its peak figure volume at 127K tonnes in 2007; however, from 2008 to 2018, production stood at a somewhat lower figure.

In value terms, bed linen of cotton production totaled $957M in 2018 estimated in export prices. Over the period under review, bed linen of cotton production continues to indicate a drastic downturn. The pace of growth appeared the most rapid in 2010 with an increase of 3.3% y-o-y. Over the period under review, bed linen of cotton production attained its peak figure level at $1.5B in 2007; however, from 2008 to 2018, production stood at a somewhat lower figure.

Production By Country in the EU

The countries with the highest volumes of bed linen of cotton production in 2018 were Italy (27K tonnes), Portugal (25K tonnes) and Germany (13K tonnes), together accounting for 70% of total production. These countries were followed by Poland, Spain, France and Romania, which together accounted for a further 21%.

From 2007 to 2018, the most notable rate of growth in terms of bed linen of cotton production, amongst the main producing countries, was attained by Spain, while the other leaders experienced mixed trends in the production figures.

Exports in the EU

In 2018, the bed linen of cotton exports in the European Union amounted to 147K tonnes, surging by 7.9% against the previous year. The total export volume increased at an average annual rate of +1.6% over the period from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2013 when exports increased by 16% year-to-year. The volume of exports peaked in 2018 and are expected to retain its growth in the immediate term.

In value terms, bed linen of cotton exports amounted to $1.6B (IndexBox estimates) in 2018. The total export value increased at an average annual rate of +1.7% from 2007 to 2018; however, the trend pattern remained relatively stable, with somewhat noticeable fluctuations being recorded over the period under review. The most prominent rate of growth was recorded in 2013 when exports increased by 17% against the previous year. Over the period under review, bed linen of cotton exports attained their maximum at $1.7B in 2014; however, from 2015 to 2018, exports stood at a somewhat lower figure.

Exports by Country

In 2018, Germany (33K tonnes), distantly followed by Portugal (19K tonnes), Poland (17K tonnes), Belgium (16K tonnes), the Netherlands (15K tonnes), Italy (7.9K tonnes), France (7.8K tonnes) and Spain (7.4K tonnes) represented the key exporters of bed linen of cotton, together making up 84% of total exports. The Czech Republic (4,375 tonnes) followed a long way behind the leaders.

From 2007 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by the Netherlands, while the other leaders experienced more modest paces of growth.

In value terms, the largest bed linen of cotton markets in the European Union were Germany ($357M), Portugal ($300M) and Belgium ($146M), together accounting for 49% of total exports. Poland, the Netherlands, Italy, France, Spain and the Czech Republic lagged somewhat behind, together accounting for a further 38%.

In terms of the main exporting countries, the Netherlands recorded the highest rates of growth with regard to exports, over the last eleven years, while the other leaders experienced more modest paces of growth.

Export Prices by Country

The bed linen of cotton export price in the European Union stood at $11,134 per tonne in 2018, flattening at the previous year. In general, the bed linen of cotton export price continues to indicate a relatively flat trend pattern. The pace of growth was the most pronounced in 2011 an increase of 16% year-to-year. In that year, the export prices for bed linen of cotton reached their peak level of $13,796 per tonne. From 2012 to 2018, the growth in terms of the export prices for bed linen of cotton remained at a lower figure.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was Portugal ($15,547 per tonne), while Poland ($7,852 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by the Czech Republic, while the other leaders experienced more modest paces of growth.

Imports in the EU

The imports stood at 319K tonnes in 2018, increasing by 3.3% against the previous year. The total import volume increased at an average annual rate of +1.9% from 2007 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations over the period under review. The most prominent rate of growth was recorded in 2013 with an increase of 17% y-o-y. The volume of imports peaked in 2018 and are expected to retain its growth in the near future.

In value terms, bed linen of cotton imports totaled $2.8B (IndexBox estimates) in 2018. The total import value increased at an average annual rate of +2.1% over the period from 2007 to 2018; the trend pattern remained consistent, with somewhat noticeable fluctuations being observed throughout the analyzed period. The most prominent rate of growth was recorded in 2011 when imports increased by 22% y-o-y. In that year, bed linen of cotton imports reached their peak of $3B. From 2012 to 2018, the growth of bed linen of cotton imports remained at a somewhat lower figure.

Imports by Country

In 2018, Germany (67K tonnes), France (47K tonnes), the UK (32K tonnes), Italy (31K tonnes), the Netherlands (27K tonnes) and Belgium (24K tonnes) were the largest importers of bed linen of cotton in the European Union, creating 71% of total import. Spain (16K tonnes) ranks next in terms of the total imports with a 4.9% share, followed by Poland (4.8%).

From 2007 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by Poland, while the other leaders experienced more modest paces of growth.

In value terms, the largest bed linen of cotton importing markets in the European Union were Germany ($611M), France ($475M) and the UK ($286M), together comprising 48% of total imports. These countries were followed by the Netherlands, Italy, Belgium, Spain and Poland, which together accounted for a further 32%.

Poland experienced the highest growth rate of imports, among the main importing countries over the last eleven-year period, while the other leaders experienced more modest paces of growth.

Import Prices by Country

In 2018, the bed linen of cotton import price in the European Union amounted to $8,910 per tonne, standing approx. at the previous year. In general, the bed linen of cotton import price continues to indicate a relatively flat trend pattern. The pace of growth was the most pronounced in 2011 when the import price increased by 28% against the previous year. In that year, the import prices for bed linen of cotton attained their peak level of $11,299 per tonne. From 2012 to 2018, the growth in terms of the import prices for bed linen of cotton remained at a somewhat lower figure.

Prices varied noticeably by the country of destination; the country with the highest price was Spain ($10,560 per tonne), while Italy ($6,906 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Spain, while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

beeswax

Asia’s Beeswax Market Is Estimated at $206M in 2018, an Increase of 3.4%

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

The revenue of the beeswax market in Asia amounted to $206M in 2018, increasing by 3.4% 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). The total market indicated a moderate increase from 2007 to 2018: its value increased at an average annual rate of +0.7% over the last eleven years.

Consumption By Country in Asia

The country with the largest volume of beeswax consumption was India (26K tonnes), accounting for 64% of total consumption. Moreover, beeswax consumption in India exceeded the figures recorded by the region’s second-largest consumer, Turkey (4.9K tonnes), fivefold. The third position in this ranking was occupied by South Korea (3.7K tonnes), with a 9.1% share.

In India, beeswax consumption expanded at an average annual rate of +2.6% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Turkey (+1.9% per year) and South Korea (-1.1% per year).

In value terms, India ($127M) led the market, alone. The second position in the ranking was occupied by Turkey ($42M). It was followed by South Korea.

The countries with the highest levels of beeswax per capita consumption in 2018 were South Korea (73 kg per 1000 persons), Turkey (59 kg per 1000 persons) and Malaysia (39 kg per 1000 persons).

