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Developing a Post-Pandemic Strategy: The Great Export USA Reset

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Developing a Post-Pandemic Strategy: The Great Export USA Reset

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The pandemic disrupted global supply chains and shattered supply-demand norms, spurring a new appetite for US exports.

USA-based companies in many verticals have a unique opportunity to sell abroad in general and more specifically “post-Covid” where a window of opportunity has opened.

The opportunity has developed as many typical developing nations and even some stalwart supplier nations have had difficulty in manufacturing, distribution, and supply chain management.

The demand for consumer items has shown unprecedented growth all over the world, including Europe, Middle East, larger African nations, and certain countries in Asia.

The typical supplier markets of the world have fallen short in delivering timely, competitively priced, and high-quality products, as they had pre-Covid.

That void has been filled by a few American manufacturers and distributors, but the opportunities can easily be expanded to a much larger group of USA-based companies.

The opportunities are out there … but one needs to know where they are, how best to access and how best to export.

The balance of this article and the additional three parts to this series will explore the challenges and even more importantly … create the blueprint for successful export sales business development.

This first article will outline all the major issues to consider when building a successful export program. These concepts will apply to a company new to export or even a more seasoned exporter.

Exports can create significant opportunity for companies seeking expansion of their overseas markets. Keep in mind that 95% of the consumer market lies external to the United States.

Having said that, exports can create certain risks. It is critical to understanding these risks and managing these exposures so that success can be gained. Tied into the successful exporter are creating “Best Practices” which reduce risk and create the best path forward.

Best Practices Summary:

Make sure you are committed to exporting.
Exporting requires funding, resource development and time. Make sure you have budgeted correctly for export business development and are aligned with external resources to provide support.

Depending upon your internal expertise, utilizing third party consultants who excel in this area, would be a prudent decision.

Assess your product’s export readiness.

You need to determine how ready your product is for the export market. This could include formulizations, packing, marking, labeling, ingredient structure, etc.

Keep in mind, that different countries have different rules, that are critical to know, acknowledge and comply with.

Export Data is essential.

Collecting data on exports provides an initial overview of potential markets and insight on where you should focus. Partnering with consultants accessing information, data and statistics on exports is very important. In the USA, the Department of Commerce can be an invaluable resource.

Short-term focus.

Identify 2-4 initial markets to reach out to. “Experiment”. Test the opportunities and determine the viability of your export opportunities. Begin the learning curve and adapt.

Selling directly or through distributors/agents.

Part of your assessment will be to determine whether to sell direct to end-users or go through importers/agents/distributors.
Generally, we recommend selling through third parties, especially in the beginning.

Advantages:

– Immediate local expertise
– Immediate access to potential clients and sales
– Assumes some of the “risks”
– Can provide assistance in the supply chain: logistics, warehousing and distribution

Disadvantages:

– Intellectual Property Rights
– Loose control over local markets
– Another entity that may require serious management oversight

Your exports become imports.

Recognize that your export will become an import for your customer overseas thus requiring an understanding of the basic import regulations of the countries you sell to. Maintain compliance with all the buyer’s country import regulations.

Documentation, packing, marking, labeling, formularizations are but some of the concerns.

Utilize the correct INCO Terms.

Learning the basics of INCO Terms is important, then applying that knowledge to ensure that you are utilizing the term best suited to meet the needs of your specific export transaction.

The seven Incoterms® 2020 rules for any mode(s) of transport are:

EXW Ex Works (insert place of delivery)
FCA Free Carrier (Insert named place of delivery)
CPT Carriage Paid to (insert place of destination)
CIP Carriage and Insurance Paid To (insert place of destination)
DAP Delivered at Place (insert named place of destination)
DPU Delivered at Place Unloaded (insert of place of destination)
DDP Delivered Duty Paid (Insert place of destination).

Note: the DPU Incoterm replaces the old DAT, with additional requirements for the seller to unload the goods from the arriving means of transport.

The four Incoterms® 2020 rules for Sea and Inland Waterway Transport are:

FAS Free Alongside Ship (insert name of port of loading)
FOB Free on Board (insert named port of loading)
CFR Cost and Freight (insert named port of destination)
CIF Cost Insurance and Freight (insert named proof of destination)

As a point of reference, if your intent is to sell where the customer picks the goods up at your place of origin, utilize FCA and not FOB or Ex Works, as you are likely to load the arriving conveyance.

Also keep in mind that trade compliance – rather than convenience – is often a more important driver of the choice of INCO Term.

Make sure you understand the 7 Basic Requirements to Reduce Risk in the Export Transaction.

1. Terms of Sale (INCO Term)
2. Terms of Payment
3. Insurance Requirements
4. Freight Handling
5. Compliance Responsibilities
6. Accounting for the Transaction (GAAP/IRS)
7. When “ownership” transfers

Utilize the correct Schedule B Number (HTSUS).

It is important to make sure you choose the correct Schedule B number, also referred to “HTS Number”. Your freight forwarder or consultant can guide you in this determination.

