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World Trader - June 2009
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June 2009
Volume 6 | Issue 3

World Trader

From the President

NAFTA’s Green Core Rule

Volunteer Spotlight: Dave Lorenzo

Country of the Month: The Republic of Haiti

From the desk of the President of the MGTA:

Technology updates MGTA June 2009

June Networking Event

Upcoming Events

From the President

by Sandy Taylor, Hyundai Merchant Marine, MGTA President

Lots to report this issue! The Forums Committee hosted its first Executive Roundtable on April 27. The event was held at the Bloomington Hilton. (There are four Hiltons in Bloomington! Who knew?) The topic was the Minnesota Trade Economy, with speakers from US Bank, MTO, and CH Robinson. It was exciting to see the openness of a roundtable. (Look forward to two more forum/roundtable events this year, in September and November.)

A thank-you goes out to the companies that sponsor our education events. Once again, Goodrich Corporation held our May 12, "Highlights of Customs Valuation." I so appreciate the support the MGTA has received this year in sponsoring/hosting education events/visits and participating in sponsoring by levels. In poor economic times, it really helps our balance sheet. Plus, it provides interesting, relevant venues that many of us may not otherwise have an opportunity to visit without the support of the host/sponsor company.

We have some changes coming to the MGTA; a decision was made by the Board of Directors to switch management firms. Nonprofit Solutions has done a wonderful job of bringing us to where we are today – so much so, that I would love to clone LJ Taugher, our out-going executive director.

As of June 15, Ewald Consulting is our new association management company. Our new website kicked off on June 12—if you have yet to visit, be sure to do so. Ewald Consulting will assist us in growing our sponsorship, getting "outside the metro” companies more involved, and more. Ewald Consulting, founded in 1982, is an association management company (AMC) located near Hwy 280 and University Avenue, on the border of Minneapolis and Saint Paul.

The MGTA board selected the new company after a thorough decision-making process during which Ewald Consulting demonstrated its commitment to assist MGTA in taking the next step in its growth. Ewald presented ideas for membership development, improvements in member service and event management and more. The company is 41 professionals strong with experts in event planning, communication, finance, government relations, public relations, membership development and leadership development.

Ewald Consulting is one of just 25 firms in the US to earn charter accreditation as an AMC from the American Society of Association Executives and the AMC Institute. The firm’s offices are centrally located within the metro area and contain ample meeting space that is available to boards, committee, and working groups -- including three Boardrooms and additional rooms for smaller committees and working groups. Learn more about the company and its staff members at www.ewald.com. There are also resource articles and streaming audio on topics related to association management.

This summer, we have a few fun events in which to participate. Here is to a "fun in the sun” summer ‘09.

Regards,
Sandy Taylor

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NAFTA’s Green Core Rule

By Lawrence M. Friedman, Barnes, Richardson & Colburn

Throughout the campaign leading up to the election of President Obama, the North American Free Trade Agreement attracted a lot of criticism for being weak on labor and weak on the environment. Prior to his election, Barack Obama stated that NAFTA needs to be renegotiated. Today, that impulse appears to have receded. Perhaps that is because the administration has other priorities. Or, it may be that the administration has taken a closer look at the agreement. In this special green issue of the MGTA News, this article will take a look at NAFTA and the environment.

The NAFTA contains a preamble, which includes the following language:
The Government of Canada, the Government of the United Mexican States and the Government of the United States of America, resolve to . . .

UNDERTAKE [the goals of the Agreement] in a manner consistent with environmental protection and conservation . . .
STRENGTHEN the development and enforcement of environmental laws and regulations

Beyond that, the main text of the Agreement is silent on environmental rules other than to say that the NAFTA does not override existing international agreements on the environment and conservation.

Outside the main text, the North American Agreement on Environmental Cooperation is one of two "side agreements” done in conjunction with the NAFTA. The other side agreement relates to labor issues. The NAAEC was designed to promote sustainable development, encourage reductions in pollution, and enhance environmental law enforcement.

The NAAEC established the Commission for Environmental Cooperation to manage the requirements of the side agreement. Among other functions, the CEC reviews submissions received from the public asserting that the U.S., Canada, or Mexico has failed to enforce its environmental laws. Since 1995, the CEC has received 68 submissions on a number of topics. For example, the most recent submission claims that the Government of Mexico has not effectively enforced rules protecting the Laguna de Cuyutlán, Manzanillo. According to the submission, the area accounts for 90% of the wetlands in the Mexican state of Colima.