From 2007 to 2018, the most notable rate of growth in terms of beeswax per capita consumption, amongst the main consuming countries, was attained by Japan, while the other leaders experienced more modest paces of growth.

Market Forecast 2019-2025 in Asia

Driven by increasing demand for beeswax in Asia, the market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +0.2% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 42K tonnes by the end of 2025.

Production in Asia

In 2018, approx. 50K tonnes of beeswax were produced in Asia; remaining stable against the previous year. The total output volume increased at an average annual rate of +1.3% from 2007 to 2018; the trend pattern remained consistent, with only minor fluctuations being recorded in certain years. The pace of growth appeared the most rapid in 2008 when production volume increased by 5.6% against the previous year. Over the period under review, beeswax production reached its peak figure volume in 2018 and is likely to continue its growth in the immediate term.

In value terms, beeswax production stood at $292M in 2018 estimated in export prices. Over the period under review, beeswax production continues to indicate prominent growth. The growth pace was the most rapid in 2011 with an increase of 25% against the previous year. Over the period under review, beeswax production attained its peak figure level at $392M in 2014; however, from 2015 to 2018, production failed to regain its momentum.

Production By Country in Asia

India (24K tonnes) remains the largest beeswax producing country in Asia, comprising approx. 49% of total production. Moreover, beeswax production in India exceeded the figures recorded by the region’s second-largest producer, China (11K tonnes), twofold. Turkey (4.5K tonnes) ranked third in terms of total production with a 9% share.

In India, beeswax production increased at an average annual rate of +2.0% over the period from 2007-2018. In the other countries, the average annual rates were as follows: China (+0.5% per year) and Turkey (+1.4% per year).

Exports in Asia

The exports totaled 14K tonnes in 2018, surging by 8.1% against the previous year. The total exports indicated a strong increase from 2007 to 2018: its volume increased at an average annual rate of +6.7% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, beeswax exports increased by +9.1% against 2016 indices. The pace of growth appeared the most rapid in 2010 when exports increased by 26% year-to-year. The volume of exports peaked in 2018 and are expected to retain its growth in the near future.

In value terms, beeswax exports amounted to $79M (IndexBox estimates) in 2018. In general, beeswax exports continue to indicate a resilient expansion. The growth pace was the most rapid in 2010 with an increase of 34% y-o-y. The level of exports peaked at $80M in 2015; however, from 2016 to 2018, exports stood at a somewhat lower figure.

Exports by Country

In 2018, China (9.7K tonnes) represented the major exporter of beeswax, committing 69% of total exports. It was distantly followed by Malaysia (1,970 tonnes) and Viet Nam (1,494 tonnes), together committing a 25% share of total exports. India (339 tonnes) held a little share of total exports.

Exports from China increased at an average annual rate of +5.3% from 2007 to 2018. At the same time, Viet Nam (+19.6%), India (+15.2%) and Malaysia (+8.8%) displayed positive paces of growth. Moreover, Viet Nam emerged as the fastest-growing exporter in Asia, with a CAGR of +19.6% from 2007-2018. China (+30 p.p.), Viet Nam (+9.2 p.p.), Malaysia (+8.5 p.p.) and India (+1.9 p.p.) significantly strengthened its position in terms of the total exports, while the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, China ($61M) remains the largest beeswax supplier in Asia, comprising 77% of total beeswax exports. The second position in the ranking was occupied by Viet Nam ($12M), with a 15% share of total exports. It was followed by India, with a 2% share.

From 2007 to 2018, the average annual rate of growth in terms of value in China stood at +10.9%. In the other countries, the average annual rates were as follows: Viet Nam (+24.8% per year) and India (+15.5% per year).

Export Prices by Country

The beeswax export price in Asia stood at $5,595 per tonne in 2018, going up by 1.8% against the previous year. The export price indicated a buoyant increase from 2007 to 2018: its price increased at an average annual rate of +4.4% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, beeswax export price decreased by -5.3% against 2015 indices. The growth pace was the most rapid in 2012 when the export price increased by 20% y-o-y. Over the period under review, the export prices for beeswax reached their maximum at $5,910 per tonne in 2015; however, from 2016 to 2018, export prices failed to regain their momentum.

Prices varied noticeably by the country of origin; the country with the highest price was Viet Nam ($7,731 per tonne), while Malaysia ($670 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by China, while the other leaders experienced more modest paces of growth.

Imports in Asia

In 2018, approx. 5.5K tonnes of beeswax were imported in Asia; stabilizing at the previous year. Overall, beeswax imports continue to indicate remarkable growth. The most prominent rate of growth was recorded in 2010 when imports increased by 40% against the previous year. The volume of imports peaked in 2018 and are likely to see steady growth in the near future.

In value terms, beeswax imports totaled $28M (IndexBox estimates) in 2018. In general, beeswax imports continue to indicate a prominent increase. The most prominent rate of growth was recorded in 2010 when imports increased by 47% year-to-year. Over the period under review, beeswax imports reached their maximum in 2018 and are expected to retain its growth in the immediate term.

Imports by Country

India represented the major importing country with an import of around 2.2K tonnes, which resulted at 40% of total imports. Japan (889 tonnes) took the second position in the ranking, followed by China (557 tonnes), Turkey (405 tonnes) and South Korea (357 tonnes). All these countries together took approx. 40% share of total imports. Pakistan (186 tonnes), Thailand (181 tonnes) and Taiwan, Chinese (93 tonnes) followed a long way behind the leaders.

India was also the fastest-growing in terms of the beeswax imports, with a CAGR of +23.1% from 2007 to 2018. At the same time, China (+20.6%), Pakistan (+14.2%), Turkey (+9.8%), Thailand (+5.9%) and Taiwan, Chinese (+1.8%) displayed positive paces of growth. Japan experienced a relatively flat trend pattern. By contrast, South Korea (-2.4%) illustrated a downward trend over the same period. India (+36 p.p.), China (+8.9 p.p.), Turkey (+4.7 p.p.), Pakistan (+2.6 p.p.), Japan (+1.6 p.p.) and Thailand (+1.5 p.p.) significantly strengthened its position in terms of the total imports, while South Korea saw its share reduced by -2% from 2007 to 2018, respectively. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, the largest beeswax importing markets in Asia were Japan ($8.2M), China ($5.5M) and South Korea ($2.9M), with a combined 60% share of total imports.

China recorded the highest growth rate of imports, among the main importing countries over the last eleven years, while the other leaders experienced more modest paces of growth.