Understand the “Documentational Requirements”.

You are creating an export, which requires conformance with U.S. based export regulations. Simultaneously, you are facilitating an import overseas and thus must also comply with the import regulation of the country you are selling to.

Your freight forwarder or consultant can guide you in these documentary requirements.

Basic Export Documentation Requirements.

  • Ocean/Air Waybill
  • Domestic Bill of Lading/Drayage
  • Certificate of Conformity
  • Certificate of Origin
  • Commercial Invoice
  • Dock/Warehouse Receipt

Develop an Export Trade Compliance Mind-set.

You need to make sure you are complying with all export regulatory
requirements. Areas that need to be addressed include, but are not limited to, are as follows:

– Denied Parties Checking
– Destination Control Statements
– Ultimate Consignees
– Product Utilizations
– Destination Country Allowance
– Export License Requirements

Contracts of Sale/Agent/Distributor.

Utilize a professional consultant or attorney to guide you into these documents of agreement that will bind you to certain obligations.

1. The parties
2. The description of the products
3. Quality
4. Price per unit
5. Total value
6. Currency
7. Tax and Charges

8. Packing
9. Marking and Labelling
10. Mode of Transport
11.Delivery: Place and Schedule (INCO Term)
12. Insurance
13. Inspection
14. Documentation
15. Mode of Payment
16. Credit period, if any
17. Warranties
18. Passing of Risk
19. Passing of property
20. Export-Import Licenses
21. Force Majeure
22. Settlement of Disputes
23. Proper Law of the Contract
24. Jurisdiction

Protect your IPR.

Intellectual property (IP) refers to creations of the mind: inventions; literary and artistic works; and symbols, images, names, and logos used in commerce.

Businesses are often unaware that their business assets include IP rights.

Your intellectual property is a valuable intangible asset that should be protected to enhance your competitive advantage in the marketplace.

Stopfakes.gov is a one-stop shop for U.S. government tools and resources on intellectual property rights (IPR). You will find business guides, country toolkits, upcoming training events, and more on the site. See also export.gov.

How to Protect your IP

IP includes copyrights, which cover works of authorship, such as books, logos, and software. It also includes patents, which protect
inventions. Other types of IP include trademarks, designs, and trade secrets.

The first thing you need to do to safeguard your intellectual property is to file for protection in the United States. Your state’s
bar association can recommend experienced lawyers who can help you with that.

Then you must be the first inventor to file for protection in the countries in which you currently do business or are certain to do business in the future. You should also consider filing for protection in countries that are well-known for counterfeit markets.

If you do business in nations that have free trade agreements with the U.S., IP protections are built into those agreements, but you’ll still need to file in each country to get those protections.

Conversely, if you do business in any country in the European Union, you only need to file for protection with the EU – not every individual nation.

If you have a registered IP right in the United States, these protections are territorial and do not extend to foreign countries. Additionally, most countries are a “first to file” country for trademark registration and “first inventor to file” for patent registration and therefore grant registration to the first filer regardless of first use in the market.

Utilizing professional consultants and IPR counsel is also an excellent resource and likely go-to solution.

Utilize Quality Freight Forwarders.

Finding quality freight forwarders is necessary to develop a strong export capability.

Evaluation criteria:

Utilize a FF where you are a “bigger
fish in a smaller pond”

Strong Technology Capability

In Good Financial Shape

Global Reach

Experienced Personnel and Ease of Communication

Understand your “Landed Costs”.

Being competitive in export trade is important and knowing what all the costs are to get your goods from origin to destination will assist in that need.
Let us suppose the shipment of 100 units of a particular product arrives

  • Supplier cost: $20 per unit
  • Duty applicable at 4%
  • Freight cost for the entire shipment was $200 – and the specific product represents one-quarter of the shipment (1/4th of the total shipment)

Total Landed Cost = $20 + (4% x 20) + ((200 x 25%)/100) = 20+ 0.8 + .5 = $21.3 per unit

Landed cost formula:

Net Landed Cost = Supplier Cost + (Duty charges) + (Shipment charges specific to this product/total units)

Landed costs will help determine margins and profits and create the competitive leverage that may be required in competitive export sales.

Make sure the shipment is insured.

The risk of loss and damage is great in export trade. Depending upon the INCO Term and how payments are made will determine who need s to insure the transaction.

Cargo insurance should be “All Risk”, “Warehouse to Warehouse” through a reputable broker and underwriter who specialize in international insurance exposures and risk management.

Make sure you get paid

You need to be very diligent about getting paid. Having an unpaid export receivable can be very discouraging and problematic.

Options:

1. Consignment
2. Open Account (O/A)
3. Collections
4. Letter of Credit (L/C)
5. Cash in Advance

Working with your bank and your customer will help determine the best option. Accommodating clients’ needs balanced with potential risks is a good concept.

Export Credit Insurance.

Protect your export sales against nonpayment, offer open account credit terms to your buyers, and increase cash flow with EXIM’s export credit insurance.

There are also private insurance options such as with COFACE. We have specific contacts at COFACE we can refer you to.

