Jun/Jul 12
Volume 9 | Issue 3

World Trader

From the President: Export Enablement

The Canada-US Beyond the Border Action Plans – What Do They Mean for Minnesota?
by John Wilson, Purolator International

Upcoming Events

North Dakota’s Railed Oil Capacity Jumps 55% in June
from Associated Press

2nd Annual Paddleford Riverboat Cruise
by Rae Hale, General Mills

Country of the Month: Venezuela
by Kevin Johnson, Best Buy

Customs Strike Could Slam Brazil Ports?
from American Shipper

Heartland Shipper Conference
by Mark Toth

Who Said it?


From the President: Export Enablement

by Jim Moore, MGTA President

Jim MooreIn the context of President Obama’s National Export Initiative, established in 2010, with an aim to double exports by 2014, Assistant Secretary of Export Enforcement David Mills visited the Twin Cities on June 20. In a luncheon meeting at the Marriott in Bloomington, the Secretary announced the Administration’s initiative to build "higher fences around smaller yards.”

The Department of Commerce has been exploring methods for removing or relieving export restrictions enacted to prevent terrorists and regimes using force against their own populations from acquiring certain technologies. This export control reform initiative is aimed at focusing on those military and dual use items that are clearly destined for unauthorized military end users, terrorists and state sponsors of terror.

US exports have been hurt by generalized restrictions that cause foreign customers to design US parts and components out of their systems. The Bureau of Industry and Security has proposed 9 categories of items that could gain licensing exceptions. Eliminating some export restrictions to 36 military alliance countries, as well as focusing on end use, should enable some export growth. In addition to exports, the interoperability of military alliance forces can be harmed by some of the more generalized controls.

The Bureau will use FBI offices in some ports that don’t have full-time employees to facilitate applications for exceptions, enforcement activity and investigations. There will also be a shift to utilizing overseas assets to assure the end use that is claimed on an export is valid, relieving exporters of burdens of proof that are deemed unreasonable. Investigations of foreign procurement networks will replace inquiries of domestic distribution networks. Enhanced use of Automated Export Systems and record keeping will allow for a smarter focus on destinations for these restricted goods.

Senior Export Policy Analyst Karen Swasey outlined the rule-making process, commentary opportunities and the development of the narrower, more focused set of restrictions. Special Agent Ron Orzel spoke about several specific cases — some originating in the Twin Cities — regarding investigations, penalties, and methods for compliance. The Export Enforcement team emphasized its shift in resources and approach from penalizing to enabling compliance and focusing on high risk situations.

Jim Moore, MGTA President

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The Canada-US Beyond the Border Action Plans – What Do They Mean for Minnesota?

by John Wilson, Purolator International

On June 28, the Federal Reserve Bank of Minneapolis hosted Martin Loken, Consul General of Canada, along with Canada and US border and regulatory officials, local State and Federal representatives, and industry and educational leaders in a discussion about the Beyond the Border Action Plans. Mr. Loken stated these plans may represent the most important changes in Canada-US trade efforts since NAFTA.

Beyond the Border is a shared vision for perimeter security and economic competitiveness announced by Prime Minister Harper and President Obama on February 4, 2011. The resulting Beyond the Border Action Plans sets out specific commitments, milestones, and metrics. Key areas of the cooperation include:

  • Addressing threats early
  • Trade facilitation, economic growth, and jobs
  • Integrated cross-border law enforcement
  • Critical infrastructure and cyber-security

Focus areas included integrating entry-exit systems for Canada-US travelers and goods, expanding successful cooperative law enforcement programs currently patrolling shared water routes to land operation, and identifying critical infrastructure to protect both Canadians and Americans from harm. Achievements in 2012 include the completed joint statement of privacy principles and goals for 2013 and beyond including extending Free & Secure Trade (FAST) and harmonization of trusted trader programs such as the US’ Customs-Trade Partnership Against Terrorist (C-TPAT) and Canada’s Partners in Protection (PIP).

Part two of the discussion focused on the North American Regulatory Cooperation Council’s work on harmonization of regulatory regimes given the similarities between Canada and US standards across many products. A collection of 29 areas including food, consumer products, transportation, and environment were highlighted for cooperation in regulatory system reliance/standard setting, product reviews/approvals, and border screening. The stated goal of regulatory cooperation is to improve the supply chain and reduce costs. Collaborative work plans are in place consisting of 14 groups assigned to the 29 areas.

