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Our 2018 Picks for the Top 100 Cities for Global Trade

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Our 2018 Picks for the Top 100 Cities for Global Trade

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

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

THE NATIONAL ECONOMY AND TRENDS

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

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

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

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

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

 

THE BEST CITIES FOR GLOBAL TRADE

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

Multi-Category Winners

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

 

New York City(Export/Financial Hub)

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

 

Seattle(Export/Skilled Workforce/Financial Hub)

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

 

Chicago(Export/Intermodal)

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

 

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

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

 

Miami , Florida(Export/Skilled Workforce)

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

 

Dallas(Export/Intermodal)

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

 

San Francisco(Financial Hub/Cities to Watch)

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

 

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

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

 

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

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

 

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

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

 

Memphis, Tennessee(Intermodal/Business Incentives)

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

 

El Paso, Texas(Export/NAFTA/USMCA)

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

 

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

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

 

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

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

 

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

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

 

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

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

 

Texarkana, Texas(Business Incentives/City to Watch)

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

 

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

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

 

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

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

 

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

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

 

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

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

 

LISTS BY CATEGORY

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

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

 

Top Export Cities

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

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

 

Top Financial Hubs

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

-Richmond, Virginia
-Lincoln, Nebraska

 

Most Advanced Ports

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

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

 

Intermodal Access

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

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

 

Start or Relocate a Business

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

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

 

NAFTA/USMCA Access

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

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

 

Quality of Life

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

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

 

Best Business Incentives

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

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

 

Skilled Workforce

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

-Boston
-Washington, D.C.
-Milwaukee

 

Leading Southern Ports

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

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

 

Small Markets (<100,000 population)

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

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

 

Cities to Watch

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

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

Archives, Global Trade Daily, Special Reports

ROLLING WITH TARIFFS

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In 2008, my best friend Terry and I were at lunch talking about what we wanted to do with the rest of our lives. We were both fifty-something serial entrepreneurs who were in between ventures. Friends since college, we both loved cycling but hated hills. We loved the concept of electric bicycles but hadn’t found a really great electric bike.  So, we decided to create our own. Over lunch, we designed our first bike on a napkin. And Pedego Electric Bikes was born.

Flash forward 10 years. Pedego is now the No. 1 electric bike company in the United States. Our bikes are sold in more than 100 Pedego-branded stores in 20 countries. Our revenues have grown 76 percent in the past two years. We were at the top of our game.

Then there was a game changer. In August, the U.S. government enacted a 25-percent tariff on nearly 300 Chinese-made products, including electric bikes. The tariffs affect every Chinese-made bicycle, electric or not, as well as nearly 5,000 other Chinese-made goods in a wide variety of industries, from aluminum and steel to farm equipment and baby cribs. Our story is just one example.

As early as June, there were rumblings coming from Washington D.C. about possible tariffs on Chinese-made electric bikes. On July 23, I testified in front of a U.S. Trade Representative’s panel to protest bicycles being on the tariff list because they did not fit the goals of preventing China from stealing intellectual property (there is no intellectual property on bikes) or bringing bike manufacturing back to the United States. There is no way to manufacture affordable bicycles in America. In fact, it would double the price of an electric bike to build it here.

I wasn’t alone in testifying. An attorney for the Trek Bicycle Co. of Wisconsin, one of the world’s largest bicycle companies, was also there as well as a representative from People for Bikes, a nonprofit devoted to increasing cycling in the United States. We weren’t just there for our companies; we were there to help the entire bicycling industry. We argued that tariffing bikes would accomplish none of the tariff’s goals and would greatly hurt the bicycle industry by increasing costs for every type of bicycle: from inexpensive kids bikes to high-end road bikes as well as the growing category of electric bikes.

We were each given five minutes to speak, but unfortunately, our testimonies fell on deaf ears. The first tariff went through on Aug. 23, a week earlier than expected. We had two containers from China come into port the next day, costing us more than $100,000 in tariffs that we hadn’t expected. Luckily, our volume of summer sales allowed us to withstand this blow, but it had to be a one-time thing.

We had already planned our expansion to Vietnam in response to the European Union’s 83 percent tariff on Chinese-made electric bikes, which was announced in the spring. With the August confirmation of U.S. tariffs on Chinese-made bikes, we decided to move our manufacturing entirely out of China. In addition to moving production to two factories in Vietnam, we also are manufacturing at a second factory in Taiwan. Both Vietnam and Taiwan are no-tariff countries.

