Trending Now

US Intermodal Gains Momentum Amid Trucking Challenges

New Articles

China Seeks to Redraw the Global Trade Map

china
Archives, Global Trade Daily, In The News, International Trade

China Seeks to Redraw the Global Trade Map

Leave a comment

Don’t Forget About Belt and Road

It’s a busy time for trade news. Headlines report every twist in the U.S.-China trade war, Brexit nears another deadline, and the U.S.-Mexico-Canada Agreement (USMCA) only just passed in Congress after a year of domestic debate. In Asia, countries are negotiating “mega” trade deals like the Regional Comprehensive Economic Partnership (RCEP) and the China-Japan-South Korea deal, while the United States is favoring “mini” or partial deals like the initial U.S.-Japan Free Trade Agreement. The WTO’s dispute settlement mechanism is stalling out without a functioning appellate body. The list of negotiations goes on.

All the while, China moves forward with its ambitious hard infrastructure plan to connect continents through its Belt and Road Initiative. The results will have a serious long-term impact on global trade. Policymakers are working to get their arms around its implications. Here are the basics everyone should know.

What is the Belt and Road Initiative?

Announced by Chinese President Xi Jinping in 2013, China’s Belt and Road Initiative is made up of two parts: The Silk Road Economic Belt (a “belt” by land) and the 21st Century Maritime Silk Road (a “road” by sea). Inspired by the historic trade routes forged between Asia and Europe and that once bustled with traders swapping silk, spices, tea, paper, and gunpowder, China is driving a state-planned version around its own vision of China-centered global trade.

The project has gone by many names: Launched as “One Belt, One Road” (OBOR), it’s now referred to as the “Belt and Road Initiative” (BRI). The plan redraws and expands China’s modern land and sea routes through new roads, railways, ports, bridges, power plants and more.

BRI spans some 138 countries, collectively home to 4.6 billion people and $29 trillion in combined GDP, an area the Chinese have loosely divided into six corridors. The biggest is the China-Pakistan Economic Corridor (CPEC), where China has spent an estimated $68 billion to date.

According to the American Enterprise Institute, Pakistan has received the most Chinese construction funds ($31.9 billion) along the BRI so far, followed by Nigeria and Bangladesh, but China is also investing heavily in more developed economies like Singapore ($24.3 billion), Malaysia and Russia. Construction projects have focused mostly on the power, transport and property sectors.

BRI Spending FN

$1 Trillion Price Tag

The World Bank estimates investment in BRI totals $575 billion so far. Firms like PWC and Morgan Stanley estimate the final cost at around $1 trillion over the next 10 years. To put that number in perspective, the U.S. spent just $13.2 billion ($135 billion in today’s dollars) to help rebuild western Europe after World War II under the 1948 Marshall Plan.

The $1 trillion price tag is just a drop in the bucket compared to the overall infrastructure needs of the region. The Asian Development Bank estimates that Developing Asia will need to invest $1.7 trillion a year in infrastructure to maintain its growth, respond to climate change and eradicate poverty. This adds up to over $26 trillion in total investment needed by 2030.

$26 trillion needed in infrastructure

Many participating BRI economies are in desperate need of infrastructure to expand trade. Trade in BRI corridor economies is 30 percent below its potential, and FDI is 70 percent below potential, according to a recent World Bank report. The BRI has the potential to increase trade, encourage foreign investment and reduce poverty by lowering trade costs. If fully implemented, the World Bank says it could end up increasing global trade between 1.7 and 6.2 percent. But improvements need to be implemented to make this a reality.

Opportunity Costs

For BRI to live up to its potential, the World Bank says China and participating countries must work to deepen policy reforms like increasing transparency, improving debt sustainability, and mitigating environmental, social and corruption risks along the belt and road.

Large infrastructure projects are notoriously difficult to execute. But risks are heightened along the BRI, where limited transparency along with weak economic fundamentals and governance make debt sustainability a real concern. The World Bank estimates 12 of the 43 BRI corridor economies are at risk for deterioration in their debt sustainability outlooks.

China has been criticized for using “debt-trap diplomacy” along the BRI to take advantage of developing countries unable to repay large debts. One frequently cited example is Sri Lanka’s Hambantota Port, which was handed over to a Chinese state-owned company in 2017 after the Sri Lankan government was unable to pay its bill for the Chinese-built port. China now holds a 99-year lease on the strategic port.

Some countries have been able to successfully renegotiate their BRI debt with Chinese banks. Malaysia recently refinanced its East Coast Rail Link project from over $15 billion to $10.7 billion after Malaysian Prime Minister Mahathir Mohamad initially cancelled $22 billion worth of BRI projects. Myanmar scaled back a major port project from $7.3 billion to $1.3 billion in 2018.

In a study of 40 cases of China’s external debt renegotiations with 28 different countries, research firm Rhodium Group found that asset seizures were rare and debt renegotiations in the form of write-offs, deferral and refinancing were far more common.

Rebranding the Belt and Road

Facing growing criticism abroad, BRI leaders announced at the second major BRI forum held in Beijing in April 2019 that the project would be getting a facelift. The joint statement says BRI investments would focus on “high-quality” cooperation, green development, and debt sustainability moving forward.

China’s Ministry of Finance also released a debt sustainability framework (DSF) for the BRI. The Chinese DSF closely mirrors the World Bank-IMF DSF, which has been used for over 20 years as a framework to guide countries and investors on how best to finance development needs while avoiding potential build up of excessive debt. The World Bank-IMF DSF requires regular debt sustainability analyses (DSAs) measuring a country’s projected debt burden, vulnerability to economic and policy shocks, and assessing the risk of debt distress.

While the introduction of the Chinese DSF is a welcome step toward improving debt sustainability along the BRI, there are still outstanding questions about how China will actually implement it. For example, Chinese officials have not yet indicated whether the DSF will be binding, or how transparent the DSF process will be.

All Roads Lead Back to Beijing

There’s plenty of trade news to vying for our attention nowadays. But China’s Belt and Road Initiative should not get lost in the shuffle. Beyond building roads and bridges in developing countries, the BRI also has serious implications for trade in areas like 5G technology, arctic trade and even space travel.

The U.S. response to the BRI has varied. The Obama administration followed a “Pivot to Asia” approach, negotiating the Trans-Pacific Partnership (TPP), a mega-trade deal excluding China. President Trump scrapped the TPP days after coming to office. His administration has since passed the BUILD Act which authorizes the U.S. government to invest up to $60 billion in developing countries across Asia and Africa.

But the United States’ muted response may be too little too late. With every new BRI project, China is physically laying the groundwork for new trade routes across the region. If successful, BRI means all roads will lead back to Beijing.

_________________________________________________________________

Lauren Kyger

Lauren Kyger served as Associate Editor for TradeVistas. A former Research Associate at the Hinrich Foundation, Lauren is also a Hinrich Foundation Global Trade Leader Scholar alumna. She recently joined the National Committee on U.S.-China Relations as digital content manager.

This article originally appeared on TradeVistas.org. Republished with permission.
salmon
Archives, EU Trade, Global Trade Daily

Smoked Salmon Market in the EU Reached $4.2B and Is Set To Expand Further

Leave a comment

IndexBox has just published a new report: ‘EU – Smoked Pacific, Atlantic And Danube Salmon – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

The revenue of the smoked salmon market in the European Union amounted to $4.2B in 2018, remaining relatively unchanged 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 +2.0% from 2007 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being recorded in certain years. Over the period under review, the smoked salmon market reached its maximum level in 2018 and is likely to continue its growth in the near future.

Consumption By Country in the EU

The countries with the highest volumes of smoked salmon consumption in 2018 were Germany (40K tonnes), the UK (22K tonnes) and France (18K tonnes), together comprising 39% of total consumption.

From 2007 to 2018, the most notable rate of growth in terms of smoked salmon consumption, amongst the main consuming countries, was attained by the UK, while smoked salmon consumption for the other leaders experienced more modest paces of growth.