Import Prices by Country

The beeswax import price in Asia stood at $5,033 per tonne in 2018, remaining stable against the previous year. Over the last eleven years, it increased at an average annual rate of +1.5%. The growth pace was the most rapid in 2014 when the import price increased by 35% y-o-y. In that year, the import prices for beeswax attained their peak level of $5,431 per tonne. From 2015 to 2018, the growth in terms of the import prices for beeswax remained at a lower figure.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was China ($9,919 per tonne), while India ($1,098 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by South Korea, while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

newtrend

NEWTREND USA VINDICATED BY CBP’S FINDING OF NO EVASION

City of Industry, California-based Newtrend USA Co. Ltd., a leading producer of fine chemical products, announced Sept. 30 that U.S. Customs and Border Protection (CBP) found no merit to the transshipment allegations made against it by its competitor, Salvi Chemical Industries Ltd. 

In September 2018, Salvi alleged to CBP that Newtrend evaded payment of antidumping duty cash deposits by transshipping Chinese-origin glycine through Thailand. That complaint initiated a CBP Enforce and Protect Act (EAPA) investigation in which the government required Newtrend Thailand to prove that it was not transshipping glycine produced in China.

The EAPA probe confirmed that Newtrend only manufactures and ships glycine to the U.S. manufactured at its affiliate in Thailand, Newtrend Food Ingredient Co., Ltd. 

“Newtrend is gratified with the outcome,” says Douglas Heffner, chairman of the U.S. Customs and International Trade practice at Drinker Biddle & Reath, LLP, who represented the company. “They were confident they had operated in complete compliance with all regulations and are pleased to put this behind them.”

tomato

COMMERCE SUSPENDS INVESTIGATION INTO FRESH TOMATO IMPORTS FROM MEXICO

On Sept. 19, Commerce finalized an agreement with Mexican tomato growers to suspend the AD investigation of fresh tomatoes from Mexico, halting the process for imposing antidumping duties on tomatoes from Mexico

“Today’s successful outcome validates the administration’s strong and smart approach to negotiating trade deals,” Secretary of Commerce Wilbur Ross said.  “The department’s action brought the Mexican growers to the negotiating table and led to a result that protects U.S. tomato producers from unfair trade. It also removes major uncertainties for the Mexican growers and their workers.”

The suspension agreement completely eliminates the injurious effects of unfairly priced Mexican tomatoes, prevents price suppression and undercutting, and eliminates substantially all dumping, while allowing Commerce to audit up to 80 Mexican tomato producers and U.S. sellers per quarter, or more with good cause. 

In addition, the agreement also closes loopholes from past suspension agreements that permitted sales below the reference prices in certain circumstances, and includes an inspection mechanism to prevent the importation of low-quality, poor-condition tomatoes from Mexico, which can have price-suppressive effects on the market. 

The probe came from a Nov. 14, 2018, request from the Florida Tomato Exchange.

quotas

Are Quotas Worse Than Tariffs?

Quotas Return

With all the focus on tariffs these days, it is easy to overlook the return of another tool used to limit imports: quotas.

Over a year ago, the Trump Administration used Section 232 of the Trade Expansion Act of 1962 to impose 25 percent tariffs on specified steel imports and 10 percent tariffs on specified aluminum imports. Three countries – South Korea, Brazil and Argentina – made agreements with the United States to apply quotas to their steel exports in lieu of the Section 232 tariffs. Argentina also agreed to quotas on its aluminum exports.

According to numerous reports, U.S. negotiators were seeking similar agreements with Canada, Mexico, Japan and the European Union (EU). In May 2019, however, the governments of the United States, Canada and Mexico announced that they had reached a deal to lift steel and aluminum tariffs without imposing quotas, choosing instead to adopt a monitoring system with the right to re-impose tariffs on these products if surges are detected in the future. This deal could be a template for agreements with Japan and the EU to address their steel and aluminum tariffs.

In ongoing Section 232 investigations, the administration is keeping quotas on the table in other sectors including autos and auto parts, uranium ore and titanium sponges.

The Difference between Quotas and Tariffs

Quotas and tariffs are both used to protect domestic industries by artificially raising prices in the domestic market. Their administration and effects, however, differ in specific ways. Quotas restrict the quantity of a good imported from another country. Tariffs are a charge levied on the value of goods imported from another country.

While tariffs generate revenue that is paid to the importing country’s treasury, the value of a quota, also called “quota rents,” generally goes to the foreign exporters who are able to sell goods subject to the quota at higher prices and collect higher per unit revenue. In both cases, domestic consumers in the importing country pay the costs of tariffs and quota rents. But with quotas, the government of the importing country receives no revenue.

Quotas can be much more complicated to administer than tariffs. Tariffs are collected by a customs authority as goods enter a country. With quotas, customs authorities must either monitor imports directly to ensure that no goods above the quota amount are imported, or can award licenses to specific companies, giving them the right to import the amount allowed under the quota. Quotas can also take the form of a voluntary export restraint (VER), where the exporting country administers the quota.

The Cost of Quotas

Costs and pricing under a tariff regime are more transparent and predictable compared to quotas. For example, if a good is subject to a 10 percent tariff, then the good should cost about 10 percent more than it did before the tariff was imposed. With a quota, the price of that same good can increase as long as demand for the good continues and the supply remains constrained. This can mean that quota rents are ultimately more costly to domestic consumers than a tariff. In this way, quota regimes may incentivize foreign producers to upgrade the quality of their exports, leading to more direct competition with domestic producers and a higher-price product mix for consumers.

On the other hand, if foreign producers export low-quality goods under a quota regime, prices and profits for both foreign and domestic producers of low-quality goods will rise because of quotas, while domestic consumers were forced to pay more for lower quality goods.

The General Agreement on Tariffs and Trade (GATT) prohibits quotas and other quantitative restrictions under Article XI (with specific exceptions including for “security reasons”) as the GATT parties agreed that quantitative restrictions were overly restrictive and distortive compared to duties or taxes, where are permitted.

Tricky to Administer

In the case of South Korea, Brazil, and Argentina and Section 232 quotas, each country agreed to product-specific absolute quotas on 54 separate steel articles based on each country’s average annual import volumes of steel from 2015 through 2017. Argentina also accepted product specific absolute quotas on two aluminum product categories.

Steel quotas under Section 232- South Korea, Brazil and Argentina

These quotas are administered by the United States to give exporters the least possible flexibility and demonstrate how complicated quota regimes can be. Some of the quotas are absolute – once the quota is reached, no additional amount can enter the United States for any price, unless an exclusion is granted. Some quotas apply to the full calendar year (but in practice may fill the minute the quota takes effect), and others are subject to quarterly limitations. Once a quota is filled in a given quarter, importers must wait until the next quarter until they can bring the product into the United States.

The True Cost in Practice

For South Korea, Brazil, and Argentina, quotas have reduced export volumes and revenue. According to U.S. Department of Commerce data, the overall quantity of steel South Korea, Brazil, and Argentina exported to the United States in 2018 dropped significantly compared to 2017, by 26.2 percent, 14.6 percent, and 20.1 percent, respectively.