There is much to criticize about the enforcement options available under the NAAEC. The CEC has very little power to force action by a party. Rather, it can collect information, engage in public hearings, and may issue reports known as "Factual Records.” While it is technically possible for the CEC to order monetary enforcement assessments, that has never happened.

On the other hand, importers have found a novel approach to use the rules of origin under NAFTA to promote the reuse of materials that might otherwise end up in landfills. This approach relates to the requirement that non-originating materials used in the production of certain NAFTA goods undergo a qualifying change in tariff classification as a result of "production” in North America.

In certain industries, it is common to collect used material (known as "core”), disassemble it for the recovery of useful parts, restore those parts to almost-new condition, and use them in the assembly of finished articles. This is called "remanufacturing.” A company that makes engines, for example, may collect old engines, disassemble them, remanufacture the constituent parts, and then assemble "remanufactured engines” for sale. The same process takes place for electronics and in other industries.

The problem was in determining the origin of the recovered parts. If a Chinese alternator is taken off an engine originally produced in Canada but used for 20 years in the United States, what is the origin of the alternator? If disassembling the engine is "production,” then origin will often be determined based on a tariff shift and the collected parts will often be NAFTA originating unless a regional value content requirement applies and is unmet. If disassembly is not production, origin will be harder to determine.

When faced with this question in 2003, U.S. Customs found that remanufacturing is both an important economic activity and supports the national goal of environmental protection through recycling. Accordingly, in 2005 the NAFTA regulations were amended to include new section 181.132, which states:

(a) Treated as production. For purposes of implementing the rules of origin provisions of General Note 12, HTSUS, and Chapter Four of the NAFTA, except as provided in paragraph (b) of this section, disassembly is considered to be production, and a component recovered from a good disassembled in the territory of a Party will be considered to be originating as the result of such disassembly provided that the recovered component satisfies all applicable requirements of Annex 401 and this part.

(b) Exception; new goods. Disassembly, as provided in paragraph (a) of this section, will not be considered production in the case of components that are recovered from new goods. For purposes of this paragraph, a "new good” means a good which is in the same condition as it was when it was manufactured and which meets the commercial standards for new goods in the relevant industry.

The addition of this rule was a success for the companies that engage in remanufacturing. More important to the debates over trade, globalization, and the environment, it is a victory for conservation.

Evidence that the NAFTA recycling rule is a success can be seen in its further adoption. In 2008, Canada Border Services Agency adopted a similar interpretation of the NAFTA. The U.S.-Chile FTA expressly provides that "recovered goods derived in the territory a Party from used goods, and utilized in the Party’s territory in the production of remanufactured goods” are considered originating. Similar, but not identical language, is in the U.S.-Australia FTA, the CAFTA-DR, and elsewhere.

While the environmental side agreement to NAFTA legitimately may be viewed with skepticism, the rules of origin have given importers a means of applying the NAFTA in a way that promotes the reuse and recycling of material. That is an environmental success story with customs compliance managers as the heroes.

Larry Friedman is a partner at Barnes, Richardson & Colburn in Chicago. His practice focuses exclusively on the representation of importers and exporters with respect to federal regulatory compliance and related litigation.

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Volunteer Spotlight: Dave Lorenzo

Name: Octavio "Dave” Lorenzo
MGTA position: Newsletter Chairperson
Company: Director of International Sales, Twin City Hardware
Contact info: email: dlorenzo@tchco.com

Why did you choose to volunteer for the MGTA Communications Committee, and when did you start?
Initially, I wanted to get involved with the MGTA in a limited way, as I had recently moved to the Twin Cities, and I did not want to over-commit. Well, I spoke to Mari McClafferty and she described the great need on the Communications Committee for a Chairperson; I saw a perfect opportunity to help.

What have you done for the committee?
I started immediately after volunteering: my first exposure to the Committee was the conference call for the April issue of World Trader. Everyone was so helpful, and helped me feel comfortable, right from the start. We produced the April issue, and then embarked on the June edition right away.

What surprised you about the experience?
That everyone was so generous with their time and expertise. The willingness to help is infectious. Not to be ignored is the level of professionalism by all the volunteers and board liaisons, all in an atmosphere that is distinctly fun and personable.

What do you consider your greatest accomplishment since joining this committee?
1.) Producing the April edition on time.
2.) Growing ever more enthusiastic about the opportunities to help the MGTA. The positive experiences that I have enjoyed have nurtured a desire to continue to help.

What are your thoughts for the future?
We are truly fortunate to have so much opportunity before us: in our lives, in the MGTA, and as a nation. The efforts of much of our readership and members will directly influence the economic recovery domestically and internationally. I, for one, am very excited.