In value terms, France ($694M), Germany ($661M) and the UK ($637M) were the countries with the highest levels of market value in 2018, with a combined 48% share of the total market.

The countries with the highest levels of smoked salmon per capita consumption in 2018 were Denmark (1,303 kg per 1000 persons), Belgium (745 kg per 1000 persons) and the Netherlands (594 kg per 1000 persons).

Market Forecast 2019-2025 in the EU

Driven by rising demand for smoked salmon in the European Union, the market is expected to continue an upward consumption trend over the next seven-year period. The performance of the market is forecast to increase moderately, with an anticipated CAGR of +1.5% for the period from 2018 to 2025, which is projected to bring the market volume to 232K tonnes by the end of 2025.

Production in the EU

In 2018, approx. 223K tonnes of smoked pacific, atlantic and danube salmon were produced in the European Union; approximately mirroring the previous year. Overall, smoked salmon production continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2013 with an increase of 7% y-o-y.

Production By Country in the EU

Poland (57K tonnes) constituted the country with the largest volume of smoked salmon production, comprising approx. 26% of total volume. Moreover, smoked salmon production in Poland exceeded the figures recorded by the second-largest producer, the UK (23K tonnes), twofold. The third position in this ranking was occupied by Lithuania (19K tonnes), with a 8.4% share.

In Poland, smoked salmon production expanded at an average annual rate of +1.5% over the period from 2007-2018. In the other countries, the average annual rates were as follows: the UK (+5.9% per year) and Lithuania (+8.7% per year).

Exports in the EU

In 2018, approx. 110K tonnes of smoked pacific, atlantic and danube salmon were exported in the European Union; surging by 6.2% against the previous year. The total exports indicated resilient growth from 2007 to 2018: its volume increased at an average annual rate of +5.7% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Over the period under review, smoked salmon exports reached their peak figure at 111K tonnes in 2016; however, from 2017 to 2018, exports failed to regain their momentum. In value terms, smoked salmon exports amounted to $2B (IndexBox estimates) in 2018.

Exports by Country

Poland was the major exporter of smoked pacific, atlantic and danube salmon exported in the European Union, with the volume of exports accounting for 46K tonnes, which was approx. 42% of total exports in 2018. Lithuania (17,147 tonnes) held a 16% share (based on tonnes) of total exports, which put it in second place, followed by Germany (12%), Denmark (7%), the Netherlands (4.8%) and the UK (4.6%). France (4,161 tonnes) followed a long way behind the leaders.

From 2007 to 2018, average annual rates of growth with regard to smoked salmon exports from Poland stood at +6.5%. At the same time, Lithuania (+10.2%), the Netherlands (+9.0%), Germany (+6.0%), the UK (+1.6%) and France (+1.4%) displayed positive paces of growth. Moreover, Lithuania emerged as the fastest-growing exporter exported in the European Union, with a CAGR of +10.2% from 2007-2018. Denmark experienced a relatively flat trend pattern.

In value terms, Poland ($800M) remains the largest smoked salmon supplier in the European Union, comprising 41% of total smoked salmon exports. The second position in the ranking was occupied by Lithuania ($297M), with a 15% share of total exports. It was followed by Germany, with a 13% share.

Export Prices by Country

In 2018, the smoked salmon export price in the European Union amounted to $17,657 per tonne, standing approx. at the previous year. Over the period from 2007 to 2018, it increased at an average annual rate of +1.5%. The growth pace was the most rapid in 2017 when the export price increased by 18% year-to-year. In that year, the export prices for smoked pacific, atlantic and danube salmon attained their peak level of $17,917 per tonne, and then declined slightly in the following year.

Average prices varied somewhat amongst the major exporting countries. In 2018, major exporting countries recorded the following prices: in the Netherlands ($19,500 per tonne) and Denmark ($18,414 per tonne), while the UK ($13,242 per tonne) and Lithuania ($17,300 per tonne) were amongst the lowest.

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

Imports in the EU

In 2018, approx. 96K tonnes of smoked pacific, atlantic and danube salmon were imported in the European Union; remaining constant against the previous year. The total imports indicated a remarkable increase from 2007 to 2018: its volume increased at an average annual rate of +7.3% over the last eleven years. The volume of imports peaked at 100K tonnes in 2016; however, from 2017 to 2018, imports remained at a lower figure. In value terms, smoked salmon imports stood at $1.6B (IndexBox estimates) in 2018.

Imports by Country

Germany was the largest importer of smoked pacific, atlantic and danube salmon imported in the European Union, with the volume of imports resulting at 38K tonnes, which was near 40% of total imports in 2018. It was distantly followed by Italy (17K tonnes), France (9.5K tonnes) and Belgium (6.9K tonnes), together creating a 35% share of total imports. The following importers – the UK (4,228 tonnes), Spain (3,752 tonnes), the Netherlands (3,362 tonnes), Austria (2,826 tonnes), Denmark (2,183 tonnes), Sweden (1,724 tonnes) and Poland (1,646 tonnes) – together made up 21% of total imports.

From 2007 to 2018, average annual rates of growth with regard to smoked salmon imports into Germany stood at +7.0%. At the same time, Poland (+20.4%), the UK (+19.8%), Spain (+13.8%), Sweden (+8.8%), France (+7.9%), Italy (+7.5%), the Netherlands (+7.0%), Denmark (+4.9%), Belgium (+3.5%) and Austria (+3.5%) displayed positive paces of growth.

In value terms, Germany ($644M) constitutes the largest market for imported smoked pacific, atlantic and danube salmon in the European Union, comprising 39% of total smoked salmon imports. The second position in the ranking was occupied by Italy ($294M), with a 18% share of total imports. It was followed by France, with a 11% share.

Import Prices by Country

In 2018, the smoked salmon import price in the European Union amounted to $17,170 per tonne, rising by 3.3% against the previous year. Over the last eleven years, it increased at an average annual rate of +1.6%.

Prices varied noticeably by the country of destination; the country with the highest price was Austria ($21,395 per tonne), while Spain ($11,716 per tonne) was amongst the lowest.

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

Source: IndexBox AI Platform

rule of law
Archives, Global Trade Daily, Stories

Rule of Law is the Bedrock of Trade Agreements

Leave a comment

Trade agreements promote rule of law

One could argue that the fundamental goal of any trade agreement is to promote and undergird government adherence to rule of law, which in turn enables private economic activity to thrive. When coupled with commitments to market access, individuals and companies are free to do business anywhere in the world.

Trade agreements such as the newly congressionally approved U.S.-Mexico-Canada Agreement contain provisions designed to directly combat corruption and promote good regulatory practices. They also contain myriad requirements that support best administrative practices including publishing changes to regulations, allowing for public comment, and adhering to transparent processes for government tenders, for example.

What is rule of law where trade is concerned?

No country gets it perfectly right. Supporting rule of law requires vigilance, upkeep and continual improvement.

Impartial review and scrutiny can be a powerful incentive for self-reflection. In 2013, the U.S. Chamber of Commerce launched an effort to measure the qualities that companies look for “to make good investment and operating decisions..in any given market.”

Its resulting Global Rule of Law and Business Dashboard identified five broad factors to assess rule of law: transparency, predictability, stability, accountability and due process. Are the laws and regulations applied to businesses operating in the market readily accessible, easily understood, and applied in a logical and consistent manner? Do governing institutions operate consistently across administrations or are decisions arbitrary and easily reversed? Can investors be confident that the law will be upheld and applied without discrimination? Does the judicial system allow for disputes to be resolved through fair, transparent, and pre-determined processes?

That’s so “meta”

The Chamber didn’t recreate the analytical wheel – it developed a “meta measure” of rule of law for business by combining underlying indicators from several established indices.

The list includes the World Economic Forum’s annual Global Competitiveness Report, the World Justice Project’s Rule of Law Index, Transparency International’s Global Corruption Barometer, the Heritage Foundation’s Index of Economic Freedom, and several World Bank survey and index products including the Doing Business reports that have been long used by governments as roadmaps for reforms. By pulling relevant pieces of these indices, the Chamber computes a composite score to rank 90 markets.