The costs are low, the coverage is broad and is a great way to protect concern from foreign receivables.

Foreign Exchange Risk.

Reduce the risk associated with the uncertainty of future exchange rates. A good way is to quote prices and require payment in U.S. dollars.

Payment Problems.

Problems involving bad debts with your international buyer can set you back.
Avoid potential payment issues and tap key resources to limit risk and resolve problems.

Concluding Remarks.

This document is to be utilized only as a reference guide and starting point in understanding all the requirements of exporting. Accessing additional resources and expertise will be central to developing a successful export business capability.

The Author

Thomas A. Cook Is a 30-year seasoned veteran of global trade and Managing Director of Blue Tiger International, based in New York, LA and West Palm Beach, Florida. The author of 19 books on international business, two best business sellers.

Graduate of NYS Maritime Academy with an undergraduate and graduate degree in marine transportation and business management.

Tom has a worldwide presence through over 300 agents in every major city along with an array of transportation providers and solutions. Tom works with a number of Associations providing “value add” to their membership services and enhancing their overall reach into global sourcing and in export sales management.

couscous
Archives, Global Trade Daily, Imports/Exports

EU Couscous Market 2019 – France is the Undisputed Leader in Consumption, Production, and Imports

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

The revenue of the couscous market in the European Union amounted to $538M in 2018, approximately equating 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 +2.2% 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 2011 with an increase of 13% y-o-y. The level of couscous consumption peaked in 2018 and is likely to see steady growth in the near future.

Consumption By Country in the EU

France (143K tonnes) remains the largest couscous consuming country in the European Union, comprising approx. 43% of total consumption. Moreover, couscous consumption in France exceeded the figures recorded by the region’s second-largest consumer, Germany (53K tonnes), threefold. The third position in this ranking was occupied by Italy (25K tonnes), with a 7.5% share.

In France, couscous consumption remained relatively stable over the period from 2007-2018. In the other countries, the average annual rates were as follows: Germany (+7.7% per year) and Italy (+4.1% per year).

In value terms, France ($238M) led the market, alone. The second position in the ranking was occupied by the UK ($79M). It was followed by Germany.

In 2018, the highest levels of couscous per capita consumption was registered in France (2,198 kg per 1000 persons), followed by the Netherlands (690 kg per 1000 persons), Belgium (669 kg per 1000 persons) and Germany (640 kg per 1000 persons), while the world average per capita consumption of couscous was estimated at 654 kg per 1000 persons.

In France, couscous per capita consumption remained relatively stable over the period from 2007-2018. The remaining consuming countries recorded the following average annual rates of per capita consumption growth: the Netherlands (+5.7% per year) and Belgium (+5.3% per year).

Market Forecast 2019-2025 in the EU

Driven by increasing demand for couscous in the European Union, the market is expected to continue an upward consumption trend over the next seven years. Market performance is forecast to decelerate, expanding with an anticipated CAGR of +1.1% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 361K tonnes by the end of 2025.

Production in the EU

In 2018, the amount of couscous produced in the European Union stood at 333K tonnes, growing by 3.6% against the previous year. The total output volume increased at an average annual rate of +2.8% 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 2016 with an increase of 8.3% against the previous year. Over the period under review, couscous production attained its peak figure volume in 2018 and is expected to retain its growth in the near future.

In value terms, couscous production stood at $509M in 2018 estimated in export prices. The total output value increased at an average annual rate of +1.5% from 2007 to 2018; however, the trend pattern remained consistent, with only minor fluctuations in certain years. The pace of growth appeared the most rapid in 2011 with an increase of 9% against the previous year. The level of couscous production peaked in 2018 and is likely to continue its growth in the near future.

Production By Country in the EU

France (140K tonnes) remains the largest couscous producing country in the European Union, accounting for 42% of total production. Moreover, couscous production in France exceeded the figures recorded by the region’s second-largest producer, Italy (67K tonnes), twofold. The third position in this ranking was occupied by Germany (46K tonnes), with a 14% share.

In France, couscous production remained relatively stable over the period from 2007-2018. The remaining producing countries recorded the following average annual rates of production growth: Italy (+6.4% per year) and Germany (+6.8% per year).

Exports in the EU

The exports stood at 77K tonnes in 2018, lowering by -8.1% against the previous year. The total exports indicated a remarkable expansion from 2007 to 2018: its volume increased at an average annual rate of +4.0% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2010 with an increase of 18% against the previous year. The volume of exports peaked at 84K tonnes in 2017, and then declined slightly in the following year.

In value terms, couscous exports totaled $107M in 2018. The total export value increased at an average annual rate of +3.7% over the period from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded in certain years. The growth pace was the most rapid in 2008 with an increase of 29% y-o-y. The level of exports peaked in 2018 and are expected to retain its growth in the near future.