Moving our manufacturing out of China doesn’t mean we won’t pay tariffs. We will still pay tariffs on Chinese-made bike parts. For example, one part that is almost entirely made in China is the throttle, a part that is on every single Pedego electric bike.

The number of Chinese-made parts on our bikes vary by the model. For example, our Pedego Interceptor Cruiser is made of about 80 percent Chinese parts while our newest bike, the Pedego Conveyor commuter bike, is made of only about 20 percent Chinese parts. To further reduce the impact of the tariffs, where possible, we will source more of our parts from tariff-free countries outside of China.

We have always sourced bicycle parts from about a dozen countries worldwide in an effort to utilize the most high-quality components available. For example, our new Conveyor is made from parts from 10 countries including Japan, Germany, France, Indonesia, Italy, Czech Republic, Taiwan and the UK, all of which are currently free from bike tariffs.

While I’m a big believer that our government should be run like a business and that leveling tariffs is, in theory, a good idea, the U.S. cost of Chinese-made goods is likely to increase dramatically in the United States. For example, our average electric bike costs $3,000. Adding 25 percent to cover the cost of the tariff would bring the cost to $3,750, a huge increase for the customer. However, our foresight in planning our move to Vietnam and luck in being able to make it happen quickly has enabled us to keep our prices fairly stable. Our entry-level electric bike remains priced at $2,299, the same price as it has been for four years. We did not increase prices on our newest bikes, which includes the Pedego Elevate electric mountain bike. Our mid-range bikes had a modest increase of just 8-10 percent.

However, just as we thought we were out of the woods, the U.S. announced a new tariff on bicycle accessories of 10 percent that went into effect in September. These tariffs aren’t just on bikes or even recreational products. In fact, the U.S. is now tariffing $250 billion worth of Chinese-made products in a variety of industries, accounting for more than half of the Chinese goods coming into America.

All companies that manufacture products on the tariff list must figure out a solution. If they stay in China and incur the tariffs, do they increase prices? Do they cut quality? Do they simply eat it? Or, like us, do they simply move away?

 

 

Don DiCostanzo is the CEO and co-founder of Pedego Electric Bikes, the No. 1 electric bike company in the U.S. according to Navigant Research. Email him at Don@Pedego.com.

And see 

Global Trade’s 2015 cover story on Pedego at www.pedegoelectricbikes.com/global-trade-magazine-peddling-to-a-global-market.

 

 

Archives, Global Trade Daily, News

DHL GLOBAL TRADE BAROMETER CONTINUES TO FORECAST TRADE GROWTH, ALBEIT SLOWER

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Global trade continues to grow, according to October’s three-months forecast from the DHL Global Trade Barometer (GTB). The index for global trade now stands at 63 points, which is a decline of four points on the previous quarter’s forecast, indicating an overall slightly slower pace of growth. In the GTB methodology, an index value above 50 indicates positive growth, while values below 50 indicate contraction.

The overall slight reduction is largely driven by lower growth rates of air trade. The respective index value declined by eight points to 62. In contrast, the growth rate for global ocean trade merely decreased by one point to 63 points. Regarding the GTB’s seven constituent countries, this quarter sees a mixed picture with a threefold differentiation: India as the only country with simultaneously increasing and very high prospects for trade growth, the UK with an unchanged outlook, and all other countries with slightly diminishing prospects.

Despite intensifying global trade disputes, mainly between China and the U.S., these countries remain in growth mode, however, at a slower pace. American growth prospects slowed down by five points to 63, while the Chinese trade outlook decreased by four points to 59. Most other constituent countries witnessed decelerating trade dynamics, too: South Korea–still one of the previous forecast’s strongest growth drivers–saw its outlook reduced by five points to 69. Likewise, Germany’s trade growth forecast was reduced by six points to 58. The outlook for Japan went down by three points to 64.

UN REPORT: TRADE WAR THREATENS OUTLOOK FOR GLOBAL SHIPPING

The outbreak of trade wars and increased inward-looking policies threaten the prospects for seaborne trade, projected Mukhisa Kituyi, secretary general of the United Nations Conference on Trade and Development at October’s Global Maritime Forum’s Annual Summit in Hong Kong.

Kituyi’s warning while launching the 2018 edition of the UNCTAD Review of Maritime Transport came against a background of an improved balance between demand and supply that has lifted shipping rates to boost earnings and profits. Freight-rate levels improved significantly in 2017 except in the tanker market, supported by stronger global demand, more manageable fleet capacity growth and overall healthier market conditions.