In terms of value, South Korea and Argentina’s steel exports subject to quotas dropped by $430 million and $1 million, respectively, from 2017 to 2018, while the value of Brazil’s steel exports under the quota increased by nearly $145 million in 2018. Argentina’s aluminum exports subject to the quota dropped by approximately 86.8 million kilograms from 2017 to 2018, by 32.8 percent, with a decrease in value of approximately $101 million, according to data from the U.S. International Trade Commission.

Although South Korea, Brazil, and Argentina have benefitted from generally higher prices in the United States for steel and aluminum, so far, the quotas are effectively reducing U.S. imports from these countries.

US imports of steel mill products- South Korea, Brazil and Argentina

Upsides for U.S. Steel Producers

For U.S. steel and primary aluminum producers, Section 232 tariffs, and to a limited extent, quotas, are accomplishing their goal of bolstering U.S. manufacturing capacity and allowing their firms to become profitable again — at least in the short run.

Though some proponents of the Section 232 protections do not advocate for quotas specifically, and recognize their downsides, others argue that quotas are a necessary component of the Section 232 program. Here’s why.

First, for industries seeking protection, quotas arguably provide greater certainty than tariffs that imports will be limited. Under tariffs, if importers can bear the costs, or exporters can reduce their prices, imports will continue to flow in and competition will remain high. For example, Vietnam’s 2018 exports of flat steel products, which are covered by Section 232 tariffs, increased by 79 percent compared to 2017. If strict quotas were applied instead of tariffs, Vietnam’s 2018 exports likely would have decreased.

Second, steel and aluminum manufacturers argue that without quotas, “countries that have exemptions [to the Section 232 tariffs] would likely redirect their metals exports to the United States to take advantage of higher prices there, undermining the purpose of the tariffs.”

Finally, the Trump Administration perceives that Section 232 quota agreements with U.S. trading partners and security allies, in combination with tariffs, are helping to pressure and incentivize allies to take seriously the problem of global excess capacity. U.S. unilateral tariffs may also have the opposite effect, though, – making allies less willing to work cooperatively with the United States to address fundamental global problems.

Downsides for Downstream Industries

It’s a different story for U.S. downstream manufacturers, who say quotas have entailed “severe supply constraints” and “created even more business uncertainty than tariffs”.

Importers may no longer be able to guarantee that their goods can enter under the quota, or at all. They may encounter unanticipated costs in the form of storage charges and shipping fees if the quota is filled while goods are in transit. They may face unpredictably higher prices for goods subject to a quota. They may have to find new suppliers and bear all the costs of negotiating new contracts, building new relationships, and shipping from a new location. The exclusion process implemented in August 2018 may provide some relief for importers under supply pressure, though its application may also introduce more uncertainty.

More generally, downstream manufacturers argue that Section 232 quotas and tariffs raise prices inhibiting their competitiveness, and have a chilling effect on growth, employment and investment. Although many businesses have been buoyed by the strong U.S. economy, they say that employment and sales in their industries would have increased even more were it not for tariffs and quotas raising prices. Moreover, downstream industries using steel and aluminum products employ more Americans than steel and primary aluminum manufacturers, so many jobs are vulnerable if supply contracts too much.

North America Alternative to Metal Quotas

In order to move forward with passage of the United States-Mexico-Canada Agreement (USMCA), the United States, Canada and Mexico first had to address the steel, aluminum and retaliatory tariffs in place since 2018. Although all parties considered quotas as a possible way forward, in the end, they agreed to lift all steel, aluminum, and related retaliatory tariffs, as well as withdraw pending WTO litigation, without imposing quotas.

The three countries agreed to prevent the importation of aluminum and steel that is unfairly subsidized and/or sold at dumped prices; prevent the transshipment of aluminum and steel made outside of Canada, Mexico, or the United States to the other country; and establish a monitoring process to detect surges of aluminum and steel imports among them.

This agreement is a positive development for two key reasons: the parties removed tariffs while avoiding quotas, and agreed to address the underlying cause of U.S. industry distress – global excess capacity.

Addressing Global Excess Capacity is Key

Though tariffs and quotas may provide short-term relief, solving underlying global excess capacity problems is critical to addressing U.S. industries’ long-term challenges, and any long-term solution will require more than the mere application of protectionist measures. The United States will have to work closely and creatively with its trading partners to address this challenge directly and to persuade the world’s largest producers — including China — to reduce global excess capacity.

__________________________________________________________

This article is a shortened version of an original report published by the Hinrich Foundation.

Feature Image Credit: Jason Welker, from “Protectionist Quotas” video on Youtube.

Holly Smith

Holly Smith is a lawyer and consultant based in Hong Kong. From 2009 to 2015, she served in the Office of the United States Trade Representative as a Director for Intellectual Property and Innovation, a Director for China Affairs, and a senior policy advisor to the Deputy U.S. Trade Representative.

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

pumpkin

U.S. Imports of Pumpkins From Mexico Account for One-Third of Global Trade

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

In 2018, global pumpkin trade is estimated at 1.5M tonnes. The U.S. remains the world’s largest and fasted-growing importer (508K tonnes in 2018), which accounts for 34% of global imports, while Mexico holds a 86% share in U.S. pumpkin imports.

The global pumpkin market revenue amounted to $22.6B in 2018, leveling off at 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).

The market value increased at an average annual rate of +3.2% from 2013 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being recorded over the period under review. The most prominent rate of growth was recorded in 2016 with an increase of 6.9% against the previous year. Over the period under review, the global pumpkin market reached its peak figure level in 2018 and is likely to continue its growth in the near future.

Consumption By Country

The countries with the highest volumes of pumpkin consumption in 2018 were China (7.9M tonnes), India (5.9M tonnes) and Russia (1.3M tonnes), together accounting for 53% of global consumption. These countries were followed by the U.S., Iran, Ukraine, Italy, Indonesia, Bangladesh and Egypt, which together accounted for a further 18%.

From 2013 to 2018, the most notable rate of growth in terms of pumpkin consumption, amongst the main consuming countries, was attained by Indonesia, while the other global leaders experienced more modest paces of growth.

In value terms, India ($6.1B), China ($4.7B) and the U.S. ($1.1B) constituted the countries with the highest levels of market value in 2018, with a combined 53% share of the global market. Russia, Italy, Ukraine, Bangladesh, Egypt, Iran and Indonesia lagged somewhat behind, together comprising a further 14%.

The countries with the highest levels of pumpkin per capita consumption in 2018 were Ukraine (15,778 kg per 1000 persons), Iran (13,096 kg per 1000 persons) and Russia (8,784 kg per 1000 persons).

From 2013 to 2018, the most notable rate of growth in terms of pumpkin per capita consumption, amongst the main consuming countries, was attained by Indonesia, while the other global leaders experienced more modest paces of growth.