Exports by Country

Italy represented the largest exporter of couscous in the European Union, with the volume of exports resulting at 44K tonnes, which was approx. 57% of total exports in 2018. It was distantly followed by France (23K tonnes), making up a 30% share of total exports. The following exporters – Belgium (2.8K tonnes), the UK (1.8K tonnes), the Netherlands (1.5K tonnes) and Germany (1.2K tonnes) – together made up 9.5% 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 the Netherlands, while the other leaders experienced more modest paces of growth.

In value terms, the largest couscous markets in the European Union were Italy ($47M), France ($39M) and Belgium ($6.1M), together accounting for 86% of total exports. These countries were followed by the UK, the Netherlands and Germany, which together accounted for a further 9.2%.

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

Export Prices by Country

The couscous export price in the European Union stood at $1,381 per tonne in 2018, surging by 12% against the previous year. Over the period under review, the couscous export price, however, continues to indicate a relatively flat trend pattern. The pace of growth appeared the most rapid in 2008 an increase of 28% against the previous year. In that year, the export prices for couscous reached their peak level of $1,825 per tonne. From 2009 to 2018, the growth in terms of the export prices for couscous failed to regain its momentum.

Prices varied noticeably by the country of origin; the country with the highest price was Germany ($2,524 per tonne), while Italy ($1,058 per tonne) was 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, couscous imports in the European Union amounted to 77K tonnes, reducing by -12.7% against the previous year. Overall, couscous imports, however, continue to indicate resilient growth. The most prominent rate of growth was recorded in 2013 with an increase of 19% against the previous year. Over the period under review, couscous imports attained their maximum at 89K tonnes in 2017, and then declined slightly in the following year.

In value terms, couscous imports stood at $106M in 2018. The total imports indicated a buoyant increase from 2007 to 2018: its value increased at an average annual rate of +5.9% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, couscous imports increased by +84.0% against 2010 indices. The pace of growth was the most pronounced in 2011 with an increase of 27% year-to-year. Over the period under review, couscous imports attained their peak figure at $108M in 2017, and then declined slightly in the following year.

Imports by Country

France was the key importer of couscous in the European Union, with the volume of imports reaching 26K tonnes, which was near 34% of total imports in 2018. It was distantly followed by the UK (11K tonnes), Belgium (8.7K tonnes), Germany (7.8K tonnes), Spain (5.1K tonnes) and the Netherlands (3.5K tonnes), together comprising a 47% share of total imports. The Czech Republic (2.8K tonnes) followed a long way behind the leaders.

From 2007 to 2018, average annual rates of growth with regard to couscous imports into France stood at +2.8%. At the same time, the Czech Republic (+17.9%), Germany (+14.8%), the UK (+8.9%), Spain (+6.6%), Belgium (+5.5%) and the Netherlands (+4.7%) displayed positive paces of growth. Moreover, the Czech Republic emerged as the fastest-growing importer in the European Union, with a CAGR of +17.9% from 2007-2018. While the share of the UK (+8.7 p.p.), France (+8.7 p.p.), Germany (+7.9 p.p.), Belgium (+5 p.p.), Spain (+3.3 p.p.), the Czech Republic (+3 p.p.) and the Netherlands (+1.8 p.p.) increased significantly, the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, France ($35M) constitutes the largest market for imported couscous in the European Union, comprising 33% of total couscous imports. The second position in the ranking was occupied by Belgium ($15M), with a 14% share of total imports. It was followed by the UK, with a 12% share.

In France, couscous imports increased at an average annual rate of +5.3% over the period from 2007-2018. The remaining importing countries recorded the following average annual rates of imports growth: Belgium (+6.0% per year) and the UK (+8.7% per year).

Import Prices by Country

In 2018, the couscous import price in the European Union amounted to $1,369 per tonne, rising by 13% against the previous year. Over the last eleven years, it increased at an average annual rate of +1.2%. The pace of growth was the most pronounced in 2008 when the import price increased by 30% y-o-y. In that year, the import prices for couscous reached their peak level of $1,572 per tonne. From 2009 to 2018, the growth in terms of the import prices for couscous remained at a somewhat lower figure.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was the Netherlands ($1,837 per tonne), while the Czech Republic ($1,109 per tonne) was 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.

Source: IndexBox AI Platform

Espionage
Archives, Global Trade Daily, International Trade

Economic Espionage and the U.S.-China Trade War

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Combatting Chinese theft of U.S. intellectual property (IP) has been a principal policy focus of the Trump Administration, including through the utilization of the Section 301 investigation process, the subsequent imposition of tariffs on Chinese-origin goods, via challenges in international regulatory bodies such as the World Trade Organization, updated foreign investment restrictions and through targeted legal designations of entities such as the leading Chinese telecommunications and consumer electronics company Huawei. IP and trade secret theft are to this day some of the largest economic and national security threats facing the U.S. and American businesses. Apart from the international trade remedies implemented by the Administration, the U.S. legal system has been another critical theatre for countering theft of IP and trade secrets from American businesses, and prosecutions have ramped up over the last half decade using civil and criminal enforcement mechanisms. 

