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

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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.”

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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.

 

 

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China International Import Expo Kicks-Off with Tariff Talks

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The first China International Import Expo gathered 2800 companies from over 130 countries and regions to meet with over 150,000 buyers in Shanghai from Nov 5 to 10, 2018. This event is now anticipated as an annual event that provides success initiatives and strong performance, according to Chinese President Xi.

The conference  kicked-off with China’s president stating that he will cut tariffs and expand China’s economy in a speech today addressing changes to come, including an overall drop in anticipated imports, according to reports.

In his address, he stated he aims to “help friends from around the world to seize opportunities presented by China’s development in the new era and offer a platform for us to deepen international business cooperation for shared prosperity and progress.”

In addition to expanding China’s trade efforts, Xi explained how openness and cooperation are at the center of dynamic international economic trade activities and how the current economic state calls for such actions and cooperation on a global level.

Xi also stated that his goals moving forward include efforts to ” lower tariffs, facilitate customs clearance, reduce institutional costs in import, and step up cross-border e-commerce and other new forms and models of business.”

Creating a world-class business environment from enforcing and respecting international laws and implementing fair practices were mentioned during his address.

“Countries need to improve their business environment by addressing their problems. They should not just point fingers at others to gloss over their own problems. They should not hold a “flashlight” in hand doing nothing but to check out on the weakness of others and not on their own.”

As the expo continues on, nations around the world watch closely for global leaders responses and comments on the speech and how things moving forward will be impacted by Xi’s statements and plans of action.

Source: http://www.xinhuanet.com/english/2018-11/05/c_137583815.htm

 

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India Trade Barriers ? New USITC Report Says “Yes”; India Says “No”

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Washington, D.C. – The U.S. International Trade Commission (USITC) has released a new report slamming India’s trade, investment and industrial policies and detailing their impact on the U.S. economy.

According to the report, tariff and customs procedures as well as taxes and financial regulations “had the most significant effect on U.S. businesses while foreign direct investment caps and intellectual property policies also impacted companies across several sectors.”

If tariff and investment restrictions were fully eliminated and standards of intellectual property (IP) protection were made comparable to U.S. and Western European levels, US exports to India would rise by two-thirds and US investment in India would roughly double, the Trade, Investment, and Industrial Policies in India: Effects on the US Economy report said.

The USITC has been asked by the House Committee on Ways and Means and the Senate Committee on Finance to conduct a second investigation looking at policy changes under the new government. The agency expects to deliver the results to the Committees by September 24.

The report, prepared at the behest of the House Committee on Ways and Means and the Senate Committee on Finance, covers tariffs and customs procedures, foreign direct investment restrictions, local-content requirements, treatment of intellectual property, taxes and financial regulations, regulatory uncertainty, and other non-tariff measures such as unclear legal liability, price controls, and sanitary and phyto-sanitary standards.

India angrily responded to the USITC report, calling it a “unilateral action” that “has no validity.”

A senior official in the New Delhi government told the media that, “India was not party to the investigations and it is the U.S.’ internal decision. The U.S. government has not taken up the matter bilaterally or multilaterally with us. India’s position remains the same as it was last year.”

The USITC report is the second such report released over the past several years by the agency on the tariff and non-tariff trade barriers U.S. companies face while doing business with the Sub-Continent.

The Washington, D.C.-headquartered U.S.-India Business Council, the largest bilateral trade association in the U.S., took a somewhat conciliatory tone when responding to the USITC report.

“There is no doubt that U.S. companies face challenges in India, but many of these issues are institutional in nature and take time and a concerted effort by all stakeholders to resolve,” said Diane Farrell, acting president of the Washington, D.C.-headquartered U.S.-India Business Council.

“As this most recent report suggests, there is a lot of potential for both countries, and we are committed to working alongside our members and both governments to further develop and deepen the two-way commercial relationship,” she said.

President Barack Obama is scheduled to visit India later this month.

01/06/2015

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U.S., Mexico Sugar Tariff Agreement Slammed

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Washington, D.C. – A new bi-level U.S.-Mexico trade pact eliminating tariffs on imports of sugar from Mexico, but also establishes minimum prices and caps on the amount of different types of sugar that can be exported from the U.S., has drawn fire from a major U.S.-based industry group.

“With the stroke of a pen, these agreements dismantle the unrestricted free trade of sugar between the United States and Mexico since 2008 and undermine the core principles of the North American Free Trade Agreement (NAFTA),” said the Sweetener Users Association (SUA).