Sunshine is the best disinfectant

Rating and publishing information about the operating conditions in the marketplace can be one of the best ways to shine light on corruption and poor governance, sometimes prompting a healthy competition among governments to show improvements that will attract more businesses.

Increasing all forms of private investment, including foreign direct investment, is critical to sustaining economic growth for most countries. Over the last few years, however, multinational companies have been reducing their foreign direct investments. In 2018, FDI flows dropped 19 percent from to $1.47 trillion to $1.2 trillion.

Companies consider many criteria when evaluating where to do business. Respect for rule of law is often a decisive factor over whether companies can or will participate in an overseas market. Without sufficient rule of the law, the risks are too great and the return on investment jeopardized. Having a high degree of confidence in rule of law is clearly correlated with where FDI flows. Other than the large emerging markets of China, Brazil, Russia, Mexico and India, the top recipients of net inflows of FDI between 2000 and 2017 are the same countries that ranked highly on the Global Rule of Law and Business Dashboard.

Room for improvement

Unsurprisingly, Singapore, Sweden, New Zealand, Netherlands, Australia, Germany, United Kingdom, the United States, Japan and Canada comprise the economies held the top ten slots on the Rule of Law and Business Dashboard released in July 2019. (China fell from 19th in 2017 to 26th in 2019.)

Bottom 10 smaller framed

And, unsurprisingly, countries beset by political instability and civil strife remain stuck at the bottom of the index. Here in the Americas neighborhood, Guatemala and Honduras, Nicaragua, El Salvador and Mexico are all perilously close to bottom of the list, something we should be concerned with and engage these countries on as important trading partners.

Importantly, the Chamber report points out that, “income is not necessarily a predetermining factor in terms of the strength of the rule of law and business environment.” Senegal and Kenya, with a per capita GDP of just around $3,458 and $3,292 respectively, score similarly to South Africa with its per capita income that is almost four times higher.

In producing the study, the Chamber seeks to induce positive changes across the board over the long run. Although the Global Rule of Law and Business Dashboard hasn’t been conducted long enough with a full complement of countries to tout a concrete impact just yet, the Chamber reports that the aggregate score does seem to be moving in right direction, increasing from 51.63 percent in 2015 to 56.77 percent in 2019. Even the United States pulled its score up more than four percentage points from 2017.

The best kind of competition

Benchmarking is a valuable approach, not merely to expose flaws but as a way for governments to identify and adopt reforms yielding proven results for other countries. Governments can even market an improved ranking to potential investors.

While we often measure the outcomes of trade agreements by the volume of trade, the biggest victory may be the least appreciated: the subtle but important improvements to the way our trading partners respect the rule of law as applied to their own citizenry – and to ours.

__________________________________________________________________

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

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

 

cheese
Archives, Global Trade Daily, Imports/Exports

European Fresh Cheese Market – Italy’s Output Doubled Over the Last Five Years

Leave a comment

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

The revenue of the fresh cheese market in the European Union amounted to $12.6B in 2018, remaining stable 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). Overall, fresh cheese consumption continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2014 with an increase of 15% against the previous year. Over the period under review, the fresh cheese market attained its maximum level at $14B in 2008; however, from 2009 to 2018, consumption remained at a lower figure.

Consumption By Country in the EU

The countries with the highest volumes of fresh cheese consumption in 2018 were Italy (967K tonnes), France (585K tonnes) and Germany (548K tonnes), together accounting for 52% of total consumption. These countries were followed by the UK, Poland, Spain, Belgium, the Netherlands, the Czech Republic and Sweden, which together accounted for a further 37%.

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

In value terms, Italy ($3.8B) led the market, alone. The second position in the ranking was occupied by the UK ($1.7B). It was followed by France.

The countries with the highest levels of fresh cheese per capita consumption in 2018 were Italy (16,290 kg per 1000 persons), Belgium (13,307 kg per 1000 persons) and Poland (10,450 kg per 1000 persons).

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

Market Forecast 2019-2025 in the EU

Driven by increasing demand for fresh cheese in the European Union, the market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to decelerate, expanding with an anticipated CAGR of +0.7% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 4.3M tonnes by the end of 2025.

Production in the EU

In 2018, approx. 4.4M tonnes of fresh cheese were produced in the European Union; going up by 1.6% against the previous year. The total output volume increased at an average annual rate of +2.1% over the period from 2007 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2017 when production volume increased by 11% y-o-y. Over the period under review, fresh cheese production attained its peak figure volume in 2018 and is likely to see steady growth in the immediate term.

In value terms, fresh cheese production amounted to $11.2B in 2018 estimated in export prices. Over the period under review, fresh cheese production continues to indicate a mild shrinkage. The pace of growth was the most pronounced in 2014 with an increase of 15% y-o-y. Over the period under review, fresh cheese production attained its peak figure level at $14.3B in 2008; however, from 2009 to 2018, production remained at a lower figure.

Production By Country in the EU

The countries with the highest volumes of fresh cheese production in 2018 were Germany (928K tonnes), Italy (927K tonnes) and France (688K tonnes), with a combined 58% share of total production. Poland, the UK, Denmark, Belgium, Spain and Lithuania lagged somewhat behind, together accounting for a further 32%.

From 2007 to 2018, the most notable rate of growth in terms of fresh cheese production, amongst the main producing countries, was attained by Belgium, while the other leaders experienced more modest paces of growth.

Exports in the EU

In 2018, the fresh cheese exports in the European Union totaled 1.6M tonnes, growing by 2.1% against the previous year. The total exports indicated resilient growth from 2007 to 2018: its volume increased at an average annual rate of +6.1% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, fresh cheese exports increased by +91.0% against 2007 indices. The most prominent rate of growth was recorded in 2011 with an increase of 11% against the previous year. Over the period under review, fresh cheese exports attained their maximum in 2018 and are expected to retain its growth in the immediate term.

In value terms, fresh cheese exports amounted to $5.6B (IndexBox estimates) in 2018. The total exports indicated remarkable growth from 2007 to 2018: its value increased at an average annual rate of +6.1% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, fresh cheese exports increased by +30.3% against 2015 indices. The most prominent rate of growth was recorded in 2011 when exports increased by 23% y-o-y. Over the period under review, fresh cheese exports reached their peak figure in 2018 and are likely to see steady growth in the immediate term.

Exports by Country

Germany was the largest exporting country with an export of about 516K tonnes, which resulted at 32% of total exports. It was distantly followed by France (221K tonnes), Denmark (183K tonnes), Italy (181K tonnes), Poland (96K tonnes) and Belgium (86K tonnes), together achieving a 48% share of total exports. The UK (67K tonnes) followed a long way behind the leaders.

Exports from Germany increased at an average annual rate of +5.5% from 2007 to 2018. At the same time, Belgium (+15.3%), Poland (+7.9%), Italy (+6.9%), Denmark (+6.4%), the UK (+5.9%) and France (+2.2%) displayed positive paces of growth. Moreover, Belgium emerged as the fastest-growing exporter in the European Union, with a CAGR of +15.3% from 2007-2018. From 2007 to 2018, the share of Germany, Italy, Denmark, Belgium, Poland, France and the UK increased by +14%, +5.9%, +5.7%, +4.3%, +3.4%, +3% and +2% percentage points, while the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, the largest fresh cheese markets in the European Union were Germany ($1.6B), Italy ($964M) and Denmark ($638M), with a combined 58% share of total exports. France, Belgium, Poland and the UK lagged somewhat behind, together comprising a further 25%.

In terms of the main exporting countries, Belgium experienced 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 fresh cheese export price in the European Union stood at $3,504 per tonne in 2018, picking up by 2.4% against the previous year. In general, the fresh cheese export price, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2008 an increase of 18% y-o-y. In that year, the export prices for fresh cheese reached their peak level of $4,179 per tonne. From 2009 to 2018, the growth in terms of the export prices for fresh cheese failed to regain its momentum.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was Italy ($5,330 per tonne), while France ($2,660 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Poland, while the other leaders experienced mixed trends in the export price figures.