The Economic Espionage Act of 1996 (“EEA”), 18 U.S.C. § 1831 et seq., is an act that makes theft or the misappropriation of trade secrets, especially through acts of industrial espionage, a federal crime. Such trade secret theft can lead to both civil and criminal enforcement actions. The EEA currently defines “trade secrets” broadly to include “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes.”1

Penalties under the EEA can be severe. In 2012, Congress revised the EEA to increase the penalties for organizations and individuals, and sentencing guidelines were increased for trade secret theft that seeks to benefit a foreign government or agent. A violation of the EEA can result in an individual being fined up to $500,000 and facing up to 10 years in prison, and a corporation found guilty can be fined up to $5,000,000. These penalties increase greatly if the trade secret theft or misappropriation benefits a foreign country or foreign agent. 

In 2016, the EEA was again amended when Congress passed the Defend Trade Secrets Act (“DTSA”). The DTSA established for the first time a private cause of action for the theft or misappropriation of trade secrets, which prior to its enactment had largely been addressed under individual state laws. 

The EEA and DTSA have been critical enforcement mechanisms for the U.S. government and private businesses in recent years to combat theft of corporate IP and trade secrets, in particular that of Chinese origin. A 2017 report from the independent Commission on the Theft of American Intellectual Property found that the annual cost to the U.S. economy from Chinese IP theft could be as high as $600 billion. More recently, a March 2019 survey found that one in five North American-based corporations on the CNBC Global CFO Council says Chinese companies have stolen their IP within the last year.2 And in April, the Department of Justice proclaimed that since 2011, more than 90 percent of the Department’s economic espionage prosecutions involve China, and more than two-thirds of all federal trade secret theft cases during that period have had at least a geographical nexus to China.3

The largest companies in the U.S. are not immune to such theft, and the EEA has been utilized in several recent high-profile prosecutions, including against a former Chinese national software engineer of IBM for the theft of proprietary source code4, a former Chinese national employee of Apple for the theft of a confidential circuit board schematic drawing designed for autonomous vehicles5 and a Chinese Ministry of State Security intelligence officer for his attempt to steal trade secrets from multiple U.S. aviation and aerospace companies, including GE Aviation.6

Beyond the government’s use of the EEA, the broad reach of the DTSA makes it important for every U.S. business to understand its nuances. The DTSA protects trade secrets if a company has taken reasonable measures to keep such information secret and “the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.”7 Trade secret misappropriation and the implications of the DTSA are therefore also prevalent in everyday business matters, including employment contracts and areas such as non-disclosures, non-compete, or confidentiality contractual provisions. The DTSA further provides important civil remedies for victims of trade secret theft, including the possibility of injunctive relief and even seizure of the allegedly stolen trade secrets. 

The EEA and DTSA are significant enforcement mechanisms for both the U.S. government and private businesses, which has been further underscored in recent years in light of ongoing malevolent Chinese industrial espionage activity. Conducting robust due diligence on new employees, foreign investors, and supply chain entities is more important than ever for U.S. businesses and their research and development entities. The effects of the U.S.-China trade war are a global concern, and problems such as securing future U.S. telecommunications networks from supply chain threats, eliminating foreign direct investment calculated to obtain proprietary U.S. trade secrets and technology,  and continuing to fight industrial cyberespionage must remain a top priority for the U.S. moving forward. 

Julius Bodie is an associate with Baker Donelson who assists U.S. and foreign companies across multiple industries with international trade regulatory issues, including identifying import/export licensing strategies, advising on global anti-corruption compliance, and counseling on Office of Foreign Assets Control (OFAC) economic sanctions programs.

Joe Whitley is a shareholder with Baker Donelson who represents national and international clients in various white-collar criminal matters including regulatory enforcement, corporate internal investigations and the Foreign Corrupt Practices Act (FCPA). During the Ronald Reagan and George H.W. Bush administrations, he served as Acting Associate Attorney General, the third-ranking position at Main Justice.

Alan Enslen is a shareholder with Baker Donelson who works with clients in international trade and national security matters, as well as government enforcement and investigations and trade remedy disputes. Enslen represents clients in numerous areas of international trade including economic/trade sanctions programs and global anti-corruption laws.

This article includes the following references:

118 U.S.C. § 1839(3).

2Eric Rosenbaum, 1 in 5 corporations say China has stolen their IP within the last year: CNBC CFO survey, CNBC (March 1, 2019) https://www.cnbc.com/2019/02/28/1-in-5-companies-say-china-stole-their-ip-within-the-last-year-cnbc.html.

3Deputy Assistant Attorney General Adam S. Hickey of the National Security Division Delivers Remarks at the Fifth National Conference on CFIUS and Team Telecom, Department of Justice (April 24, 2019) https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-adam-s-hickey-national-security-division-delivers-0.

4Chinese National Sentenced for Economic Espionage and Theft of a Trade Secret From U.S. Company, Department of Justice Press Release (January 18, 2018)  https://www.justice.gov/opa/pr/chinese-national-sentenced-economic-espionage-and-theft-trade-secret-us-company

5Former Apple Employee Indicted On Theft Of Trade Secrets, Department of Justice Press Release (July 16, 2018) https://www.justice.gov/usao-ndca/pr/former-apple-employee-indicted-theft-trade-secrets.