The Washington, D.C.-headquartered SUA is the largest sugar-related industry group in the country representing such sugar-using giants as Mars Inc. and the Hershey Company.

The deal, says the group, “has increased the importance of broadening access to the domestic market through other trade agreements and the need for greater reform of a government sugar support program.”

The agreement “will limit supplies of sugar from Mexico, driving up costs for food companies and consumers, and make it necessary to boost access to the U.S. sugar market to Australia and Canada through the Trans-Pacific Partnership Agreement,” the group said, adding they “move the U.S. sugar program in the wrong direction.”

In essence, the new deal curbs the access to the U.S. sugar market Mexico obtained through NAFTA, which was finalized late last week after changes to a pact that was traded to end a U.S. government investigation into the dumping of cheap, subsidized sugar from Mexico.

The signed deal raises the price floor for sugar and lowers the proportion of refined sugar that the country can export to the United States.

For several years, the SUA has pushed for an overhaul of the controversial U.S. sugar program that it and other critics say bloat U.S. prices amid a complicated network of import restrictions and price supports.

12/22/2014

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White House ‘Optimistic’ on Pacific Trade Deal

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Los Angeles, CA – The White House is optimistic on the chances that negotiators can forge a strong, comprehensive Trans-Pacific Partnership (TPP) deal that would impact 11 countries and encompass nearly 40 percent of the world economy.

“I’m much more optimistic about us being able to close out an agreement with our TPP partners than I was last year,” said President Barack Obama at a recent meeting of the President’s Export Council.

Confident that the administration could make a “strong case” in Congress for a TPP, Obama added, “It doesn’t mean it’s a done deal, but I think the odds of us being able to get a strong agreement are significantly higher than 50-50.”

According to the Office of the U.S. Trade Representative, the White House has held more than 1,500 meetings with members of Congress on TPP, including sharing negotiating text, and would continue to consult closely.

U.S. Representative Sander Levin of Michigan, the senior Democrat on the House of Representatives Ways and Means Committee, which has jurisdiction over trade, has said there was still a long list of “major issues” impacting the final make-up of the proposed trade pact.

Levin is calling for Congress to have more input into the deal, asserting that workers’ rights, access to medicines in developing countries and the phase-out period for U.S. tariffs on Japanese cars top the list of of major issues still to be resolved.

With the ongoing talks wrapping-up this week in Washington, D.C., negotiators may meet again next month in either the U.S. or Australia.

The 11 countries included in the TPP are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the U.S.

12/16/2014

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Australia, China Ink Major Free Trade Agreement

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Los Angeles, CA – Australia and China, it largest trading partner, have inked a preliminary free-trade deal that would give Australia’s service industry unsurpassed access to the Chinese market and hand the Australian agriculture sector some significant market advantages over its U.S., Canadian and European competitors.

Under the terms of the “Declaration of Intent” deal, China will reportedly make 85 percent of Australian goods imports tariff-free from the outset, rising to 93 percent four years later, the Australian government said.

In return, Australia will lift tariffs on imports of Chinese manufactured goods and alter the threshold at which privately-owned Chinese companies can invest in non-sensitive areas without government scrutiny from 248 million Australian dollars ($218 million) to AU$1,078 million.

The pact would be signed soon after the first of the year and could take effect as early as March if it is endorsed by the Australian Parliament. No modeling has been done on the value of the free-trade deal, the government said.

The removal of tariffs on Australian farm products would give Australia an advantage over U.S., Canadian and E.U. competitors while negating advantages New Zealand and Chile have enjoyed through their free-trade deals with China, the government said.

According to press reports, stumbling blocks in the negotiations, which began in 2005, were Chinese protection of its rice, cotton, wheat, sugar and oil seed industries and demands for less Australian government restrictions on Australian companies and assets being sold to Chinese state-owned businesses.

Those specific areas were excluded from the agreement, which will be renegotiated in three years, reports said.

Two-way trade between Australia and China grew from $86 million in the early 1970s to $136 billion in 2013.

11/20/2014

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WTO: Global Customs Agreement Deal In a Fortnight

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Los Angeles, CA – There is a “high probability” that a major deal on streamlining global customs rules will be implemented within two weeks now that the U.S., the European Union and India have reached a compromise agreement on agricultural subsidies.