Imports in the EU

In 2018, the amount of fresh cheese imported in the European Union stood at 1.3M tonnes, increasing by 5.4% against the previous year. The total imports indicated remarkable growth from 2007 to 2018: its volume increased at an average annual rate of +5.3% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, fresh cheese imports increased by +76.1% against 2007 indices. The growth pace was the most rapid in 2011 with an increase of 10% against the previous year. The volume of imports peaked in 2018 and are likely to see steady growth in the immediate term.

In value terms, fresh cheese imports amounted to $4.4B (IndexBox estimates) in 2018. The total imports indicated a strong increase from 2007 to 2018: its value increased at an average annual rate of +5.3% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, fresh cheese imports increased by +29.3% against 2016 indices. The pace of growth appeared the most rapid in 2011 with an increase of 21% year-to-year. The level of imports peaked in 2018 and are likely to see steady growth in the near future.

Imports by Country

The countries with the highest levels of fresh cheese imports in 2018 were Italy (221K tonnes), the UK (189K tonnes), Germany (137K tonnes), the Netherlands (127K tonnes), France (118K tonnes), Spain (95K tonnes) and Belgium (77K tonnes), together resulting at 74% of total import. Austria (39K tonnes), Poland (33K tonnes), Romania (33K tonnes), the Czech Republic (26K tonnes) and Ireland (25K 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 Ireland, while the other leaders experienced more modest paces of growth.

In value terms, the largest fresh cheese importing markets in the European Union were Italy ($778M), the UK ($573M) and Germany ($507M), with a combined 42% share of total imports. France, the Netherlands, Spain, Belgium, Austria, Poland, Romania, Ireland and the Czech Republic lagged somewhat behind, together comprising a further 44%.

In terms of the main importing countries, Poland experienced the highest rates of growth with regard to imports, over the last eleven years, while the other leaders experienced more modest paces of growth.

Import Prices by Country

In 2018, the fresh cheese import price in the European Union amounted to $3,409 per tonne, rising by 3.7% against the previous year. Overall, the fresh cheese import price continues to indicate a relatively flat trend pattern. The pace of growth appeared the most rapid in 2008 an increase of 17% against the previous year. In that year, the import prices for fresh cheese attained their peak level of $3,996 per tonne. From 2009 to 2018, the growth in terms of the import prices for fresh cheese failed to regain its momentum.

Average prices varied somewhat amongst the major importing countries. In 2018, major importing countries recorded the following prices: in France ($3,885 per tonne) and Austria ($3,750 per tonne), while the Netherlands ($2,750 per tonne) and the UK ($3,029 per tonne) were amongst the lowest.

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

Source: IndexBox AI Platform

pulp
Archives, Global Trade Daily, News

U.S. Pulp Market – Exports to China Fell 9.4% in 2018, U.S Companies Lost $78M

Leave a comment

IndexBox has just published a new report: ‘U.S. Pulp Market. Analysis And Forecast to 2025’. Here is a summary of the report’s key findings.

The revenue of the pulp market in the U.S. amounted to $4.8B in 2018, going up by 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 +2.5% from 2013 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations throughout the analyzed period. The pace of growth was the most pronounced in 2014 with an increase of 19% against the previous year. In that year, the pulp market attained its peak level of $5.1B. From 2015 to 2018, the growth of the pulp market remained at a lower figure.

Pulp Production in the U.S.

In value terms, pulp production totaled $7.2B in 2018. Overall, pulp production, however, continues to indicate a relatively flat trend pattern. The growth pace was the most rapid in 2014 with an increase of 8.9% year-to-year. In that year, pulp production reached its peak level of $7.7B. From 2015 to 2018, pulp production growth failed to regain its momentum.

Exports from the U.S.

In 2018, approx. 6M tonnes of pulp were exported from the U.S.; going down by -4.7% against the previous year. Over the period under review, pulp exports continue to indicate a mild shrinkage. The growth pace was the most rapid in 2015 with an increase of 3.1% against the previous year. Exports peaked at 6.4M tonnes in 2013; however, from 2014 to 2018, exports remained at a lower figure.

In value terms, pulp exports amounted to $4.5B (IndexBox estimates) in 2018. The total export value increased at an average annual rate of +1.7% from 2013 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being observed over the period under review. The growth pace was the most rapid in 2018 when exports increased by 11% against the previous year. In that year, pulp exports reached their peak and are likely to continue its growth in the immediate term.

Exports by Country

China (1.6M tonnes) was the main destination for pulp exports from the U.S., with a 26% share of total exports. Moreover, pulp exports to China exceeded the volume sent to the second major destination, Japan (479K tonnes), threefold. The third position in this ranking was occupied by Italy (391K tonnes), with a 6.6% share.

From 2013 to 2018, the average annual rate of growth in terms of volume to China stood at -3.2%. Exports to the other major destinations recorded the following average annual rates of exports growth: Japan (+3.1% per year) and Italy (-3.4% per year).

In value terms, China ($1.2B) remains the key foreign market for pulp exports from the U.S., comprising 26% of total pulp exports. The second position in the ranking was occupied by Japan ($410M), with a 9.1% share of total exports. It was followed by Italy, with a 6.3% share.

From 2013 to 2018, the average annual growth rate of value to China amounted to +1.0%. Exports to the other major destinations recorded the following average annual rates of exports growth: Japan (+6.9% per year) and Italy (-1.5% per year).

Export Prices by Country

In 2018, the average pulp export price amounted to $759 per tonne, going up by 16% against the previous year. Over the period from 2013 to 2018, it increased at an average annual rate of +3.1%. The growth pace was the most rapid in 2018 an increase of 16% against the previous year. In that year, the average export prices for pulp reached their peak level and is likely to continue its growth in the immediate term.

Prices varied noticeably by the country of destination; the country with the highest price was Japan ($855 per tonne), while the average price for exports to Germany ($554 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was recorded for supplies to South Korea, while the prices for the other major destinations experienced more modest paces of growth.

Imports into the U.S.

In 2018, the amount of pulp imported into the U.S. totaled 2.5M tonnes, increasing by 4.2% against the previous year. The total import volume increased at an average annual rate of +3.5% from 2013 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being recorded in certain years. The pace of growth appeared the most rapid in 2018 when imports increased by 4.2% year-to-year. In that year, pulp imports reached their peak and are likely to continue its growth in the immediate term.

In value terms, pulp imports totaled $1.5B (IndexBox estimates) in 2018. The total import value increased at an average annual rate of +4.8% over the period from 2013 to 2018; the trend pattern indicated some noticeable fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2018 with an increase of 23% year-to-year. In that year, pulp imports attained their peak and are likely to continue its growth in the immediate term.

Imports by Country

In 2018, Brazil (2.1M tonnes) constituted the largest pulp supplier to the U.S., accounting for a 85% share of total imports. Moreover, pulp imports from Brazil exceeded the figures recorded by the second-largest supplier, Chile (248K tonnes), ninefold.

From 2013 to 2018, the average annual rate of growth in terms of volume from Brazil amounted to +1.7%. The remaining supplying countries recorded the following average annual rates of imports growth: Chile (+20.8% per year) and Sweden (+19.7% per year).

In value terms, Brazil ($1.4B) constituted the largest supplier of pulp to the U.S., comprising 90% of total pulp imports. The second position in the ranking was occupied by Chile ($75M), with a 4.8% share of total imports.

From 2013 to 2018, the average annual growth rate of value from Brazil totaled +4.0%. The remaining supplying countries recorded the following average annual rates of imports growth: Chile (+16.9% per year) and Sweden (+14.9% per year).

Import Prices by Country

The average pulp import price stood at $619 per tonne in 2018, growing by 18% against the previous year. Over the period from 2013 to 2018, it increased at an average annual rate of +1.2%. The pace of growth appeared the most rapid in 2018 an increase of 18% y-o-y. In that year, the average import prices for pulp reached their peak level and is likely to continue its growth in the immediate term.