6Chinese Intelligence Officer Charged with Economic Espionage Involving Theft of Trade Secrets from Leading U.S. Aviation Companies, Department of Justice Press Release (October 10, 2018) https://www.justice.gov/opa/pr/chinese-intelligence-officer-charged-economic-espionage-involving-theft-trade-secrets-leading.

718 U.S.C. § 1839.  

Archives, Global Trade Daily, Imports/Exports

Sausage Market in the USA – Key Insights

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IndexBox has just published a new report, the U.S. Sausage, Canned Meat, And Meat By-Product Market. Analysis And Forecast to 2025. Here is a summary of the report’s key findings.

The revenue of the sausage market in the U.S. amounted to $4B in 2018, dropping by -7.9% 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).

Overall, sausage consumption continues to indicate an abrupt reduction. The pace of growth was the most pronounced in 2014, when the market value increased by -0.8% y-o-y. Over the period under review, the sausage market reached its peak figure level at $6B in 2013; however, from 2014 to 2018, consumption stood at a somewhat lower figure.

Sausage Exports

Exports from the USA

In 2018, the amount of sausage, canned meat, and meat by-product exported from the U.S. stood at 852K tonnes, growing by 15% against the previous year. Overall, the total exports indicated a prominent expansion from 2013 to 2018: its volume increased at an average annual rate of +4.4% over the last five year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, the sausage exports increased by +64.3% against 2015 indices.

In value terms, sausage exports totaled $527M (IndexBox estimates) in 2018.

Exports by Country

Indonesia (216K tonnes), Singapore (160K tonnes) and China (84K tonnes) were the main destinations of sausage exports from the U.S., with a combined 54% share of total exports.

From 2013 to 2018, the most notable rate of growth in terms of exports, amongst the main countries of destination, was attained by Singapore (+763.0% per year), while the other leaders experienced more modest paces of growth.

In value terms, Singapore ($111M), Indonesia ($105M) and China ($58M) appeared to be the largest markets for sausage exported from the U.S. worldwide, together comprising 52% of total exports.

Export Prices by Country

The average sausage export price stood at $618 per tonne in 2018, reducing by -8.2% against the previous year. In general, the sausage export price continues to indicate a moderate slump. The growth pace was the most rapid in 2017, an increase of 6.6% year-to-year. Over the period under review, the average export prices for sausage, canned meat, and meat by-product reached their peak figure at $697 per tonne in 2013; however, from 2014 to 2018, export prices remained at a lower figure.

There were significant differences in the average export prices for the major foreign markets. In 2018, the country with the highest export price was Honduras ($901 per tonne), while the average price for exports to the Philippines ($419 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of export prices was recorded for supplies to the UK (+13.3% per year), while the export prices for the other major destinations experienced more modest paces of growth.

Sausage Imports

Imports into the USA

Sausage imports into the U.S. stood at 258K tonnes in 2018, jumping by 26% against the previous year.

In value terms, sausage imports stood at $533M (IndexBox estimates) in 2018.

Imports by Country

In 2018, Australia (99K tonnes) constituted the largest supplier of sausage to the U.S., accounting for a 38% share of total imports. Moreover, sausage imports from Australia exceeded the figures recorded by the second largest supplier, New Zealand (46K tonnes), twofold. China (22K tonnes) ranked third in terms of total imports with a 8.6% share.

From 2013 to 2018, the average annual growth rate of volume from Australia amounted to +19.6%. The remaining supplying countries recorded the following average annual rates of imports growth: New Zealand (-5.7% per year) and China (+22.3% per year).

In value terms, China ($135M), Australia ($121M) and New Zealand ($99M) appeared to be the largest sausage suppliers to the U.S., with a combined 67% share of total imports. Brazil, France, Belgium, India, Canada, Denmark, Italy and Chile lagged somewhat behind, together accounting for a further 22%.

Import Prices by Country

In 2018, the average sausage import price amounted to $2.1 per kg, going up by 10% against the previous year. Over the last five year period, it increased at an average annual rate of +2.8%. The growth pace was the most rapid in 2018, an increase of 10% year-to-year. In that year, the average import prices for sausage, canned meat, and meat by-product reached their peak level, and is likely to continue its growth in the immediate term.

There were significant differences in the average import prices amongst the major supplying countries. In 2018, the country with the highest import price was China ($6.1 per kg), while the price for Canada ($506 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of import prices was attained by Belgium (+21.0% per year), while the import prices for the other major suppliers experienced more modest paces of growth.