What advice would you give someone who is looking to help with this project?
Don’t be afraid to hold your hand up! Volunteer to help—even if you can only give an hour a week; if you can write an article for the World Trader (shameless plug); JUST DO IT—Get involved somehow with the MGTA. The feeling of satisfaction derived from helping, will far outweigh your time commitment.

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Country of the Month: The Republic of Haiti

map2

Background:

mapThe native Taino Amerindians -- who inhabited the island of Hispaniola when it was discovered by COLUMBUS in 1492 – were nearly annihilated by Spanish settlers within 25 years. In the early 17th century, the French established a presence on Hispaniola. In 1697, Spain ceded to the French the western third of the island, which later became Haiti. The French colony, based on forestry and sugar-related industries, became one of the wealthiest in the Caribbean -- but only through the heavy importation of African slaves and considerable environmental degradation. In the late 18th century, Haiti’s nearly half-million slaves revolted under Toussaint L’Ouverture.

After a prolonged struggle, Haiti became the first black republic to declare independence in 1804. The poorest country in the Western Hemisphere, Haiti has been plagued by political violence for most of its history. After an armed rebellion led to the forced resignation and exile of President Jean-Bertrand Aristide in February 2004, an interim government took office to organize new elections under the auspices of the United Nations Stabilization Mission in Haiti (MINUSTAH). Continued violence and technical delays prompted repeated postponements, but Haiti finally did inaugurate a democratically elected president and parliament in May 2006.

Geography: Haiti

Location:
Caribbean, western one-third of the island of Hispaniola, between the Caribbean Sea and the North Atlantic Ocean, west of the Dominican Republic.

Area:
Total: 27,750 sq km
Country comparison to the world: 154
Land: 27,560 sq km
Water: 190 sq km

Area - comparative:
Slightly smaller than Maryland

Land boundaries:
Total: 360 km
Border countries: Dominican Republic 360 km

Coastline:
1,771 km

Maritime claims:
Territorial sea: 12 NM
Contiguous zone: 24 NM
Exclusive economic zone: 200 nm
Continental shelf: to depth of exploitation

Climate:
Tropical; semiarid where mountains in east cut off trade winds

Terrain:
Mostly rough and mountainous

Elevation extremes:
Lowest point: Caribbean Sea 0 m
Highest point: Chaine de la Selle 2,680 m

Natural resources:
Bauxite, copper, calcium carbonate, gold, marble, hydropower

Land use:
Arable land: 28.11%
Permanent crops: 11.53%
Other: 60.36% (2005)

Irrigated land:
920 sq km (2003)

Total renewable water resources:
14 cu km (2000)

Freshwater withdrawal (domestic/industrial/agricultural):
Total: 0.99 cu km/yr (5%/1%/94%)
Per capita: 116 cu m/yr (2000)

Natural hazards:
Lies in the middle of the hurricane belt and subject to severe storms from June to October; occasional flooding and earthquakes; periodic droughts

Environment – current issues:
Extensive deforestation (much of the remaining forested land is being cleared for agriculture and used as fuel); soil erosion; inadequate supplies of potable water

Environment – international agreements:
Party to: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Law of the Sea, Marine Dumping, Marine Life Conservation, Ozone Layer Protection

Signed, but not ratified: Hazardous Wastes note:
Shares island of Hispaniola with Dominican Republic (western one-third is Haiti, eastern two-thirds is the Dominican Republic)

Economy - Overview:

Haiti is the poorest country in the Western Hemisphere with 80% of the population living below the poverty line and 54% in abject poverty. Two-thirds of all Haitians depend on the agricultural sector, mainly small-scale subsistence farming, and remain vulnerable to damage from frequent natural disasters, exacerbated by the country’s widespread deforestation. While the economy has recovered in recent years, registering positive growth since 2005, four tropical storms in 2008 severely damaged the transportation infrastructure and agricultural sector.

U.S. economic engagement under the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act, passed in December 2006, has boosted apparel exports and investment by providing tariff-free access to the U.S. HOPE II, passed in October 2008, has further improved the export environment for the apparel sector by extending preferences to 2018. The apparel sector accounts for two-thirds of Haitian exports and nearly one-tenth of GDP. Remittances are the primary source of foreign exchange, equaling nearly a quarter of GDP and more than twice the earnings from exports.

Haiti suffers from high inflation, a lack of investment because of insecurity and limited infrastructure, and a severe trade deficit. In 2005, Haiti paid its arrears to the World Bank, paving the way for reengagement with the Bank. Haiti is expected to receive debt forgiveness for about $525 million of its debt through the Highly-Indebted Poor Country (HIPC) initiative by mid-2009. The government relies on formal international economic assistance for fiscal sustainability.