Seaborne trade expanded by a healthy four percent in 2017, the fastest growth in five years, and UNCTAD forecasts similar growth this year, subject to Kituyi’s warning over trade and tariff wars: “Escalating protectionism and tit-for-tat tariff battles will potentially disrupt the global trading system which underpins demand for maritime transport.”

MYANMAR AT BOTTOM OF GLOBAL INDEX ON ILLICIT TRADE

The Transnational Alliance to Combat Illicit Trade (TRACIT) in October called for Myanmar to urgently step up efforts to fight illicit trade. Myanmar’s structural difficulties to effectively address illicit trade is evidenced in its very low score in the 2018 Global Illicit Trade Environment Index.

The index was produced by the Economist Intelligence Unit (EIU) and evaluates 84 countries on the extent they enable or prevent illicit trade. Myanmar ranks 82nd out of 84 countries evaluated, with an overall score of 23.0 (out of 100).

“This means that—apart from Iraq and Libya—Myanmar shows the poorest structural defense against illicit trade,” said TRACIT Director-General Jeffrey Hardy. “It also means we have a lot of work to do here, especially in the areas of illegal logging and mining, wildlife and human trafficking, spirits, beer and cigarette smuggling, and counterfeiting of all types of consumer goods.”

“We’re trying to solve illicit trade in all possible ways,” reported U Ko Lay, director of the Myanmar Ministry of Commerce. “But we need law and order first and that will pave the way for legal trade.”

COMMERCE UNDER SECRETARY SIGNS INDUSTRY COLLABORATION AGREEMENTS

Under Secretary of Commerce for International Trade Gilbert Kaplan met in Singapore with officials from the U.S. Chamber of Commerce, Singapore Business Federation (SBF) and Singapore Manufacturing Federation (SMF) in September to update and expand the Department of Commerce’s framework for U.S.-Singapore commercial collaboration.

The discussions were part of a broader trip that Kaplan led to India, Vietnam and Singapore to advance the U.S. government’s new Indo-Pacific Initiative by helping American companies navigate market challenges and by enhancing trade promotion efforts.

In his remarks, Kaplan emphasized that “our partnership with Singapore has been a great representation of the mutually beneficial outcomes we hope to accomplish throughout the broader Indo-Pacific region, especially with all of the gains we have seen since the United States and Singapore signed our bilateral free trade agreement 15 years ago. This includes the Commerce Department’s work with Singapore’s business organizations, who have been great friends and partners of the U.S. government and U.S. business community over the years.”

GPA APPROVES $92 MILLION RAIL EXPANSION

During a September meeting of the Georgia Ports Authority (GPA) board of directors in Atlanta, $92 million was approved for the Mason Mega Rail Terminal, a project that will double the Port of Savannah’s annual rail capacity to 1 million containers and deliver the largest on-terminal rail facility in North America by 2020.

“It is no accident the GPA is constructing rail capacity as the demand for rail is growing,” said GPA Board Chairman Jimmy Allgood. “As part of our strategic planning two years ago, our team identified the growing role intermodal cargo would play in GPA’s long-term success and put into place this plan for expansion.”

The GPA also announced it had moved 375,833 TEUs in August, an eight-percent increase over August 2017, while handling 86,200 intermodal TEUs represented a 33 percent jump.

PORT MANATEE, CARVER MARITIME INK LONG-TERM TERMINAL PACT

Port Manatee and Carver Maritime LLC in August entered a long-term marine terminal operating agreement for a 10-acre aggregate offloading facility at the Florida Gulf Coast port.

The Manatee County Port Authority-approved agreement lasts for as many as 20 years (including options) and ensures property lease payments totaling $1.8 million for the initial five-year term, in addition to wharfage payments for annual cargo throughputs.

“We, along with our customers, are excited about this opportunity, and very much look forward to a long and fruitful relationship with Port Manatee, as well as its tenants,” said Carver Laraway, president of Altamont, New York-based parent firm Carver Companies. “The projected growth of Central Florida and the business-friendly environment of Manatee County make us eager to call it home.”

Archives, Commentary, Global Trade Daily

Singapore: The case grows stronger

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Pick any global ranking of places to do business, and it’s safe to say Singapore will appear somewhere near the top. TMF Group’s Financial Complexity Index ranks it among the most straightforward countries in the world in terms of financial compliance. It’s no surprise that many companies have already chosen to make Singapore their de facto home in the Asia-Pacific region. We believe some recent trends and developments build the case for incorporating in Singapore even further.