Market Forecast 2019-2025

Driven by increasing demand for pumpkin worldwide, the market is expected to continue an upward consumption trend over the next seven years. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +2.0% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 32M tonnes by the end of 2025.

Production 2007-2018

In 2018, approx. 28M tonnes of pumpkin (squash and gourds) were produced worldwide; picking up by 2.8% against the previous year. The total output volume increased at an average annual rate of +2.6% from 2013 to 2018; the trend pattern remained consistent, with only minor fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2018 with an increase of 2.8% y-o-y. In that year, global pumpkin production attained its peak volume and is likely to continue its growth in the immediate term. The general positive trend in terms of pumpkin output was largely conditioned by a measured increase of the harvested area and a relatively flat trend pattern in yield figures.

In value terms, pumpkin production amounted to $22.3B in 2018 estimated in export prices. The total output value increased at an average annual rate of +3.4% from 2013 to 2018; the trend pattern remained consistent, with only minor fluctuations being observed over the period under review. The most prominent rate of growth was recorded in 2017 with an increase of 6.9% y-o-y. In that year, global pumpkin production reached its peak level of $22.5B, leveling off in the following year.

Production By Country

The countries with the highest volumes of pumpkin production in 2018 were China (7.9M tonnes), India (5.9M tonnes) and Russia (1.2M tonnes), with a combined 53% share of global production. These countries were followed by Iran, the U.S., Spain, Ukraine, Mexico, Italy, Indonesia, Bangladesh and Turkey, which together accounted for a further 21%.

From 2013 to 2018, the most notable rate of growth in terms of pumpkin production, amongst the main producing countries, was attained by Indonesia, while the other global leaders experienced more modest paces of growth.

Harvested Area 2007-2018

In 2018, the global harvested area of pumpkin (squash and gourds) amounted to 2B ha, increasing by 2.1% against the previous year. The harvested area increased at an average annual rate of +2.0% from 2013 to 2018; the trend pattern remained consistent, with somewhat noticeable fluctuations being recorded over the period under review. The growth pace was the most rapid in 2018 when harvested area increased by 2.1% year-to-year. In that year, the global pumpkin harvested area attained its peak level and is likely to continue its growth in the immediate term.

Yield 2007-2018

Global average pumpkin yield amounted to 14 kg per ha in 2018, flattening at the previous year. In general, the pumpkin yield continues to indicate a relatively flat trend pattern. The growth pace was the most rapid in 2018 when yield increased by 0.7% against the previous year. In that year, the average pumpkin yield attained its peak level and is likely to continue its growth in the immediate term.

Exports 2007-2018

Global exports totaled 1.6M tonnes in 2018, increasing by 5.7% against the previous year. The total export volume increased at an average annual rate of +4.9% from 2013 to 2018; the trend pattern remained consistent, with only minor fluctuations being observed throughout the analyzed period. The pace of growth appeared the most rapid in 2016 with an increase of 14% year-to-year. The global exports peaked in 2018 and are likely to continue its growth in the immediate term.

In value terms, pumpkin exports stood at $1.5B (IndexBox estimates) in 2018. The total export value increased at an average annual rate of +3.3% over the period from 2013 to 2018; the trend pattern remained consistent, with somewhat noticeable fluctuations being observed in certain years. The most prominent rate of growth was recorded in 2017 with an increase of 14% against the previous year. The global exports peaked in 2018 and are expected to retain its growth in the near future.

Exports by Country

In 2018, Mexico (508K tonnes) and Spain (352K tonnes) represented the major exporters of pumpkin (squash and gourds)around the world, together achieving 55% of total exports. It was distantly followed by New Zealand (81K tonnes), creating a 5.1% share of total exports. The U.S. (67K tonnes), Turkey (67K tonnes), Morocco (51K tonnes), Portugal (51K tonnes), the Netherlands (41K tonnes), France (36K tonnes), China (34K tonnes), Canada (33K tonnes) and Italy (33K tonnes) held a minor share of total exports.

From 2013 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by China, while the other global leaders experienced more modest paces of growth.

In value terms, the largest pumpkin markets worldwide were Mexico ($483M), Spain ($403M) and Morocco ($64M), with a combined 64% share of global exports. These countries were followed by the U.S., the Netherlands, France, Italy, New Zealand, Turkey, Portugal, China and Canada, which together accounted for a further 24%.

In terms of the main exporting countries, China experienced the highest growth rate of exports, over the last five-year period, while the other global leaders experienced more modest paces of growth.

Export Prices by Country

In 2018, the average pumpkin export price amounted to $939 per tonne, growing by 1.5% against the previous year. Over the period under review, the pumpkin export price, however, continues to indicate a slight drop. The most prominent rate of growth was recorded in 2017 when the average export price increased by 15% against the previous year. The global export price peaked at $1,017 per tonne in 2013; however, from 2014 to 2018, export prices stood at a somewhat lower figure.

Prices varied noticeably by the country of origin; the country with the highest price was the Netherlands ($1,442 per tonne), while Portugal ($449 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by France, while the other global leaders experienced more modest paces of growth.

Imports 2007-2018

Global imports totaled 1.5M tonnes in 2018, picking up by 19% against the previous year. The total import volume increased at an average annual rate of +4.2% from 2013 to 2018; the trend pattern remained relatively stable, with only minor fluctuations over the period under review. The growth pace was the most rapid in 2018 when imports increased by 19% year-to-year. In that year, global pumpkin imports reached their peak and are likely to continue its growth in the immediate term.

In value terms, pumpkin imports amounted to $1.4B (IndexBox estimates) in 2018. The total import value increased at an average annual rate of +1.2% from 2013 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2018 with an increase of 5.4% against the previous year. In that year, global pumpkin imports attained their peak and are likely to continue its growth in the immediate term.

Imports by Country

The U.S. was the key importing country with an import of around 508K tonnes, which amounted to 34% of total imports. It was distantly followed by France (159K tonnes), Germany (111K tonnes), the UK (109K tonnes), Japan (103K tonnes) and the Netherlands (68K tonnes), together creating a 37% share of total imports. Canada (55K tonnes), Russia (48K tonnes), Singapore (38K tonnes), Belgium (30K tonnes) and Italy (25K tonnes) occupied a minor share of total imports.

The U.S. was also the fastest-growing in terms of the pumpkin (squash and gourds) imports, with a CAGR of +7.8% from 2013 to 2018. At the same time, Germany (+4.8%), Russia (+4.0%), Canada (+3.4%), France (+1.6%) and the UK (+1.3%) displayed positive paces of growth. The Netherlands, Singapore, Japan and Italy experienced a relatively flat trend pattern. By contrast, Belgium (-4.4%) illustrated a downward trend over the same period. While the share of the U.S. (+11 p.p.) and Germany (+1.5 p.p.) increased significantly, the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, the U.S. ($414M) constitutes the largest market for imported pumpkin (squash and gourds) worldwide, comprising 30% of global imports. The second position in the ranking was occupied by France ($172M), with a 12% share of global imports. It was followed by Germany, with a 11% share.