There were significant differences in the average prices amongst the major supplying countries. In 2018, the country with the highest price was Brazil ($655 per tonne), while the price for Chile ($300 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Brazil, while the prices for the other major suppliers experienced a decline.

Companies Mentioned in the Report

Profile Products, Domtar Industries, Georgia-Pacific Brewton, Woodland Pulp, Cascade Pacific Pulp, Northwest Capital Appreciation, Forest Resolute Products, American Paper Recycling, Cascades Tissue Group-Oregon, A Division of Cascades Holding US, Parsons & Whittemore, St Paper, Alabama River Cellulose, Buckeye Technologies, Brunswick Cellulose, Parsons & Whittemore Enterprises, Fibrek Inc., Port Townsend Holdings Company, Buckeye Mt. Holly, Lest Distributors, Southern Cellulose Products, DOMTAR A.W., Alabama River Group, GP Cellulose, Buckeye Florida Limited Partnership, Pratt Paper (ny), Fibrek Recycling U.S. , Cosmo Specialty Fibers, Ox Paperboard

Source: IndexBox AI Platform

global pepper
Archives, Global Trade Daily, Imports/Exports

Global Pepper Market Is Expected to Reach 840K Tonnes by 2025

Leave a comment

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

The global pepper market revenue in 2018 is estimated at $4.1B, a decrease of -1.7% 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). In general, pepper consumption continues to indicate a strong expansion. The most prominent rate of growth was recorded in 2011 when the market value increased by 26% against the previous year. The global pepper consumption peaked at $4.2B in 2017, and then declined slightly in the following year.

Consumption By Country

The countries with the highest volumes of pepper consumption in 2018 were Viet Nam (166K tonnes), India (86K tonnes) and the U.S. (68K tonnes), with a combined 41% share of global consumption. These countries were followed by Bulgaria, Indonesia, China, Singapore, Malaysia, Sri Lanka, Germany, the United Arab Emirates and the UK, which together accounted for a further 33%.

In value terms, Viet Nam ($904M), India ($506M) and the U.S. ($374M) constituted the countries with the highest levels of market value in 2018, with a combined 43% share of the global market. These countries were followed by Indonesia, Singapore, China, Malaysia, Bulgaria, Sri Lanka, the United Arab Emirates, Germany and the UK, which together accounted for a further 33%.

The countries with the highest levels of pepper per capita consumption in 2018 were Bulgaria (7,641 kg per 1000 persons), Singapore (5,288 kg per 1000 persons) and Viet Nam (1,724 kg per 1000 persons).

Market Forecast 2019-2025

Driven by increasing demand for pepper worldwide, the market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to decelerate, expanding with an anticipated CAGR of +1.2% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 840K tonnes by the end of 2025.

Production 2007-2018

In 2018, the amount of pepper produced worldwide stood at 752K tonnes, jumping by 5.1% against the previous year. In general, the total output indicated a conspicuous expansion from 2007 to 2018: its volume increased at an average annual rate of +3.2% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, pepper production increased by +55.4% against 2012 indices. The pace of growth was the most pronounced in 2016 with an increase of 11% against the previous year. Over the period under review, global pepper production reached its maximum volume in 2018 and is likely to continue its growth in the immediate term. The general positive trend in terms of pepper output was largely conditioned by a tangible increase of the harvested area and a resilient expansion in yield figures.

In value terms, pepper production totaled $3.8B in 2018 estimated in export prices. Over the period under review, pepper production continues to indicate a remarkable increase. The pace of growth appeared the most rapid in 2011 when production volume increased by 47% against the previous year. The global pepper production peaked at $4.6B in 2016; however, from 2017 to 2018, production remained at a lower figure.

Production By Country

The country with the largest volume of pepper production was Viet Nam (273K tonnes), comprising approx. 36% of total production. Moreover, pepper production in Viet Nam exceeded the figures recorded by the world’s second-largest producer, Indonesia (88K tonnes), threefold. The third position in this ranking was occupied by Brazil (80K tonnes), with a 11% share.

In Viet Nam, pepper production expanded at an average annual rate of +8.1% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Indonesia (+0.8% per year) and Brazil (+0.2% per year).

Harvested Area 2007-2018

In 2018, approx. 570K ha of pepper were harvested worldwide; stabilizing at the previous year. Overall, the pepper harvested area, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2009 when harvested area increased by 8% against the previous year. The global pepper harvested area peaked at 622K ha in 2007; however, from 2008 to 2018, harvested area failed to regain its momentum.

Yield 2007-2018

Global average pepper yield amounted to 1.3 tonne per ha in 2018, surging by 4.8% against the previous year. In general, the yield indicated prominent growth from 2007 to 2018: its figure increased at an average annual rate of +4.0% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, pepper yield increased by +53.3% against 2012 indices. The pace of growth appeared the most rapid in 2013 with an increase of 22% y-o-y. Over the period under review, the average pepper yield attained its maximum level in 2018 and is likely to continue its growth in the immediate term.

Exports 2007-2018

Global exports totaled 392K tonnes in 2018, picking up by 6.5% against the previous year. The total export volume increased at an average annual rate of +2.1% from 2007 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being recorded in certain years. The most prominent rate of growth was recorded in 2015 with an increase of 7.9% y-o-y. Over the period under review, global pepper exports attained their maximum at 398K tonnes in 2016; however, from 2017 to 2018, exports stood at a somewhat lower figure.

In value terms, pepper exports stood at $2B (IndexBox estimates) in 2018. Over the period under review, pepper exports continue to indicate strong growth. The growth pace was the most rapid in 2011 with an increase of 43% against the previous year. Over the period under review, global pepper exports reached their peak figure at $3.4B in 2015; however, from 2016 to 2018, exports failed to regain their momentum.

Exports by Country

Viet Nam represented the largest exporter of pepper in the world, with the volume of exports finishing at 142K tonnes, which was approx. 36% of total exports in 2018. It was distantly followed by Brazil (73K tonnes) and Indonesia (36K tonnes), together achieving a 28% share of total exports. India (17K tonnes), Germany (16K tonnes), Sri Lanka (15K tonnes), Malaysia (12K tonnes), Mexico (8.4K tonnes), the Netherlands (7.5K tonnes), France (6.8K tonnes) and the U.S. (6.8K tonnes) took a minor share of total exports.

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

In value terms, Viet Nam ($743M) remains the largest pepper supplier worldwide, comprising 36% of global exports. The second position in the ranking was occupied by Brazil ($243M), with a 12% share of global exports. It was followed by Indonesia, with a 9.9% share.

In Viet Nam, pepper exports increased at an average annual rate of +9.6% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Brazil (+7.3% per year) and Indonesia (+2.9% per year).

Export Prices by Country

In 2018, the average pepper export price amounted to $5,214 per tonne, going down by -14.2% against the previous year. Over the period under review, the pepper export price, however, continues to indicate remarkable growth. The most prominent rate of growth was recorded in 2011 an increase of 51% y-o-y. The global export price peaked at $8,660 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 the Netherlands ($8,605 per tonne), while Mexico ($2,602 per tonne) was amongst the lowest.

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

Imports 2007-2018

Global imports totaled 414K tonnes in 2018, picking up by 8.6% against the previous year. The total import volume increased at an average annual rate of +2.9% over the period from 2007 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being observed in certain years. The most prominent rate of growth was recorded in 2013 when imports increased by 9.8% y-o-y. Over the period under review, global pepper imports attained their maximum in 2018 and are likely to see steady growth in the near future.

In value terms, pepper imports amounted to $2.1B (IndexBox estimates) in 2018. Overall, pepper imports continue to indicate a strong expansion. The pace of growth was the most pronounced in 2011 when imports increased by 41% year-to-year. The global imports peaked at $3.3B in 2015; however, from 2016 to 2018, imports stood at a somewhat lower figure.

Imports by Country

In 2018, the U.S. (75K tonnes), distantly followed by Viet Nam (35K tonnes), Germany (32K tonnes) and India (31K tonnes) were the major importers of pepper, together creating 42% of total imports. The following importers – the United Arab Emirates (16K tonnes), the UK (13K tonnes), France (11K tonnes), the Netherlands (11K tonnes), Spain (10K tonnes), Japan (9.5K tonnes), Pakistan (8.2K tonnes) and Russia (8K tonnes) – together made up 21% of total imports.