Companies Mentioned in the Report

Darling Ingredients, Griffin Industries, Baker Commodities, R U K Ltd, Neatsfoot Oil Refineries Corp, Geo. Pfau’s Sons Company, Inland Products, Hrr Enterprises, Ace Grease Service, Texas By-Products Partnership, Park West Enterprises, Tallowmasters, Kruger Commodities, Mendota Agri-Products, Riegel By-Products Co, Valley By Products, Marine Polymer Technologies, Kane-Miller Corp, Sanimax Ato, Hahn & Phillips Grease Company, Nupro Industries Corporation, W B Riggins Tallow Co, H.T.C. Industries, North State Rendering, Co., Nevada Byproducts, Istamer, Simmons Feed Ingredients

Source: IndexBox AI Platform

Archives, Global Trade Daily, Software

Transport Optimizations Increased with ZIM & Avantida Partnership

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Leading shipping liner, ZIM confirmed moving forward in a partnership with Avantida in an effort to offer street turn services in the United States, placing them as the second provider of such services after Maersk.
“We are quickly gaining traction in the US. The partnerships with Maersk and now ZIM reflect the market’s eagerness to embrace the Avantida platform,” said Luc De Clerck, CEO, Avantida. “We hope to soon offer the transport community in the US a central hub for requesting optimizations to all major shipping lines.”
Through the Avantida platform, successful coordination of empty container and methods of reuse for import containers for export booking are enabled. Additionally, it’s responsible for the facilitation of over 2,000 transactions per day and welcomed 130 transport and logistics companies since its initial launch.
“We have a successful partnership with Avantida in Europe, and are sure the platform will provide great opportunities to the transporters in the US who are seeking to optimize their container transport planning, while reducing their carbon footprint.” said Gil Lehman, ZIM US VP Logistics.
“The cooperation is part of ZIM’s ongoing effort to introduce new advanced platforms for the benefit of our vendors and customers”, added Ronen Meroz, ZIM Global Intermodal Manager.
The platform is currently deployed in  Belgium, The Netherlands, Germany, Austria, France, Spain, Italy, Portugal, Poland, Lithuania, Scandinavia, Switzerland, the UK, Mexico, the United States and Canada.
Source: BSY Associates
Archives, Global Trade Daily, Ocean Carriers

The “Deadly Dozen” and Human Behavior

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Maritime safety and ensuring minimal risk impact is a topic that isn’t discussed enough. Human error is unpredictable, and until shippers evolve into a fully digitally integrated system, human hands are absolutely essential to keep business moving.

A report released  provides insight and tips to consider and leverage for improving procedures. Surprisingly enough, the majority of the high-risk behaviors analyzed are fairly common and are the determining factor between making or breaking business initiatives and successful processes.

Reducing risks while on the sea can greatly impact workers and business relationships beyond the numbers, creating satisfaction and a positive working environment. One of the most common themes in the trends highlighted boils down to simple communication: alerting, situational awareness and mindfulness of culture differences. Without effective communication, business is a shot in the dark.

Here are a few examples taken from the deadly dozen to consider:

Situational Awareness

This asks the obvious but extremely important question of, “What’s the situation?” If you can’t answer this, it’s a problem. The report advises effective communication and always leveraging your team for feedback. Remember to ask yourself WHIM: “What Have I Missed?

 Alerting

Make sure to speak up at all times. Encourage this within your team and don’t chastise an assertive or proactive approach to a potentially disastrous situation. Again, this is directly linked to effective communication. Alerts can save lives and prevent accidents.

 Communication

Understand that 30% of communication is actually verbal and different cultures have different approaches will not only reduce risks but also eliminate possible strife due to offense. The report advises implementing climate control internally and externally through considering these factors for success.

 Fatigue

Don’t overwork your crew – it doesn’t pay off and creates a toxic and risky environment. The report highlights this is an ever-present condition for workers on the sea and can create ill-health as well as present risky conditions.

Pressure

Cutting corners should never be an option. In doing so, details are overlooked, tension is caused and stress is multiplied. Ensure there’s a system of balance in place and there’s always someone keeping a finger on the pulse to verify the safety and wellness of the team. Healthy pressure can create productivity, but don’t push it.

These common-sense tips and approaches can become more difficult to implement the more demanding the market becomes. Maritime trade is one of the largest sectors the industry utilizes. Within this sector, the human element is the common denominator associated with accidents, incidents and errors.

To view the full report, visit: Human Element Guidance

 

Source: MGN 520

Archives, Commentary, Global Trade Daily

SURVEY SAYS …

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The International Chamber of Commerce (ICC) Banking Commission’s 10th annual Global Survey on Trade Finance reveals that digitalization of the sector is increasing, although obstacles remain in the path toward efficient and paperless trade finance.

The survey, which gathered insights from 251 respondents in 91 countries, indicates that a key barrier to digitalization is the lack of standardization throughout the sector.

This indicates work is still needed to drive forward the digital agenda, although progress to date has been positive.

Download the full ICC Global Survey on Trade Finance at: http://www.iccwbo.org/global-survey-report.

The move toward paperless trade finance has been a long-standing objective for many in the industry. And, as our 10th annual survey indicates, digitalization is beginning to gain significant traction. Some 45 percent of respondents to this year’s survey indicated they intend to prioritize digital trade and the development and deployment of platforms over the next one to three years.