In the U.S., pumpkin imports expanded at an average annual rate of +3.7% over the period from 2013-2018. The remaining importing countries recorded the following average annual rates of imports growth: France (-1.5% per year) and Germany (+2.5% per year).

Import Prices by Country

The average pumpkin import price stood at $921 per tonne in 2018, declining by -11.8% against the previous year. Over the period under review, the pumpkin import price continues to indicate a moderate reduction. The pace of growth appeared the most rapid in 2017 an increase of 18% against the previous year. Over the period under review, the average import prices for pumpkin (squash and gourds) reached their maximum at $1,067 per tonne in 2013; however, from 2014 to 2018, import prices remained at a lower figure.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was Belgium ($1,463 per tonne), while Singapore ($544 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Italy, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

vegetable wax

Global Vegetable Waxes Market – Brazil Emerged As the World’s Largest Supplier, With a 45% Share of Total Exports

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

The global vegetable waxes market revenue amounted to $536M in 2018, increasing by 3.7% 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).

Consumption By Country

China (18K tonnes) constituted the country with the largest volume of vegetable waxes consumption, comprising approx. 17% of total consumption. Moreover, vegetable waxes consumption in China exceeded the figures recorded by the world’s second-largest consumer, India (7.2K tonnes), twofold. Russia (3.2K tonnes) ranked third in terms of total consumption with a 3.2% share.

In China, vegetable waxes consumption expanded at an average annual rate of +1.8% over the period from 2007-2018. In the other countries, the average annual rates were as follows: India (+0.5% per year) and Russia (-4.0% per year).

In value terms, China ($94M) led the market, alone. The second position in the ranking was occupied by India ($38M). It was followed by the U.S..

In 2018, the highest levels of vegetable waxes per capita consumption was registered in Australia (78 kg per 1000 persons), followed by Russia (22 kg per 1000 persons), Pakistan (16 kg per 1000 persons) and Japan (16 kg per 1000 persons), while the world average per capita consumption of vegetable waxes was estimated at 13 kg per 1000 persons.

From 2007 to 2018, the average annual growth rate of the vegetable waxes per capita consumption in Australia stood at +8.8%. In the other countries, the average annual rates were as follows: Russia (-4.4% per year) and Pakistan (-5.3% per year).

Production 2007-2018

In 2018, the global production of vegetable waxes totaled 98K tonnes, growing by 3.8% against the previous year. Over the period under review, vegetable waxes production, however, continues to indicate a moderate slump. The pace of growth was the most pronounced in 2010 with an increase of 8.2% year-to-year. Over the period under review, global vegetable waxes production attained its peak figure volume at 132K tonnes in 2007; however, from 2008 to 2018, production stood at a somewhat lower figure.

In value terms, vegetable waxes production totaled $466M in 2018 estimated in export prices. In general, vegetable waxes production, however, continues to indicate a measured contraction. The most prominent rate of growth was recorded in 2010 when production volume increased by 9.2% against the previous year. The global vegetable waxes production peaked at $612M in 2007; however, from 2008 to 2018, production remained at a lower figure.

Production By Country

The countries with the highest volumes of vegetable waxes production in 2018 were Brazil (17K tonnes), China (15K tonnes) and India (7.2K tonnes), with a combined 40% share of global production.

From 2007 to 2018, the most notable rate of growth in terms of vegetable waxes production, amongst the main producing countries, was attained by China, while the other global leaders experienced mixed trends in the production figures.

Exports 2007-2018

Global exports stood at 31K tonnes in 2018, going down by -1.8% against the previous year. Over the period under review, vegetable waxes exports continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2010 with an increase of 36% year-to-year. The global exports peaked at 61K tonnes in 2012; however, from 2013 to 2018, exports remained at a lower figure.

In value terms, vegetable waxes exports amounted to $171M (IndexBox estimates) in 2018. Overall, the total exports indicated a moderate expansion from 2007 to 2018: its value decreased at an average annual rate of -0.5% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, vegetable waxes exports decreased by +0.4% against 2016 indices. The most prominent rate of growth was recorded in 2010 when exports increased by 44% y-o-y. Over the period under review, global vegetable waxes exports attained their peak figure at $261M in 2012; however, from 2013 to 2018, exports stood at a somewhat lower figure.

Exports by Country

Brazil was the largest exporter of vegetable waxes in the world, with the volume of exports accounting for 14K tonnes, which was near 45% of total exports in 2018. Indonesia (4,327 tonnes) ranks second in terms of the total exports with a 14% share, followed by the U.S. (11%), Mexico (5.8%) and Germany (5.6%). China (1,172 tonnes) and Japan (756 tonnes) occupied a relatively small share of total exports.

Brazil experienced a relatively flat trend pattern of vegetable waxes exports. At the same time, China (+8.4%), Germany (+6.3%), the U.S. (+4.9%), Mexico (+3.0%) and Japan (+1.0%) displayed positive paces of growth. Moreover, China emerged as the fastest-growing exporter in the world, with a CAGR of +8.4% from 2007-2018. By contrast, Indonesia (-5.8%) illustrated a downward trend over the same period. From 2007 to 2018, the share of the U.S., Germany, China and Mexico increased by +4.6%, +2.7%, +2.2% and +1.6% percentage points, while Brazil (-4.2 p.p.) and Indonesia (-12.8 p.p.) saw their share reduced. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, Brazil ($93M) remains the largest vegetable waxes supplier worldwide, comprising 54% of global exports. The second position in the ranking was occupied by Mexico ($18M), with a 10% share of global exports. It was followed by the U.S., with a 8.4% share.

In Brazil, vegetable waxes exports expanded at an average annual rate of +2.8% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Mexico (+11.9% per year) and the U.S. (+5.6% per year).

Export Prices by Country

The average vegetable waxes export price stood at $5,458 per tonne in 2018, declining by -3% against the previous year. Over the period under review, the export price indicated a notable expansion from 2007 to 2018: its price increased at an average annual rate of +3.2% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, vegetable waxes export price decreased by -7.9% against 2015 indices. The growth pace was the most rapid in 2014 an increase of 27% year-to-year. The global export price peaked at $5,926 per tonne in 2015; however, from 2016 to 2018, export prices remained at a lower figure.

Prices varied noticeably by the country of origin; the country with the highest price was Mexico ($9,814 per tonne), while Indonesia ($1,318 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Mexico, while the other global leaders experienced more modest paces of growth.