Imports into the U.S. increased at an average annual rate of +1.5% from 2007 to 2018. At the same time, Viet Nam (+21.5%), India (+8.8%), the UK (+5.4%), the United Arab Emirates (+3.9%), Spain (+2.9%), Russia (+2.6%) and France (+2.0%) displayed positive paces of growth. Moreover, Viet Nam emerged as the fastest-growing importer in the world, with a CAGR of +21.5% from 2007-2018. Pakistan, Japan and Germany experienced a relatively flat trend pattern. By contrast, the Netherlands (-2.7%) illustrated a downward trend over the same period. From 2007 to 2018, the share of Viet Nam, India and the U.S. increased by +7.5%, +4.5% and +2.7% percentage points, while the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, the U.S. ($391M) constitutes the largest market for imported pepper worldwide, comprising 18% of global imports. The second position in the ranking was occupied by Germany ($188M), with a 8.9% share of global imports. It was followed by India, with a 7.8% share.

In the U.S., pepper imports increased at an average annual rate of +5.5% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Germany (+4.8% per year) and India (+14.1% per year).

Import Prices by Country

In 2018, the average pepper import price amounted to $5,122 per tonne, shrinking by -18.3% against the previous year. In general, the pepper import price, however, continues to indicate noticeable growth. The growth pace was the most rapid in 2011 an increase of 45% against the previous year. Over the period under review, the average import prices for pepper attained their peak figure at $8,550 per tonne in 2015; however, from 2016 to 2018, import prices remained at a lower figure.

Prices varied noticeably by the country of destination; the country with the highest price was the United Arab Emirates ($8,027 per tonne), while Viet Nam ($2,485 per tonne) was amongst the lowest.

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

Source: IndexBox AI Platform

trade
Archives, Global Trade Daily, Imports/Exports

Trade and the Impact on Imports and Exports in 2020

Leave a comment

Significant and sustained increases in the world trade index (an index measuring the number of times the word uncertainty or its variants are mentioned in Economist Intelligence Unit (EIU) reports at a country level) should be a worry for many as “the increase in trade uncertainty observed in the first quarter could be enough to reduce global growth by up to 0.75 percentage points in 2019”[1]

In August, the US Institute for supply management[2] latest report shows a contraction in production, purchasing, and employment indices.

Ahir, H, N Bloom, and D Furceri (2019), “The global economy hit by higher uncertainty”, VoxEU.org. https://voxeu.org/article/trade-uncertainty-rising-and-can-harm-global-economy

 

Uncertainty generated from Brexit, the US-China trade war, Japan – South Korea trade wars, and general discontentment with global trend towards widening income inequality is creating a toxic mix for politicians to deal with. The irony is the conventional approach of blaming your trading partners for your problems is only likely to exacerbate a general lack of confidence and increase further uncertainty.

The current round of the G7 summit in Biarritz concluded with support “to overhaul the WTO to improve effectiveness with regard to intellectual property protection, to settle disputes more swiftly and to eliminate unfair trade practices.” In essence, it’s signaling a need to strengthen the capabilities of the WTO to act faster and more decisively in resolving disputes that are even more political than structural in nature, requiring a more multi-faceted engagement approach. Whilst this may help in the long-run, in reality, companies will have to contend with uncertainty in global trade for some time to come as well as the impacts on the real economy from these disputes.

And all of this is happening as IMO 2020 approaches, the January 1, 2020, date by which the International Maritime Organization mandates a switch to lower sulfur fuels in order to achieve an 80% reduction in sulfur emissions leading to significant cost increases in the shipping goods via ocean freight (initial estimates between 180USD – 420 USD per TEU dependent on routing, base fuel costs, carrier).

So given the significant uncertainty around global trade agreements, the increasing use of trade as a political football, the increasing costs to trade and the shortening of product lifecycles as customers want faster, newer more differentiated offerings. Is it still worth it?

Of course this is very much dependent on what industry you are in. Whether you’re a global manufacturer or a wholesaler sourcing goods, your perspectives may be different based on investments made, sensitivity to current trade/tariff measures, customer demands, your markets, and the degree to which you are exposed to political debate and targeting.

However, I would offer that the benefits of specialization, economies of scale and unique factors of production that have underpinned global trade still exist as Adam Smith put it in 1776:

“By means of glasses, hotbeds, and hot walls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland?”[1]

Today this simple analogy still holds true in skills, competences, capabilities, and access to markets and insights so that over time the expectation is that trade will prevail.

While the recent outlook has been gloomy, opportunities for 2020 include a resolution to a number of ongoing disputes and a final settlement on Brexit (we hope). Additionally, the maturation in technologies such as blockchain, process automation, forecasting and demand management solutions can also offset costs associated with IMO and support greater agility in the uncertain supply-chain world that we currently live in.

Indeed, if 2019 was the year of trade uncertainty, 2020 could be a restorative year in our ability to execute global trade.

Partnering with an experienced supply chain leader will be essential to minimizing cost increases while ensuring the efficient flow of your company’s goods and services.

_____________________________________________________

[1] World Economic Forum:https://www.weforum.org/agenda/2019/07/how-trade-uncertainty-is-impacting-the-global-economy/

[2]https://www.instituteforsupplymanagement.org/ismreport/mfgrob.cfm?SSO=1

[3]Adam Smith: Wealth of nations 1776

Neil Wheeldon is the Vice Presidents Solutions, BDP International.

China
Archives, Commentary, Global Trade Daily

Amid US-China Trade Battle, Here is how America can Remain the World’s Strongest Economy

Leave a comment

The Communist Party of China has laid plans for a century of unlimited Chinese power and, with it, the end of the American era. However, we still can — and must — bet big on the future of American economic power. The best antidote to China’s ambitions is to ensure America’s continued economic and technological preeminence.

Far too many strategists, investors, and policymakers accept China’s economic preeminence as an inevitable outcome, given the country’s enormous population and potential for growth.

As the business community looks toward a “partial trade deal” to unwind tariffs and reduce trade hostility between the world’s two largest economies, we must understand that non-negotiable problems in U.S.-China relations will accelerate if China closes the gap with the United States in terms of economic and technological power. With the right strategic mindset and a focus on domestic productivity, America can not only win the economic and technological contest but also turn the tide in the U.S.-China competition for global power.

China’s bid for global power is built on its economic ascendency, which is based on engagement with the United States and our allies. Chinese companies are capturing global markets and climbing the ranks of the Fortune Global 500 by taking advantage of stolen or coerced foreign intellectual property and state-orchestrated market distortions. The Communist Party is converting China’s technological power into a dystopian surveillance state and a military that is focusing its capabilities on the United States and our partners.

Chairman Xi Jinping calls regularly for Chinese forces to “prepare to fight and win wars,” while converting civilian industrial technology into military power through “civil-military fusion.” Meanwhile, China’s current account surplus is employed for global influence, buying “strategic partners” with intercontinental projects like the “Belt and Road Initiative” and state-backed acquisitions of foreign firms.

U.S.-China competition is likely to be the hardest geopolitical contest in generations — but it is a contest that the United States can win if we focus on the right objectives.

The People’s Republic of China is a challenge to America’s values and concept of world order. U.S.-China competition is likely to be the hardest geopolitical contest in generations — but it is a contest that the United States can win if we focus on the right objectives. So, where do we go from here?

Focus on GDP

The first step must be a focus on accelerating U.S. productivity growth. U.S. productivity growth need only increase from 1.3 percent a year to 2.5 percent for U.S. GDP to remain ahead of China’s for the entirety of the 2020s, the decade in which many expect China’s economy to surpass America’s.

By 2030, economic leadership will be easier to maintain as China’s demographic problems set in. Such a productivity increase is realistic, given that productivity growth from 1995 to 2008 was higher than 2.5 percent.