In a related development, interest in supply chain finance (SCF) is also gathering momentum. SCF, which usually involves financing through an online platform, is providing a growing number of banks with a strong alternative to traditional trade finance. What’s more, some 56 percent of bank respondents that offer SCF stated they had already developed their own proprietary systems rather than rely on an outsourced platform.

Nonetheless, the benefits of implementing technology solutions in trade finance processes have not been felt by all banks, with only 9 percent of respondents agreeing digitalization had improved efficiency to date. Divergent standards are cited as a key reason for the lack of improvement. This is apparent within SCF platforms and their lack of common standards for exchanging data.

As a result, some 32 percent of respondents with proprietary systems reported issues due to the lack of interoperability. Nevertheless, over 60 percent of banks said they were moving toward further digitalization, while just 7 percent indicated they had no plans to implement technology solutions in their trade finance offerings.

Enduring Problem: The Trade Finance Gap

Certainly, digitalization of the trade-finance sector is aimed at improving efficiency and processes, which should allow for greater trade finance capacity. And that should help relieve one of the greatest concerns for trade finance: the trade finance gap.

The difference between the demand and supply of trade finance currently stands at US$1.5 trillion, according to figures from the Asian Development Bank. What is more, some 22 percent of respondents expect the unmet demand to increase in the next 12 months.

Nonetheless, the survey indicates a positive outlook on the current and future provision of trade finance. Two thirds of respondents declared the amount of traditional trade finance they provided in 2017 was higher than the previous year. SCF provision is also increasing, with 43 percent of respondents indicating their SCF business grew in the past year.

In total, respondents to the survey provided over US$4.6 trillion in traditional trade finance and US$813 billion in supply chain finance last year. Over the next one to three years, some 41 percent of respondents expect the trade-finance gap to shrink.

Regulation: Key Barrier to Provision

Unfortunately, regulation remains one of the major barriers preventing the bridging of the trade-finance gap. The survey revealed that regulatory compliance requirements are still inhibiting banks’ ability to provide trade finance.

Some 90 percent of respondents highlighted regulatory compliance as a major obstacle to growth. Know Your Customer and Know Your Customer’s Customer (KYC/KYCC) obligations remain an issue for trade finance providers, with 18 percent of respondents to the survey citing compliance with KYC/KYCC regulations as the reason for a decrease in their provision of trade finance. What’s more, some 40 percent of respondents revealed the requirements were already a persistent challenge for SCF delivery.

The survey also outlines regulation to counter the financing of terrorism (CFT) as a key concern. Some 56 percent of respondents have serious concerns about the impact of CFT regulations on their ability to provide adequate trade finance in support of cross-border trade.

While practitioners recognize the need for adequate compliance measures, the lack of clarity surrounding regulatory expectations has led to overly stringent, self-imposed industry measures. Fulfilling all these regulatory requirements consequently represents an unnecessarily resource and time-heavy burden for banks.

Looking Ahead: What to Expect?

Despite these issues, the survey revealed a generally positive outlook on the future of the trade-finance sector.

Some 73 percent of respondents to the survey expect trade financing to grow over the next 12 months. Banks, especially, see the potential for SCF, with 91 percent of bank respondents expecting revenue growth from SCF in the next one to three years.

Regarding the potential for future digitalization, respondents agree that continued investment is necessary, with 46 percent believing the long-term focus should be on implementing and leveraging the opportunities from new technologies.

Importantly, the implementation of common standards is necessary to increase efficiency and market capacity, while enabling cost-effective due diligence.

Olivier Paul is head of Policy at the International Chamber of Commerce.

 

Archives, Global Trade Daily, News

USITC Rules on ‘Oil Country Tubular Goods’ Imports

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Washington, DC –The US International Trade Commission (USITC) has determined that “a US industry is materially injured or threatened with material injury” by the import of certain oil country tubular goods (OCTG) from six countries.

The ruling on OCTG from India, Korea, Taiwan, Turkey, Ukraine, and Vietnam gives the US Department of Commerce the go-ahead to impose tariffs as high as 118 percent on the affected OCTG imports.

The determination does not impact imports of the product from the Philippines and Thailand.

OCTG imports from Saudi Arabia were dropped from the earlier complaint, which was brought in 2013 by US steel companies after imports of the pipes used in the oil and gas industry surged and foreign manufacturers sought to cash in on booming US shale gas drilling.

Seventeen US companies including United States Steel; Maverick Tube Corporation; Boomerang Tube; Energex Tube; Northwest Pipe Co.; Welded Tube, USA; and Tejas Tubular Products filed the original complaint.

The US used 7 million tons of OCTG, valued at $10.1 billion in 2013, accounting for nearly two-thirds of the US market, according to the American Iron and Steel Institute in Washington, DC.

Leading sources of OCTG last year were Korea, Canada, Argentina, Japan, Mexico, and Germany, the trade group said.

Foreign manufacturers responded to the determination saying countered that they do not supply enough pipe to threaten the US industry, and instead blamed the lower prices on US producers increasing supply.

09/02/2014