Imports 2007-2018

In 2018, approx. 35K tonnes of vegetable waxes were imported worldwide; picking up by 6.4% against the previous year. In general, vegetable waxes imports continue to indicate a relatively flat trend pattern. The pace of growth was the most pronounced in 2012 with an increase of 42% y-o-y. In that year, global vegetable waxes imports attained their peak of 72K tonnes. From 2013 to 2018, the growth of global vegetable waxes imports remained at a lower figure.

In value terms, vegetable waxes imports totaled $208M (IndexBox estimates) in 2018. In general, the total imports indicated strong growth from 2007 to 2018: its value increased at an average annual rate of +0.8% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, vegetable waxes imports increased by +12.5% against 2016 indices. The most prominent rate of growth was recorded in 2010 with an increase of 37% year-to-year. Over the period under review, global vegetable waxes imports reached their maximum at $263M in 2012; however, from 2013 to 2018, imports remained at a lower figure.

Imports by Country

In 2018, the U.S. (6.2K tonnes), distantly followed by Germany (3,635 tonnes), China (3,444 tonnes), Japan (2,816 tonnes), Australia (1,967 tonnes) and the UK (1,660 tonnes) were the largest importers of vegetable waxes, together achieving 57% of total imports. France (1,412 tonnes), the Netherlands (1,338 tonnes), Estonia (1,328 tonnes), the Philippines (1,089 tonnes), Italy (994 tonnes) and South Korea (932 tonnes) followed a long way behind the leaders.

From 2007 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by Australia, while the other global leaders experienced more modest paces of growth.

In value terms, the largest vegetable waxes importing markets worldwide were the U.S. ($40M), Germany ($25M) and China ($23M), with a combined 42% share of global imports. Japan, France, the Netherlands, the UK, South Korea, Italy, Estonia, Australia and the Philippines lagged somewhat behind, together accounting for a further 36%.

Among the main importing countries, Australia experienced the highest growth rate of imports, over the last eleven years, while the other global leaders experienced more modest paces of growth.

Import Prices by Country

In 2018, the average vegetable waxes import price amounted to $5,964 per tonne, rising by 2.5% against the previous year. Over the period under review, the import price indicated a strong expansion from 2007 to 2018: its price increased at an average annual rate of +4.1% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, vegetable waxes import price increased by +64.5% against 2012 indices. The most prominent rate of growth was recorded in 2013 an increase of 34% against the previous year. Over the period under review, the average import prices for vegetable waxes attained their peak figure in 2018 and is likely to see steady growth in the near future.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was France ($8,360 per tonne), while the Philippines ($1,405 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by China, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

Global Lard Market to Grow 1.6% a Year through 2025, Fuelled by Rising Demand in China

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

The global lard market revenue amounted to $15.7B in 2018, jumping by 2.9% 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). The market value increased at an average annual rate of +2.1% from 2012 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations throughout the analyzed period. The most prominent rate of growth was recorded in 2017 when the market value increased by 6.6% against the previous year. Over the period under review, the global lard market attained its peak figure level in 2018 and is expected to retain its growth in the near future.

Consumption By Country

The country with the largest volume of lard consumption was China (2.6M tonnes), accounting for 40% of total consumption. Moreover, lard consumption in China exceeded the figures recorded by the world’s second-largest consumer, Germany (615K tonnes), fourfold. Brazil (478K tonnes) ranked third in terms of total consumption with a 7.3% share.

From 2012 to 2018, the average annual growth rate of volume in China totaled +2.2%. In the other countries, the average annual rates were as follows: Germany (+0.7% per year) and Brazil (+1.3% per year).

In value terms, China ($11.1B) led the market, alone. The second position in the ranking was occupied by Russia ($1B). It was followed by Brazil.

The countries with the highest levels of lard per capita consumption in 2018 were Belgium (12,397 kg per 1000 persons), Germany (7,481 kg per 1000 persons) and Canada (4,662 kg per 1000 persons).

From 2012 to 2018, the most notable rate of growth in terms of lard per capita consumption, amongst the main consuming countries, was attained by Russia, while the other global leaders experienced more modest paces of growth.

Market Forecast 2019-2025

Driven by increasing demand for lard in China, the world market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +1.6% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 7.3M tonnes by the end of 2025.

Production 2007-2018

Global lard production totaled 6.5M tonnes in 2018, increasing by 2% against the previous year. The total output volume increased at an average annual rate of +1.6% over the period from 2012 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being observed throughout the analyzed period. The most prominent rate of growth was recorded in 2017 with an increase of 2.5% against the previous year. The global lard production peaked in 2018 and is expected to retain its growth in the immediate term.

In value terms, lard production stood at $15.6B in 2018 estimated in export prices. The total output value increased at an average annual rate of +2.0% over the period from 2012 to 2018; the trend pattern remained relatively stable, with only minor fluctuations throughout the analyzed period. The most prominent rate of growth was recorded in 2017 with an increase of 11% against the previous year. The global lard production peaked in 2018 and is likely to continue its growth in the near future.

Production By Country

The country with the largest volume of lard production was China (2.6M tonnes), accounting for 39% of total production. Moreover, lard production in China exceeded the figures recorded by the world’s second-largest producer, Germany (653K tonnes), fourfold. The third position in this ranking was occupied by Brazil (481K tonnes), with a 7.4% share.

In China, lard production expanded at an average annual rate of +2.3% over the period from 2012-2018. In the other countries, the average annual rates were as follows: Germany (+0.6% per year) and Brazil (+1.3% per year).

Exports 2007-2018

In 2018, approx. 243K tonnes of lard were exported worldwide; jumping by 9.2% against the previous year. Over the period under review, lard exports continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2015 with an increase of 11% y-o-y. The global exports peaked in 2018 and are likely to continue its growth in the near future.

In value terms, lard exports amounted to $220M (IndexBox estimates) in 2018. In general, lard exports continue to indicate a slight setback. The most prominent rate of growth was recorded in 2017 when exports increased by 26% y-o-y. The global exports peaked at $241M in 2012; however, from 2013 to 2018, exports failed to regain their momentum.

Exports by Country

Germany (46K tonnes), Spain (45K tonnes) and Belgium (35K tonnes) represented roughly 52% of total exports of lard in 2018. The U.S. (17K tonnes) ranks next in terms of the total exports with a 6.9% share, followed by the Netherlands (5.7%), Italy (5.3%) and Austria (5%). France (10,645 tonnes), Canada (9,206 tonnes), Denmark (7,849 tonnes), Poland (7,002 tonnes) and Portugal (4,028 tonnes) took a minor share of total exports.

From 2012 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by Portugal, while the other global leaders experienced more modest paces of growth.

In value terms, Spain ($57M), Germany ($31M) and Belgium ($23M) appeared to be the countries with the highest levels of exports in 2018, together comprising 50% of global exports. The U.S., Italy, the Netherlands, Canada, Poland, France, Austria, Denmark and Portugal lagged somewhat behind, together accounting for a further 41%.