As if to show it’s not resting on its laurels, Singapore’s government continues to introduce changes to enhance the overall business environment, as well as tweaks to encourage investment from specific industries.

The Monetary Authority of Singapore’s recent introduction of the Variable Capital Company structure is an excellent example. The VCC will significantly boost Singapore’s appeal as a center for the domiciling and management of funds. It makes it easier for investors to enter and exit funds, manage multiple sub-funds and streamline accounting procedures.

This development comes not long after changes to the tax treatment of Singapore-listed real estate investment trusts (S-REITs), which should further encourage the development of this asset class. Authorities have also put a host of incentives and support infrastructure in place to foster future-focused industries, from fintech to green buildings.

In August, the Monetary Authority of Singapore also announced and issued the revised Code of Corporate Governance with the desired outcome to support sustained corporate performance and innovation as well as strengthen investor confidence in Singapore’s capital markets.

Promising foundations

Beyond pro-business policies, the city-state’s abundance of private wealth and high-net-worth individuals make it attractive for investors to raise funds. Singapore’s ultra-high-net-worth population is set to expand 40 percent by 2026, outpacing London and New York.

None of this is to say Singapore isn’t without its challenges. The government has been tightening procedures for the hiring of foreign executives, and more stringent anti money-laundering procedures mean processes like opening a bank account can sometimes involve more complications than companies expect.

But even these challenges have corresponding upsides. Singapore’s stability and high quality of life means attracting and hiring foreign talent of a caliber that meets the bar set by the government is rarely a problem for long. The rigorous checks exercised by some banks are testament to the integrity and security of the local financial system, which enable investors to transact and house funds in absolute confidence.

Tapping into a regional network

Another of Singapore’s unique strengths is the role it can play as a gateway to one of the world’s most promising growth stories. The city is part of (and geographically at the heart of) the Association of Southeast Asian Nations (ASEAN), a region tipped to be the fourth-largest economy globally by 2030, home to a rising middle class. With its highly developed infrastructure and exceptional connections, Singapore provides the ideal foundation to develop a presence throughout Southeast Asia and beyond.

However, it must also be noted that not all regional economies offer Singapore’s levels of regulatory and compliance certainty. This means potential investors planning to use Singapore as an entry point for ASEAN should seek local support to plan their strategies and navigate ASEAN’s still distinct bureaucracies.

By engaging such a partner from the beginning, investors can structure their Singapore and subsequent operations in a way that will enable them to move quickly and effectively to tap into the region’s significant potential.

Matthew Allen is the regional director for business development at TMF Group based in the Singapore office. TMF Group is a professional services firm based in the Netherlands that provides accounting, HR, payroll and other administrative services, with a focus on companies that are expanding internationally.

Archives, Global Trade Daily

Don’t Feel Entirely Helpless in Trade Volatility

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

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

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

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

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

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

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

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

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

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

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

 

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

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

 

 

Archives, Global Trade Daily, International Trade

Advancing Global and Regional Trade in Africa through Intra-African Trade Fair

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December 11-17, 2018 at the Egypt International Exhibition Center in Cairo, all 55 African countries will converge for the first edition of the Intra-African Trade Fair (IATF). This is an initiative of the Africa Export Import Bank (Afreximbank) in collaboration with the African Union (AU) and supported by other partners around the world including the World Trade Center Miami.

Afreximbank, the convener of the trade fair, intends to use this platform to address the market information gap which in part is responsible for poor regional trade in Africa. Building a platform which provides access to the exchange of trade and market information will support the implementation of the African Continental Free Trade Area. The Continental Free Trade Area (CFTA) currently being negotiated aims to establish an open market for goods, services and business persons within the continent. Even though the CFTA agreement has been signed by about eighty percent of the countries in Africa, the road to its full implementation is still far ahead.

 

The process of market and economic integration is complicated everywhere in the world and particularly in Africa where poor levels of industrialization and openness, lack of dispute management mechanisms and intellectual property protections remain major roadblocks. Nevertheless, market integration is extremely important and in fact, a survival strategy for Africa. From Cape to Cairo, the continent is too fragmented in many ways – the economy, landscape and logistics, to make any meaningful improvement on economic development and hinterland connectivity.

The good news is, despite all the challenges associated with doing business in Africa, economic integration is already happening through African corporate entrepreneurs and multinational corporations. A report on “Pioneering One Africa” by the Boston Consulting Group named 150 companies, 75 African companies and 75 multinational companies who are driving the Pan-African market and economic integration.