Protect America’s edge

The second step is to preserve our edge in advanced and emerging technologies. America must remain ahead of Communist China, not only in hard sciences, but also in the actual production of advanced goods and services.

If America competes against China only through soybean and oil production, we will fail to counter China in advanced industries such as robotics, semiconductors, aerospace and biopharmaceuticals. China is gaining in these and other technologies and industries and could eventually have a decisive advantage over the United States.

As Alexander Hamilton warned 200 years ago, America can’t be great if it is a “hewer of wood and drawer of water.” We must out-invent and outproduce China in advanced technology and industrial goods.

Maintaining U.S. advantage will require collaboration between government and corporations towards national goals in science, engineering and industry. This approach has long served our nation in times of international struggle and led to lasting commercial and national security breakthroughs.

New and Big

In order to attain these goals, Washington must think new and big. New in the sense of a bipartisan consensus that productivity growth and technological competitiveness must be national priorities.

Big in the sense of big and bold proposals. Here are three: First, implement a robust research, development and investment tax credit that will stimulate innovation and investment on American soil. Second, establish a series of well-funded “moonshot” goals to ensure American leadership in emerging industries such as advanced robotics and quantum computing. Third, develop a national productivity strategy that will take the best ideas of government and industry and focus on building the next $10 trillion in annual U.S. GDP by 2030.

Half a century ago, under the leadership of President John F. Kennedy, America faced a Communist superpower that believed that it would “bury” the United States, much as Chinese Communist leaders today believe that the 21st century belongs to China. Kennedy reminded us then that America would “bear any burden” and “meet any hardship” to prevail in that consequential time.

In the end, it was the power of the American economy, the power of American technology, and the power of American industry that brought victory over our ambitious foe. We must unleash these forces once again, wrestle them into national service, and build on toward the greater good — an American era that can and must prevail.

__________________________________________________________________

Dr. Jonathan D.T. Ward is the author of “China’s Vision of Victory” and founder of Atlas Organization, a strategy consultancy on US-China global competition. Follow him on Twitter @jonathandtward. 

Dr. Robert D. Atkinson is the president of the Information Technology and Innovation Foundation and the author of “Big is Beautiful: Debunking the Mythology of Small Business.” Follow him on Twitter @robatkinsonITIF..

This article originally appeared on FoxBusiness.com. Republished with permission. 

phase one
Archives, Global Trade Daily, International Trade

The Phase One Deal: How We Got Here And What Is Next

Leave a comment

President Trump announced that the United States and China had reached a partial “Phase One” trade deal in mid-October, signaling a pause in the trade tensions that have steadily grown over the past two and half years.  While the precise goals of the President’s trade action against China have always been vague, there was an unquestionable desire to change certain structural issues of the Chinese economy, particularly with the country’s intellectual property and forced technology practices.  

To put the proposed Phase One deal in its proper context, this article breaks down (1) the various stages of escalation since President Trump took office, (2) what’s known about the contents of agreement, and (3) the potential risks that could derail the deal from being signed.  

The Escalation of the Trade War

The President’s most high-profile actions against China have been his use of long-thought-defunct trade authority, Section 301 of the Trade Act of 1974 (“Section 301”).  Section 301 grants the President the authority to impose tariffs on countries if it determines that the acts, policies, or practices of a country are unjustifiable and burden or restrict U.S. commerce.  

Following a lengthy investigation, the Office of the U.S. Trade Representative (“USTR”) officially determined in March 2018 that China’s policies result in harm to the U.S. economy.  Simultaneously, President Trump signed a Presidential Memorandum outlining a series of remedies that his Administration would take in response to these findings, most notably the imposition of tariffs.  

President Trump’s Section 301 tariffs currently cover most products imported from China, after having been rolled out in four different lists:  

-List 1 of the Section 301 tariffs went into effect July 2018 and imposes a 25 percent tariff on $34 billion worth of goods from China.  

-List 2 went into effect August 2018 and imposes a 25 percent tariff on $16 billion worth of goods.  

-Following China’s retaliatory tariffs on Lists 1 and 2, the United States announced List 3, which began imposing a 10 percent tariff on $200 billion of Chinese products in September 2018.  The List 3 tariffs were increased to 25 percent after negotiations between the two countries fell apart.

-List 4 could hit almost $300 billion more of Chinese products.  Part of the list (“List 4a”) went into effect on September 1 and imposes 15 percent tariffs on $112 billion of Chinese products.  The U.S. is scheduled to impose 15 percent tariffs on the remaining $160 billion of the list (“List 4b”) starting December 15.  

The Trump Administration has taken aggressive action to increase pressure on China that goes well beyond the Section 301 tariffs.  Since President Trump took office, he has targeted China’s steel and aluminum industries through global tariffs on these products. He has (at least temporarily) sanctioned major Chinese tech firms or restricted their ability to do business with the United States.  He has sanctioned Chinese individuals and entities connected to North Korea and others related to the treatment of the Uighurs in western China. He signed into law a major expansion of authority for the Committee on Foreign Investment in the United States (“CFIUS”), which has immediate and future implications for Chinese investment in the United States. 

Additionally, the Administration has moved closer to Taiwan. President Trump has authorized significant military sales to Taiwan, and as President-elect, he took a call from Taiwan’s leader Tsai Ing-wen, the first such call by a U.S. President or President-elect since the 1970s. The Administration has either directly or indirectly made clear that these restrictions, sanctions, and geopolitical relationships can be used as points of leverage in the trade negotiations.  

The Phase One Deal

Many details about what is included in the Phase One deal remain unknown.  In announcing the deal, President Trump said “We have a great deal. We’re papering it now.  Over the next three or four or five weeks, hopefully, it’ll get finished. A tremendous benefit to our farmers, technology, and many other things — the banking industry, financial services.”  As the two sides “paper” the agreement into finalized text, what is known about the deal has come largely from statements made by both sides. We know that as part of the deal, the United States will not pursue plans to increase the List 1-3 tariffs from 25 percent to 30 percent. We also know China plans to make large purchases of U.S. agricultural products.  

There are reports the Phase One deal could also delay or cancel the planned List 4b tariffs. Other reports suggest that China is seeking additional eliminations or reductions of the Section 301 tariffs.  

As for the structural changes to the Chinese economy sought by the Trump Administration, it seems as though they could be mentioned in the Phase One deal, but the real work will be addressed in subsequent phases.  

What Comes Next

The stars were aligning for President Trump and President Xi to sign the Phase One deal at the Asia-Pacific Economic Cooperation (“APEC”) meetings in Santiago, Chile this week.  Unfortunately, the APEC meetings were unexpectedly cancelled due to protests in the country, highlighting that a few weeks can feel like an eternity for sensitive trade talks.  

Assuming the U.S. and China can find another location, there are still risks out there that could prevent the deal’s signing.  

One big risk to the deal is the events unfolding in Hong Kong. The Trump Administration has been notably quiet on the protests, outside of President Trump expressing his faith in President Xi to satisfactorily resolve the situation.  The strongest statement from the Administration came from Vice President Pence, who recently said, “[T]he United States will continue to urge China to show restraint, to honor its commitments, and respect the people of Hong Kong.  And to the millions in Hong Kong who have been peacefully demonstrating to protect your rights these past months, we stand with you.”

According to multiple reports, President Trump pledged to Chinese President Xi Jinping that his Administration would remain quiet on the Hong Kong protests throughout the trade talks.  However, the Administration’s hand could be forced if the protests escalate into more sustained violence or if, as is expected, Congress passes legislation in support of Hong Kong with veto-proof majorities.  

Another risk is more vocal opposition from so-called “China hawks” that are dissatisfied that Phase One doesn’t get to the heart of the problems they have with China’s economic practices.  Senate Minority Leader Chuck Schumer (D-NY) cautioned the President that he “shouldn’t be giving in to China unless we get something big in return.” Senator Marco Rubio (R-FL) doubted China’s commitment to the deal long-term, saying, “I do believe that [China] will agree to things they don’t intend to comply with.” There are reports that China hawks within the White House are also pushing the President to reject the deal, notably Director of the Office of Trade and Manufacturing Policy Peter Navarro.  