In terms of the main exporting countries, Portugal experienced the highest rates of growth with regard to exports, over the last six years, while the other global leaders experienced more modest paces of growth.

Export Prices by Country

In 2018, the average lard export price amounted to $902 per tonne, falling by -4.1% against the previous year. Over the period under review, the lard export price continues to indicate a temperate slump. The most prominent rate of growth was recorded in 2017 when the average export price increased by 15% against the previous year. The global export price peaked at $1,027 per tonne in 2012; however, from 2013 to 2018, export prices failed to regain their momentum.

Prices varied noticeably by the country of origin; the country with the highest price was Poland ($1,359 per tonne), while Austria ($452 per tonne) was amongst the lowest.

From 2012 to 2018, the most notable rate of growth in terms of prices was attained by the U.S., while the other global leaders experienced mixed trends in the export price figures.

Imports 2007-2018

Global imports stood at 223K tonnes in 2018, increasing by 8.2% against the previous year. The total import volume increased at an average annual rate of +1.3% from 2012 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being recorded in certain years. The growth pace was the most rapid in 2015 with an increase of 11% y-o-y. In that year, global lard imports attained their peak of 236K tonnes. From 2016 to 2018, the growth of global lard imports remained at a somewhat lower figure.

In value terms, lard imports totaled $194M (IndexBox estimates) in 2018. In general, lard imports continue to indicate a moderate drop. The pace of growth appeared the most rapid in 2017 with an increase of 11% y-o-y. Over the period under review, global lard imports attained their peak figure at $227M in 2012; however, from 2013 to 2018, imports remained at a lower figure.

Imports by Country

In 2018, Spain (50K tonnes), distantly followed by the Netherlands (26K tonnes), Mexico (20K tonnes), Slovakia (18K tonnes), Denmark (16K tonnes) and France (11K tonnes) were the key importers of lard, together achieving 63% of total imports. Belgium (9,105 tonnes), the UK (7,294 tonnes), Germany (7,042 tonnes), the U.S. (6,910 tonnes), Portugal (6,763 tonnes) and the Philippines (5,311 tonnes) followed a long way behind the leaders.

From 2012 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by the Philippines, while the other global leaders experienced more modest paces of growth.

In value terms, Spain ($41M), Mexico ($22M) and the Netherlands ($18M) were the countries with the highest levels of imports in 2018, with a combined 42% share of global imports. Denmark, Belgium, France, the U.S., the UK, Germany, Slovakia, Portugal and the Philippines lagged somewhat behind, together accounting for a further 35%.

Slovakia experienced the highest growth rate of imports, in terms of the main importing countries over the last six-year period, while the other global leaders experienced more modest paces of growth.

Import Prices by Country

In 2018, the average lard import price amounted to $870 per tonne, standing approx. at the previous year. In general, the lard import price continues to indicate a perceptible reduction. The pace of growth appeared the most rapid in 2017 when the average import price increased by 13% y-o-y. Over the period under review, the average import prices for lard attained their peak figure at $1,100 per tonne in 2012; however, from 2013 to 2018, import prices failed to regain their momentum.

Prices varied noticeably by the country of destination; the country with the highest price was the U.S. ($1,157 per tonne), while the Philippines ($131 per tonne) was amongst the lowest.

From 2012 to 2018, the most notable rate of growth in terms of prices was attained by Denmark, while the other global leaders experienced mixed trends in the import price figures.

Source: IndexBox AI Platform

China market

Success in China: Market Opportunities & How to Get Started

Are you an ambitious entrepreneur from the west seeking to expand to China? Or are you interested in opening a new business in China? If yes, this article is for you. We will explain the 5 most viable business openings in China today and the 5 most reliable tips on how to get started in this highly-competitive market. Please be our guest.

Which Viable Market Opportunities Can You Pursue in China?

As the affluent middle class continues to expand in China, solid economic transformations in the country are being realized day by day. The biggest beneficiaries of these transformations are multinational companies who have set up or are planning to open a shop in China. There are now bigger and better market opportunities to pursue, more advanced industries to invest in, and more tech-intensive manufacturing opportunities to consider. As a matter of fact, China now boasts of a 50% bigger manufacturing economy as compared to the USA.

If you are looking to tap into the continued increase in high value-added production, increased globalization of the service sector, as well as the increased outbound investment in China, these 5 market opportunities would be lucrative enough for you:

Healthcare

Rising wealth often comes with an increase in lifestyle diseases. An increase in manufacturing, on the other hand, brings forth many environmental concerns. These two factors have made the healthcare industry very lucrative in China. You will create a reliable cash cow if you could invest in a business that deals with herbal supplements or small health products- or a mainstream pharmaceutical company, so to speak. Also, the use of skincare products is on the rise in China. It’s best to set up a wholly foreign-owned enterprise for such operations.

Import and export trade

China is currently the largest exporter of tech goods and importer of processed foods globally. That means you can build a profitable importing and exporting business here in a heartbeat. 

Supplementary education

Many middle-class Chinese are keen on improving their English and expanding their knowledge of different aspects of business and politics. If you can offer them after-school private tutoring services, you will be making impressive annual returns on a consistent basis. Moreover, online tutorage is on the rise in China, which enables you to tutor more people in a more cost-effective way.Food production

This goes without saying: Everyone needs food, everyone loves good food. And now that the middle-class in China is welcoming new entrants in huge numbers, there is a significant supply gap within this class for as long as the food is concerned. A rise in class obviously comes with a change in lifestyle, and food is at the center of every lifestyle. 

Mobile phones and accessories

The whole world has in the recent past turned to China for all its tech needs. The nation is the largest producer and importer of affordable mobile phones and accessories, meaning that a business in this industry would be extremely profitable.

How to Get Started In China

As lucrative as China could be, many investors from the west talk about it with fear. Some of these foreign entrants tried and failed, or struggled to find their footing in this Asian economic giant. But what would render you unable to compete and survive here? For starters, the business environment here is too unforgiving and the competition too stiff for the faint-hearted. Also, cases of language barriers, cultural differences, and bureaucratic government regulations have led to the peril of many. 

In the middle of all these, how do you defy the odds and succeed in China? Here are 5 actionable tips on how to get started in China:

Don’t just translate your content for China; ensure that everything about your business is localized for China. 

It is important to understand and comply with all business regulations in China. The hiring process can be tricky to a new entrant, which necessitates the services of a Chinese recruitment agency. Such an agency will help you with all employment laws, privileges, and remuneration. 

Ensure that you understand and respect the cultural differences that exist between the west and the east. 

Never underestimate the power of customer opinion in China. Let the customer tell what their experience with your product is, respect their opinion, learn from your mistakes, and ensure that you find lasting solutions to all their concerns. 

As much as possible, try to work with a local partner in order to benefit from the many favors local entrepreneurs get from the government.