A panel concluded the afternoon’s discussion. Katie Clark, Minnesota Trade Office Executive Director, noted that 157,000 jobs in Minnesota are related to Canada-Minnesota trade and welcomed initiatives to increase that figure. Eric Schwartz, Dean of the Humphrey School of Public Affairs, noted that trends in foreign investment as a percentage of GDP have risen from single digits to one-third, which necessitates international cooperation on regulatory matters. Dean Schwartz suggested that Canada and the US form the ideal laboratory for this cooperation.

More information on Beyond the Border can be found at actionplan.gc.ca/border.

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Upcoming Events

10th Annual Midwest Global Trade Association Golf Tournament

August 15, 2012
Crystal Lake Golf Club, 16725 Innsbrook Dr., Lakeville, MN

The format for the tournament will be a best ball scramble with awards given to teams and individuals. In addition, there will be hole contests such as: hole-in-one, longest drive (men’s and women’s), a putting contest, and closest to the pin contest.

Register now

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AgCom

North Dakota’s Railed Oil Capacity Jumps 55% in June

from Associated Press

North Dakota’ s capacity to export crude oil by rail has jumped about 55 percent in June.

The increase comes with two new loading facilities in western North Dakota’s oil patch.

Musket Corp. increased capacity at its crude-to-rail facility at Dore from 10,000 barrels to 60,000 barrel per day. And Rangeland Energy says its new facility near Epping has at least 120,000 barrels of daily shipping capacity. North Dakota Pipeline Authority Director Justin Kringstad says the two terminals bring to 17 the number of facilities built since 2008 to move crude to markets not served by pipelines.

Kringstad says the state now has the ability to ship about 470,000 barrels of oil daily by rail. He says that number could increase to 710,000 barrels by year’s end.

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2nd Annual Paddleford Riverboat Cruise

by Rae Hale, General Mills

President Elect John Wilson enjoying the view

The 2nd Annual Paddleford Networking Event took place on June 14, 2012. It looked like it would be a repeat of last year’s stormy weather, but once we headed down the Mighty Mississippi, the clouds parted and we were able to enjoy a little sun! For those of you who attended last year (in the monsoon), that is a vast improvement! The journey began and ended at the Paddleford Launch on Harriet Island in Saint Paul. As we traveled down the river, I noticed a few barges, and it got me thinking about the history of the river, riverboats and the role they have played in our lives as Minnesotans and International Traders. See more photos.

Saint Paul and Minneapolis exist today because of riverboats. Rivers were the "freeways" of the 1800s. Travel was faster and much more comfortable on the big riverboats than by any other means. By the 1850s, hundreds of riverboats were coming to Saint Paul bringing all types of goods and thousands of people. (www.riverrides.com/pages/school/sftinfo.html)

Did you know that while the Mississippi itself is only the second longest river in the US, it forms the longest and most important river system in North America with its tributaries, the Missouri and Jefferson. The river system has the third largest drainage basin in the world and drains 41 percent of the United States, Alaska excluded. The Mississippi river system drains North America's agricultural heartland. With the water comes pollution and massive amounts of fertilizers that create a "death zone" devoid of marine life in the Bay of Mexico. (knowledge.allianz.com/health/food_water/?693/most-important-rivers)

The Mississippi River is also extremely important for agricultural exporters in the US. The 14,000 miles of waterways connecting through the Mississippi River system carry the most cargo of any river in America and is the second most productive river transportation system in the world, behind only the Yangtze River in China. The Mississippi allows some 30 states to ship their goods to export markets. Cargo exports through the ports on the lower Mississippi are estimated to be worth more than $100 billion a year. Recent budget cuts affecting the ability to keep the Mississippi dredged to appropriate depths are raising concerns…"Failure to properly dredge the river hurts America’s ability to compete in the world marketplace.” (www.maritime-executive.com/article/mississippi-river-dredging-cutbacks-result-restrictions-ships-threats-exports).

Hope to see everyone out on the river next year!

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Country of the Month: Venezuela

by Kevin Johnson, Best Buy

Geography
Area: 912,050 sq. km. (352,143 sq. mi.); slightly more than twice the size of California.
Cities: Capital – Caracas (metro. area pop. 3.2 million). Other major cities – Maracaibo, Valencia, Barquisimeto, Maracay, Merida, Ciudad Bolivar.
Terrain: Andes Mountains and Maracaibo Lowlands in northwest; central plains; Guiana Highlands in southeast.
Climate: Varies from tropical to temperate, depending on elevation.