GDP (purchasing power parity):
$11.59 billion (2008 est.)
Country comparison to the world: 142
$11.33 billion (2007)
$10.98 billion (2006)
Note: data are in 2008 U.S. dollars

GDP (official exchange rate):
$6.966 billion (2008 est.)

GDP – real growth rate:
2.3% (2008 est.)
Country comparison to the world: 157
3.2% (2007 est.)
2.3% (2006 est.)

GDP – per capita (PPP):
$1,300 (2008 est.)
Country comparison to the world: 202
$1,300 (2007 est.)
$1,300 (2006 est.)
Note: data are in 2008 U.S. dollars

GDP – composition by sector:
Agriculture: 28%
Industry: 20%
Services: 52% (2004 est.)

Labor force:
3.6 million
Country comparison to the world: 93
Note: shortage of skilled labor, unskilled labor abundant (1995)

Labor force – by occupation:
Agriculture: 66%
Industry: 9%
Services: 25% (1995)

Unemployment rate:
Widespread unemployment and underemployment; more than two-thirds of the labor force do not have formal jobs (2002 est.)

Household income or consumption by percentage share:
Lowest 10%: 0.7%
Highest 10%: 47.7% (2001)
Distribution of family income – Gini index:
59.2 (2001)
Country comparison to the world: 8
Investment (gross fixed):
28.9% of GDP (2008 est.)
Country comparison to the world: 31
Sources:
CIA The World Factbook, www.cia.gov

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From the desk of the President of the MGTA:

I would like to thank Mark Toth, Board member and Communication Chair/Liaison. Thanks to Mark, we had a successful transition from our former management firm to our new management firm on all communications.

I had asked Mark if he would run with the new website creation. Mark worked closely with Ewald Consulting, our management firm, to create a new MTGA website. All I can say is WOW. The website is so fresh, with wonderful tools, links, and such.

Key objectives for my term are high-tech initiatives showing the MGTA as current with global changes and able to communicate on hot topics, to be current with today’s technology. Last year, Mark added LinkedIn and Facebook to our website. He helped kick off our first webinar. A lot of work is involved in turning off one website and turning on another site at the exact same time, and getting it off the ground, Kudos to Mark. This year he has added RSS feeds, blogs and numerous direct links.

The positive results of Mark's involvement have truly enhanced the MGTA. I truly wish to thank Mark Toth for all he has done thus far and for all that is to come. Mark has fresh ideas and is very intuitive with new technologies.

Sincerely,
Sandy Taylor
President MGTA

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Technology updates MGTA June 2009

1.) LinkedIn is growing at a quick pace - nearly 5 new members per week! If you have not signed up yet, please do so at www.linkedin.com. Search for the Midwest Global Trade Association.

2.) The new MGTA website is live online and boasts several new functions. Check it out at www.mgta.org. We are excited to have you look around on the site and get familiar with all the bells and whistles.

Special Note: Check out the available store discounts at the following location: www.mgta.org/msmindex.cfm. At the top of the page click on the "Association Mall” link and see what’s available. This is an example of one newly added MGTA Membership bonus.

Under the "Resources” tab, see the new searchable member directory. This is available without logging in.

For members, under the "Members Only” tab you can log in and get additional search details in the membership directory.

Your username is your "FirstnameLastname” and your password is "mgta.”

This log-in is used for online purchases in the aforementioned Association Mall. Once inside, you can change any of your personal data including password. Make sure to update your member record so your colleagues can find you more easily.

Send your questions or concerns to mark.toth@mgta.org.

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June Networking Event

The MGTA held its June Networking Event at SBS Group of Companies on Wednesday, June 17. Speaker Paul Johnson, Vice President of Operations, SBS, led a review of third-party logistics companies and the value they offer to members. The event drew 39 participants.

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Upcoming events

Mark your calendar and plan to attend our upcoming MGTA events. For more information about MGTA programs and meetings, click here.

7th Annual Golf Tournament

Wednesday, August 19, 2009
12:00 pm–7:00 pm
Crystal Lake Golf Club | Lakeville, MN

Details & registration

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2009 Annual Sponsors:

 

1236475

© 2009 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.

Midwest Global Trade Assocaition
1000 Westgate Drive, Ste. 252 | St. Paul, MN 55114
p 651.290.7482 | f 651.290.2266 | office@mgta.org |
www.mgta.org

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