India said it will sign the Trade Facilitation Agreement (TFA) as the U.S. and the EU have said they will accept India’s demand that it be allowed to stockpile food without observing the usual World Trade Organization rules on government subsidies and that developing countries be provided flexibility in fixing minimum support price for farm products.

India’s stand plunged the WTO into a crisis that effectively paralyzed the global trade group and risked derailing the customs reforms that are seen affecting an estimated $1 trillion to global trade.

“I would say that we have a high probability that the Bali package will be implemented very shortly,” said WTO Director-General Roberto Azevedo. “I’m hopeful that we can do it in a very short period of time, certainly within the next two weeks.”

Implementation of all aspects of the Trade Facilitation Agreement package, he added, “would be a major boost to the WTO, enhancing our ability to deliver beneficial outcomes to all our members.”

Azevedo made his comments ahead of the recent Group of 20 Leaders Summit in Brisbane, Australia.

The compromise U.S./EU/India agricultural subsidy deal included no major revision of the original WTO deal struck last December, which provided for India’s food stockpiling to be shielded from legal challenge by a “peace clause.”

A food security law passed by India’s last government expanded the number of people entitled to receive cheap food grains to 850 million.

India recently disclosed that its state food procurement cost $13.8 billion in 2010-11, part of the total of $56.1 billion it spends on farm support. Wheat stocks, at 30 million tons, are more than double official target levels.

The deal, which needs to be backed by all 160 WTO members, has resurrected hopes that the trade body can now push through those reforms, opening the way up for further negotiations.

11/19/2014

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U.S., China Planning New Hi-Tech Tariff Cut Agreement

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Los Angeles, CA – The U.S. and China have reached an “understanding” on a deal that would eliminate more than 200 tariffs on certain high-tech goods.

Speaking with the media at the current Asia Pacific Economic Cooperation (APEC) conference in Beijing, U.S. officials said that the quasi-agreement is yet to be finalized in detail.

They did say, however, that an agreement would include the phased-out removal of tariffs on such goods as medical devices, global positioning systems, computer software, and video game consoles.

No specific timeline was given on finalizing a broader agreement, which would have to be vetted by the World Trade Organization.

Talks on a proposed hi-tech trade deal collapsed last summer due to disagreements over what products would be covered by an expanded agreement. A finalized deal would mark the first major tariff reduction agreement by the WTO in 17 years.

According to the Office of the U.S. Trade Representative (USTR), a new agreement would affect $4 trillion in annual trade and dismantle a tariff system that adds as much as 25 percent to the cost of imported high-tech products sold in the U.S.

“We already export over $2 billion of high-tech, high-end semiconductors, even with 25 percent tariffs,” said USTR Michael Froman. “Eliminating those tariffs will obviously expand that trade significantly. It’s an area where we have a comparative advantage, and where we can support a lot of good, well-paying American jobs.”

11/12/2014

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Changes Planned for Harmonized Tariff Codes

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Washington, DC – International customs officials at the World Customs Organization (WCO) have agreed on 234 changes to the global system that categorizes products that are imported and exported around the world.

In the US, those mandated changes will be implemented by the International Trade Commission – the federal government agency responsible for maintaining and updating the Harmonized Tariff Schedule (HTS) product category system utilized by US-based companies involved in global trade.

As a result of the move by the WCO, the agency has said it will make the appropriate recommendations to the White House on the necessary modifications to the HTS.

The US and other countries have until January 1, 2017, to incorporate the changes, “but much work lies ahead,” according to Jim Holbein, director of the ITC office that maintains the HTS.

“The first step for importers and exporters is to become aware of the changes being made at the international level,” he said. “If they believe they will be affected, they will want to stay on top of the process as it moves forward.”

‘Nomenclature analysts’ at the ITC “are analyzing the WCO document” with the ITC expecting to issue proposed recommendations on changes to the HTS by the end of this year, he added.

“At that time, the USITC will seek public comments on the proposed recommendations,” he said. “Detailed information on how to submit comments and related deadlines will be provided at that time.”

The USITC, said Holbein, will consider all public comments, as well as comments from other US government agencies in making its recommendations, which will be submitted to the White House via the Office of the US Trade Representative by July 2015.

Following expiration of a 60-day layover period before Congress, the president has the authority to forward the modifications to the HTS for action. .

The Brussels, Belgium-headquartered World Customs Organization (WCO) was established in 1952 as the Customs Co-operation Council (CCC).

An independent inter-governmental body, it represents 179 Customs administrations across the globe that collectively process approximately 98 percent of world trade.

09/12/2014