People
Nationality: Noun and adjective – Venezuelan(s).
Population (February 2012 est.): Between 28,750,000 and 28,900,000.
Annual population growth rate: 1.6%.
Religion: Roman Catholic 96%, Protestant 2%, other 2%.
Language: Spanish (official), numerous indigenous dialects.
Education: Years compulsory – 9. Literacy (2009) – 98.7%.
Health: Infant mortality rate (2008) – 16 deaths/1,000 live births. Life expectancy (2009) – 73.94 years.
Ethnic groups: Spanish, Italian, Portuguese, Arab, German, African, Amerindian.

Government
Type: Federal Republic.
Independence: July 5, 1811.
Constitution: December 20, 1999.
Branches: Executive – President (head of government and chief of state; 6-year term); Council of Ministers (cabinet, appointed by president). Legislative – unicameral National Assembly (5-year term). Judicial – 32-member Supreme Court (elected by National Assembly; 12-year term). Electoral – National Electoral Council (elected by National Assembly; 7-year term). Citizen Power – Prosecutor General, Public Defender, Comptroller General (elected by National Assembly; 7-year term).
Subdivisions: 23 states, one federal district (Caracas), and one federal dependency (72 islands).
Major political parties: United Socialist Party of Venezuela (PSUV), Communist Party of Venezuela (PCV), Democratic Action or Accion Democratica (AD), Christian Democrats or Comite Organizador Politico por Elecciones Independientes (COPEI), Fatherland for All or Patria Para Todos (PPT), Movement to Socialism or Movimiento al Socialismo (MAS), Radical Cause or La Causa Radical, First Justice or Primero Justicia, the National Convergence or Convergencia, For Social Democracy or Podemos, A New Time or Un Nuevo Tiempo (UNT), Project Venezuela, Popular Will or Voluntad Popular (VP).
Suffrage: Universal, age 18 and over.

2012 Presidential Elections
The constitution establishes January 10 as the date for presidential inaugurations, but does not set election dates. In March 2012, the CNE officially convoked Venezuela’s presidential election for October 7, 2012 and gubernatorial elections for December 16, 2012. Despite his cancer diagnosis in June 2011, President Chavez said he would be his party’s candidate. The opposition's "Unity Table” (MUD) held a primary election on February 12, 2012, in which three million voters (17% of the electorate) participated. Voters elected Miranda State Governor Henrique Capriles Radonski as the opposition’s presidential candidate.

Principal Government Officials
President – Hugo CHAVEZ Frias
Vice President – Elias JAUA Milano
Minister of Foreign Affairs – Nicolas MADURO Moro
Minister of Defense – Henry Rangel Silva
Ambassador to the United States – vacant; Chief of Mission – Angelo RIVERO
Ambassador to the Organization of American States – Roy CHADERTON Matos
Ambassador to the United Nations – Jorge VALERO Briceno

The Venezuelan embassy in the United States is located at 1099 30th St. NW, Washington, DC 20007, Tel. (202) 342-2214. In addition to Washington, DC, Venezuela maintains consulates in Boston, Chicago, Houston, Miami (administratively closed), New Orleans, New York, San Francisco, and Puerto Rico.

ECONOMY
The Venezuelan Government dominates the economy. There is considerable income inequality. The Gini coefficient was 0.3902 in 2011. According to government statistics, the percentages of poor and extremely poor among Venezuelan households were 23.8% and 5.9%, respectively, in the second half of 2009. Record government expenditures helped to fuel positive GDP growth of about 4.2% in 2011, after a sharp drop in oil prices caused a global economic contraction in 2009-2010. The Consumer Price Index increased by 27.9% from September 2009 to September 2010, following increases of 25.1% in 2009, 30.9% in 2008, and 22.5% in 2007.

The state oil company, PDVSA, controls the petroleum sector. Government companies control the electricity sector and important parts of the telecommunications and media sectors. In 2008, the government nationalized cement and steel producers, as well as select companies in the milk and meat distribution sectors. In 2009 it nationalized assets in the oil (including assets owned by U.S. oil services companies), chemicals, tourism, agribusiness (including a processed rice plant owned by a US company), retail, and banking industries. In 2010, the government nationalized companies in the agricultural and construction sectors as well as US assets in the petrochemical and packaging industries. Threats of continuing nationalizations, as well as other threats to property rights and an uncertain macroeconomic environment characterized by high inflation and foreign exchange controls, have led to reduced space for the private sector and low levels of private investment.