A deal to end or pause the trade tensions between the United States and China would provide the private sector with more certainty as they make decisions about 2020 and beyond.  The Phase One deal looks to provide at least a pause, but geopolitical actions or domestic opposition could still derail the agreement before it is signed.   

___________________________________________________________

Rory Murphy is an Associate at Squire Patton Boggs, where his practice focuses on providing US public policy guidance, global cultural and business diplomacy advice that helps US and foreign governments and entities with doing business around the globe.

plantain
Archives, Global Trade Daily, Imports/Exports

Africa’s Plantain Market to Reach Over 30M Tonnes by 2025

Leave a comment

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

Consumption By Country in Africa

The countries with the highest volumes of plantain consumption in 2018 were Democratic Republic of the Congo (5.5M tonnes), Cameroon (4.8M tonnes) and Ghana (4.1M tonnes), together comprising 59% of total consumption.

From 2007 to 2018, the most notable rate of growth in terms of plantain consumption, amongst the main consuming countries, was attained by Democratic Republic of the Congo, while the other leaders experienced more modest paces of growth.

The countries with the highest levels of plantain per capita consumption in 2018 were Cameroon (197 kg per person), Ghana (141 kg per person) and Uganda (68 kg per person).

From 2007 to 2018, the most notable rate of growth in terms of plantain per capita consumption, amongst the main consuming countries, was attained by Democratic Republic of the Congo, while the other leaders experienced mixed trends in the per capita consumption figures.

Market Forecast 2019-2025

Driven by increasing demand for plantain in Africa, 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 +2.9% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 30M tonnes by the end of 2025.

Production in Africa

The plantain production stood at 25M tonnes in 2018, picking up by 3.6% against the previous year. The total output volume increased at an average annual rate of +3.0% from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded throughout the analyzed period. The pace of growth appeared the most rapid in 2010 when production volume increased by 12% against the previous year. Over the period under review, plantain production attained its peak figure volume in 2018 and is likely to see steady growth in the near future. The general positive trend in terms of plantain output was largely conditioned by a conspicuous increase of the harvested area and a relatively flat trend pattern in yield figures.

Production By Country in Africa

The countries with the highest volumes of plantain production in 2018 were Democratic Republic of the Congo (5.5M tonnes), Cameroon (4.8M tonnes) and Ghana (4.1M tonnes), together comprising 59% of total production.

From 2007 to 2018, the most notable rate of growth in terms of plantain production, amongst the main producing countries, was attained by Democratic Republic of the Congo, while the other leaders experienced more modest paces of growth.

Harvested Area in Africa

The plantain harvested area amounted to 4.2M ha in 2018, growing by 3.7% against the previous year. The harvested area increased at an average annual rate of +2.9% over the period from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded throughout the analyzed period. The growth pace was the most rapid in 2010 with an increase of 14% against the previous year. Over the period under review, the harvested area dedicated to plantain production reached its peak figure at 4.3M ha in 2015; however, from 2016 to 2018, harvested area stood at a somewhat lower figure.

Yield in Africa

The average plantain yield amounted to 5.8 tonne per ha in 2018, approximately equating the previous year. In general, the plantain yield, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2016 when yield increased by 1.6% y-o-y. The level of plantain yield peaked at 5.8 tonne per ha in 2009; however, from 2010 to 2018, yield stood at a somewhat lower figure.

Exports in Africa

The exports totaled 99K tonnes in 2018, dropping by -5.8% against the previous year. Overall, plantain exports continue to indicate an abrupt decrease. The growth pace was the most rapid in 2013 when exports increased by 27% year-to-year. The volume of exports peaked at 181K tonnes in 2007; however, from 2008 to 2018, exports remained at a lower figure.

In value terms, plantain exports amounted to $45M (IndexBox estimates) in 2018. Over the period under review, plantain exports continue to indicate a drastic descent. The pace of growth appeared the most rapid in 2014 when exports increased by 13% year-to-year. The level of exports peaked at $85M in 2007; however, from 2008 to 2018, exports failed to regain their momentum.

Exports by Country

In 2018, Mozambique (38K tonnes) and Cote d’Ivoire (26K tonnes) were the main exporters of plantains in Africa, together making up 65% of total exports. It was distantly followed by Sudan (14K tonnes) and South Africa (12K tonnes), together committing a 27% share of total exports. The following exporters – Cameroon (3.2K tonnes) and Ghana (2.9K tonnes) – each accounted for a 6.1% share of total exports.

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

In value terms, the largest plantain markets in Africa were Cote d’Ivoire ($12M), Sudan ($11M) and Mozambique ($11M), together accounting for 76% of total exports.

Sudan experienced the highest rates of growth with regard to exports, among the main exporting countries over the last eleven-year period, while the other leaders experienced mixed trends in the exports figures.

Export Prices by Country

In 2018, the plantain export price in Africa amounted to $454 per tonne, growing by 4.8% against the previous year. Overall, the plantain export price, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2015 an increase of 11% year-to-year. Over the period under review, the export prices for plantains attained their maximum at $485 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 Cameroon ($850 per tonne), while Ghana ($203 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Cameroon, while the other leaders experienced mixed trends in the export price figures.

Imports in Africa

The imports totaled 179K tonnes in 2018, picking up by 11% against the previous year. The total imports indicated a prominent expansion from 2007 to 2018: its volume increased at an average annual rate of +5.5% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, plantain imports increased by +20.7% against 2014 indices. The pace of growth appeared the most rapid in 2013 with an increase of 19% year-to-year. Over the period under review, plantain imports reached their peak figure in 2018 and are likely to continue its growth in the immediate term.

In value terms, plantain imports totaled $51M (IndexBox estimates) in 2018. The total import value increased at an average annual rate of +1.8% from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded over the period under review. The pace of growth was the most pronounced in 2017 with an increase of 11% y-o-y. Over the period under review, plantain imports reached their maximum in 2018 and are expected to retain its growth in the near future.

Imports by Country

South Africa was the key importing country with an import of about 119K tonnes, which resulted at 66% of total imports. Senegal (29K tonnes) held the second position in the ranking, followed by Mali (17K tonnes). All these countries together took approx. 26% share of total imports. Botswana (5.1K tonnes) and Algeria (3.1K tonnes) occupied a little share of total imports.

Imports into South Africa increased at an average annual rate of +11.5% from 2007 to 2018. At the same time, Senegal (+19.5%) and Mali (+6.1%) displayed positive paces of growth. Moreover, Senegal emerged as the fastest-growing importer in Africa, with a CAGR of +19.5% from 2007-2018. By contrast, Botswana (-2.5%) and Algeria (-16.8%) illustrated a downward trend over the same period. From 2007 to 2018, the share of South Africa, Senegal and Mali increased by +46%, +14% and +4.6% percentage points, while Algeria (-11.4 p.p.) saw their share reduced. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, South Africa ($27M) constitutes the largest market for imported plantains in Africa, comprising 53% of total plantain imports. The second position in the ranking was occupied by Senegal ($13M), with a 25% share of total imports. It was followed by Botswana, with a 6.4% share.

From 2007 to 2018, the average annual rate of growth in terms of value in South Africa totaled +9.2%. The remaining importing countries recorded the following average annual rates of imports growth: Senegal (+22.9% per year) and Botswana (-3.2% per year).

Import Prices by Country

In 2018, the plantain import price in Africa amounted to $284 per tonne, coming down by -1.9% against the previous year. Overall, the plantain import price continues to indicate a perceptible setback. The growth pace was the most rapid in 2015 when the import price increased by 12% year-to-year. The level of import price peaked at $421 per tonne in 2007; however, from 2008 to 2018, import prices failed to regain their momentum.

Prices varied noticeably by the country of destination; the country with the highest price was Algeria ($1,017 per tonne), while Mali ($64 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Algeria, while the other leaders experienced mixed trends in the import price figures.

Source: IndexBox AI Platform