African airlines, financial institutions, telecoms operators and media companies are accelerating intra-African connectivity and market integration by expanding their operational network to many countries across Africa. Over the last decade, Africa has seen growth in the number of air routes by local airlines, bank branch network and telecommunications operations. For example, Ethiopian airlines serves about 40 destinations in the region while the United Bank for Africa (UBA) has branches in 19 African countries. The progress being made by these companies shows that a continental single market for Africa is not impossible.

To continue the market and economic integration pioneered by these local and multinational companies, a multi-dimensional approach is required by all stakeholders. One approach which has proven to be an effective tool for trade development is trade fairs where businesses engage face to face. The Intra-African Trade Fair will help African countries to develop closer economic ties and harmonize their regulatory procedures thereby leading to increased global and regional trade.

The multi-sector Intra-African Trade Fair anticipates over $25 billion worth of trade and investment deals from 70,000 attendees featuring country pavilions for African and non-African countries. Other sideline events include engagement sessions with leaders and top government officials.

The trade fair is a gateway into the African single market of over one billion people. It will not only boost trade within Africa, American companies and other global market players can leverage this unprecedented market entry opportunity to grow their network and expand business interests to Africa.

 

 Kemi Arosanyin is a Global Trade contributor and Director, Africa Trade Expansion Program at the World Trade Center Miami. She writes, speaks, and advises on trade and investment in sub-Saharan Africa.

 

Archives, Global Trade Daily, International Trade

NOT A LOT FOR FREIGHT FORWARDERS IN YESTERDAY’S UK BUDGET, SAYS UK TRADE ASSOCIATION

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The trade association for UK freight forwarding companies and logistics service providers says that whilst it welcomes some of the announcements in yesterday’s UK Budget, it feels that the issues covered are all overshadowed by the ongoing uncertainty over the shape that the UK’s exit from the EU is going to take.

Robert Keen, Director General of the British International Freight Association (BIFA) says, “Whilst the investment in road transport infrastructure might make a difference to our members, we should not forget that back in November 2015, the Government announced that funding would be provided for the largest road investment programme since the 1970s.

“I am not sure that the country’s network of A roads and motorways has become any less congested since that announcement.

“BIFA has said repeatedly that it is imperative that new road building and road reconstruction projects are not only implemented, but developed in such a way as to maximise their functionality to the BIFA members, which as freight forwarders, use them to move Britain’s visible domestic and international trade.

“Hopefully this talk of infrastructure investment will cease to be just talk and we will see some spades in the ground.

“Our members will also welcome the news that the freeze in fuel duty would remain, but would have preferred to see an outright cut, the introduction of an essential user rebate and some form of fuel duty stabilisation mechanism.”

Notwithstanding any of the above, BIFA is concerned by Chancellor Phillip Hammond’s assertion that the spending commitments outlined in yesterday budget statement would not be affected in the event of a no-deal, hard Brexit.

Keen adds: “If that is the case, why would Mr Hammond feel the need to also state that his Spring statement might need to be upgraded to a new hard-Brexit budget?

“Speaking on behalf of BIFA’s members, which facilitate much of the movement of the UK’s visible exports and imports, we believe that any new tariffs and delays that could result from a no-deal Brexit would make today’s announcements unsustainable.”

“Our business sector is an accurate barometer of the nation’s trading performance, and wants to see a Brexit deal as closely aligned with the EU Customs Union as possible.

“Our members remain concerned about the potential impact on infrastructure plans, labour shortages and border delays of a no-deal Brexit, and want to see much more progress with the agreement on several key processes if a frictionless border is to be achieved.

“Our members want to see the government achieve an agreement on trade and customs as an urgent priority. That will be of much greater importance to the work of our members than anything announced in yesterday’s budget.”

Source: https://www.bifa.org/news/articles/2018/oct/not-a-lot-for-freight-forwarders-in-yesterday-s-uk-budget-says-uk-trade-association

Archives, Global Trade Daily, News

USITC to Probe Changes in Indian Trade Policies

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Washington, DC – The US International Trade Commission (ITC) has launched an investigation into significant changes in India’s trade and investment policies by that country’s newly-elected government.

The decision by the agency comes in response to a request made in a September 25 letter sent jointly from the House Ways and Means Committee and the Senate Committee on Finance.