A number of US companies whose assets have been nationalized in Venezuela have chosen to pursue their claims through international arbitration. On January 24, 2012, the Venezuelan Government formally denounced the International Centre for Settlement of Investment Disputes (ICSID) Convention, triggering its withdrawal from this international arbitration forum. Venezuela’s withdrawal will take formal effect in 6 months. While pending ICSID cases will not be affected by the decision, it will affect the ability of prospective foreign investors in Venezuela to invoke international arbitration.

All requests for foreign exchange at the official exchange rate must be approved by the National Exchange Control Administration (CADIVI), and the Central Bank (BCV) completes all legal purchase and sale of foreign currency. On December 30, 2010, the government set the official exchange rate at 4.3 bolivares per dollar. An alternative exchange market, called the Transaction System for Foreign Exchange Denominated Securities (SITME), is accessed through authorized Venezuelan financial institutions and operates by means of a bond-swap mechanism through the Central Bank. The SITME exchange rate has averaged 5.3 bolivares=US $1 since transactions began in June 2010. Any other foreign exchange transactions are not legally permitted, although a black market is reported to exist. Central Bank international reserves were US $28.4 billion at the end of January 2012.

On August 17, 2011, President Chavez announced his government’s decision to relocate all of Venezuela’s international reserves that were deposited in US and European financial institutions. This included 211 tons of gold reserves to be transferred to the Central Bank of Venezuela and $6.28 billion in cash reserves to be transferred to banks in Brazil, China, and Russia.

US-VENEZUELAN RELATIONS
US-Venezuelan relations have been tense in recent years, although both nations agreed at the April 2009 Summit of the Americas in Trinidad to seek a relationship based on mutual interest. President Chavez continues to define himself in opposition to the United States, using incendiary rhetoric to insult the US Government and US influence in Latin America. President Chavez ordered the expulsion of the US Ambassador on September 11, 2008, in solidarity with the Bolivian Government's decision to expel the US Ambassador in La Paz. The US Government ordered the reciprocal expulsion of the Venezuelan Ambassador in Washington. Venezuela and the United States returned the ambassadors to their posts in June and July 2009, respectively, after an unusual agreement by each country to declare without effect the "persona non grata” designations. On December 20, 2010, the Venezuelan Government revoked agrement for Ambassador-designate Larry Palmer, which had been issued in May, and on December 27, the United States revoked the diplomatic visa of Ambassador Bernardo Alvarez. Notwithstanding tensions in the bilateral relationship, the United States continues to seek constructive engagement with the Venezuelan Government, focusing on areas where cooperation is in both nations’ interest. Examples of such overlapping interests include cooperation in confronting narcotics trafficking and terrorism, as well as the commercial relationship.

US-Venezuelan commercial ties are deep. The United States is Venezuela's most important trading partner, with US goods accounting for about 24% of imports and approximately 42% of Venezuelan exports going to the United States. In turn, Venezuela is the United States' fifth-largest export market in Latin America, purchasing US machinery, transportation equipment, agricultural commodities, and auto parts. Venezuela is one of the top four suppliers of foreign oil to the United States. The Department of State is committed to promoting the interests of US companies in overseas markets. For contact information and a list of government publications, please go to the end of this document.

Venezuela is a minor source country for opium poppy and coca but a major transit country for cocaine and heroin. Money laundering and judicial corruption are major concerns. In 2004 and early 2005, counternarcotics cooperation between the US and Venezuela deteriorated significantly. In March 2005, the Venezuelan National Guard removed its highly experienced members from the US-supported Prosecutor's Drug Task Force. In August 2005, the Government of Venezuela accused the US Drug Enforcement Administration (DEA) of espionage and terminated cooperation with the DEA pending negotiation of a new cooperation agreement, which had gone unsigned as of October 2006. Since the Venezuelan Government ended formal cooperation with the DEA, bilateral counternarcotics cooperation has been limited to case-by-case deportations of wanted drug fugitives to the United States, informal information exchanges, and maritime interdictions with the US Coast Guard. The United States has concluded that Venezuela demonstrably failed to meet its international counternarcotics obligations every year since 2005.

In May 2011, the Secretary of State decided to impose sanctions on PDVSA for delivering at least three cargoes of reformate, a blending component for gasoline, to Iran between December 2010 and March 2011. The sanctions were imposed under the Iran Sanctions Act of 1996, as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010. They prohibit PDVSA from competing for US Government contracts, securing financing from the Export-Import Bank of the United States, and obtaining export licenses.

In June 2011, Venezuela was listed as Tier 3 in the State Department's Trafficking in Persons Report. Tier 3 status indicates that a country does not comply with the minimum standards for the elimination of trafficking.

Approximately 18,000 US citizens living in Venezuela have registered with the US Embassy, an estimated three-quarters of them residing in the Caracas area. An estimated 13,000 US tourists visit Venezuela annually. About 500 US companies are represented in the country.

Source: www.state.gov

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Customs Strike Could Slam Brazil Ports

from American Shipper

A strike by Brazilian customs officers is disrupting operations at major ports and affected the clearance of imported goods, according to a notice recently from maritime services company Inchcape Shipping Services.

The notice said the government is negotiating with officers over better salary and working conditions. If the talks are unsuccessful "interruption to vessel movements is likely to intensify.”

"Industrial action of varying lengths and degrees has already affected normal port operations in the majority of Brazil’s major ports including Santos, Paranagua, Salvador, Manaus, Santarem, Santana and Itacoatiara,” Inchcape said in the notice. "Customs officers had originally advised shipping agents that they would stop work for two days a week, and only work at a minimal level on the remaining days, until an agreement is reached.

"Customs’ leaders have now warned that if the negotiations taking place over the next few days are unsuccessful, they will start an undefined strike which will affect the whole country and paralyze Brazil including ports, airports and bonded warehouses. Importers, including industry which relies on raw materials and parts, are expecting to be particularly badly hit.”

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Heartland Shipper Conference

by Mark Toth

The MGTA has traditionally been a Twin Cities Metro organization. With the adaptation of the word "Midwest” as a literal definition, we have expanded our member base and offerings to include the needs of the Midwest shipping community.

A year ago, I attended a golf event at The International Traders of Iowa in Des Moines. This group is a cooperating organization. The President, Mr. Tim Woods, and a few others stayed back at the clubhouse and chatted. It was at this time that the concept was sold to me regarding a traveling conference in the Midwest. I took detailed notes and shared with the MGTA Board. Under the plan, the MGTA would be a founding sponsor.

It was approved by the MGTA Board and the conference was born. Several regional organizations also became founding sponsors, MGTA was first in line.

Rotation of cities as hosts is as follows: 2012 Des Moines, 2013 Minneapolis/St.Paul, 2014 Kansas City, 2015 North Dakota (city to be advised) then back to Des Moines to begin another rotation. 2012 in Des Moines was a homerun by conference standards; we stayed on the profit side of the ledger! Which is great for a first year. Also the attendance was over 200 participants. The organizing partner of these events is Cargo Business News.

So here we are. 2013 calendar year (it was agreed that April of each year was best timing for the conference) is the year of Minneapolis/St.Paul Heartland Shipper Conference. We begin the ramping up of site selection, speaker pool/agenda, and sponsorship. For last year’s program kindly follow the link here. You will see that Cargo Business News pulled in some dynamic speakers and the event was well planned. The draw of this conference brought shippers, freight forwarders, carriers, port managers and service providers. I met people from the tip of Florida to Port of Seattle. A nice national presence!

As soon as the 2013 program is available, I will share the link and any updates as they occur. Please set aside time in mid-April for this event each year. If your company finds the event as exciting as we do, please consider a sponsorship of the event; a great way to see your advertising dollars in action.

I am Chair of the MGTA Heartland Shippers Conference Committee 2013. If you are interested in volunteering with this event, contact me at the below phone/address.

Mark William Toth
mark.toth@mgta.org
612-460-8684

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Do you know an MGTA member who was recently promoted or hired to an import/export company? Know of a member who recently got married or had a new addition to the family? Share the good news with your industry colleagues by emailing JLloyd@scoular.com.

Who Said it?

"Always desire to learn something useful."
– Sophocles

"Whenever an individual or a business decides that success has been attained, progress stops."
– Thomas J. Watson

"In modern business it is not the crook who is to be feared most, it is the honest man who doesn’t know what he is doing."
– William Wordsworth

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Thank you, Newsletter Sponsor:

Port of Seattle

2012 Annual Sponsors:

 

Bremer

CH RobinsonDrinker

HMMKing Solutions

Neville Peterson LLPZepol
Global Training Center
Williams Mullen

© 2012 Midwest Global Trade Association. All Rights Reserved.
World Trader is distributed bi-monthly to MGTA members.
Articles submitted by our membership do not express the views of MGTA or the Board of Directors. If you would like to submit an article for publication in the World Trader, please contact the MGTA office at office@mgta.org.

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