“Given the recent national elections in India and the formation of a new Bharatiya Janata Party-led government, and our interest in receiving the most comprehensive and up-to-date information possible,” the letter read, “we now request that the Commission conduct a second investigation concerning India’s industrial policies that discriminate against US trade and investment since the first ITC investigation.”

As requested, the ITC said it will “provide information about any significant changes by the new Indian government to the trade and investment policies identified in the Commission’s ongoing investigation.”

The agency said it “will also include information on any new relevant trade and investment policies and practices in India, focusing on the period from mid-2014.”

It added that the agency expects to deliver the report to the committees by September 24, 2015, the official statement said, adding that it will hold a public hearing in connection with this investigation on April 7, 2015.

The new investigation is the ITC’s second probe regarding India’s trade and investment policies requested by the two committees.

In 2013, the committees jointly asked the agency to investigate Indian policies that restrict US trade and investment.

The ITC is expected to submit its report in that investigation – Trade, Investment, and Industrial Policies in India: Effects on the US Economy – to both the House and Senate committees on December 15.

10/29/2014

Archives, Commentary, Global Trade Daily

Economist: India ‘Scuttles’ WTO Trade Talks

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Los Angeles, CA – India “has apparently chosen to scuttle the ‘good ship’ WTO-Bali, the first truly multilateral agreement achieved since the founding of the WTO in 1995,” says Dr. Kent Jones, professor of economics at Babson College in Massachusetts.

“This is not the only ship in the WTO fleet, but it is the only one of its kind that has been successfully floated under its multilateral negotiating mandate. It is now taking on water, thereby endangering the entire multilateral trading system,” says Jones, a published author and an acknowledged expert on trade and policy issues who served as a senior economist for trade policy at the US State Department.

India, said Jones, “agreed last December to accept a deal in Bali that combined new rules on trade facilitation with a 2017 timeline on reconciling WTO agricultural rules with India’s food security policies.”

Trade facilitation provisions, he said, “would combine reductions in red tape and improvements in customs logistics with aid for developing countries’ trade infrastructure. The lion’s share of economic welfare gains, estimated at $1 trillion, would flow to developing countries, most of which are not amused at India’s decision to renege on the deal at the last minute.”

India’s system of food subsidies and stockpiling, Jones asserts, “currently runs afoul of WTO agricultural rules, but beyond that requires a wasteful domestic bureaucracy and market distortions that cannot help the poor in a sustainable manner. In addition, it cannot improve agricultural productivity, which is what is really needed for a lasting solution to its food security problem.”

Nonetheless, he adds, “the Bali deal set a moratorium on challenges to such policies until 2017, by which time negotiations on reforming the rules could take place. In the interim, alternatives and compromises could be considered that could allow India’s food security policies to coexist with WTO rules for global markets.”

The new government “feels that this timeline is not good enough, and hopes to hold the globally popular trade facilitation deal hostage in order to force a global agricultural deal immediately that will make its current policy legal under WTO rules. India professes to support trade facilitation, which only lays bare its cynical strategy to renege on its earlier commitments and blame everyone else for failing to re-negotiate,” Jones says.

“DESTRUCTIVE BRINKMANSHIP”

India’s “strategy of brinkmanship appears not only destructive to the WTO’s credibility as a negotiating forum, but to India’s global interests as well. Most major trading countries are so furious at India for breaking its word at Bali that many are planning to implement trade facilitation outside the regular WTO framework, through bilateral, regional or ‘pluritaleral’ agreements,” he says. “Global WTO agreements are the best way to expand trade, but countries have already shown that they will strike their own deals if WTO negotiations break down.”

According to Jones, “These initiatives outside the WTO would deprive India of any leverage in pursuing agricultural rules reform in its favor, while forfeiting its potential leadership role among developing and emerging economies. Brazil and China, in particular, reportedly criticized India’s veto.”

Without a deal forged in Bali, the “peace clause” preventing disputes against India’s agricultural policies would be suspended, which could lead to trade sanctions. India’s export industries would also suffer from abandoning the WTO negotiations. It stands to lose a lot from this misadventure,” he asserts.

“Indian trade diplomats insist that they have presented viable compromise measures that could lead to a new deal in September,” says Jones.

“Diplomats can always walk back from the brink, but it seems clear that there will be no fundamental renegotiation of what was agreed in Bali last December. By throwing rocks in its own harbors, India’s economy will remain tethered to a costly protectionist regime, while the rest of the world will seek other shores—and negotiating venues.”

08/07/2014