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World Trader - April10
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April 2010
Volume 7 | Issue 3

World Trader

From the President

Upcoming Events

Your World, Today

Japan's Exports Log Fastest Rise in 30 Years

State Exports at $3.9 Billion in Fourth Quarter

Country of the Month: Czech Republic

Who Said It?

The Grab Bag


From the President

by Mari McClafferty, MGTA President

Mari McClaffertyIt’s a wonderful place to be this spring in Minnesota with the above average warm weather and the recent Minnesota Twin’s opener at the new Target Field. Go Twins!

This nicer than usual weather helped with a good turn out at our recent Forum event held at the Hotel Sofitel covering Intellectual Property Rights. Special thanks to Jim Moore, Madesmart and MGTA Board Member and Paul Rasmussen, Zepol Corporation and sponsors for all their efforts with the Forum. At the beginning of the event everyone was able to introduce themselves, network and submit IP-related questions that they want answered. Some companies approached me to offer their services as volunteers. I look forward to working with you! Click here to see photos.

Long-time MGTA member, sponsor, speaker, and Attorney John Peterson, with Neville Peterson LLP, provided some useful, cost-saving legal tips. We learned how U.S. Customs can help companies enforce and protect IP without time-consuming legal actions. Every time I use a razor or a paint can with a hand grasp I will think of Attorney, James L. Young, Westman, Champlin & Kelly, P.A. who walked MGTA members through the process, history and product examples of how patents are registered. Thank you all for a very informative legal Forum!

With spring comes renewal, and the MGTA Board met at Ewald Consulting on April 16 to plan the strategic direction and 3 year plan for the Midwest Global Trade Association. Our new MGTA Mission: The Midwest Global Trade Association (MGTA) supports the global trade community with professional development, networking and industry resources. The upcoming Africa, Near East, and South Africa (ANESA) Conference sponsored by the Minnesota District Export Council (DEC) to be held at the Minneapolis Radisson May 11-12 is an event not to miss, with experts from 20 countries on hand to help with new trade business and answer your questions.

I hope to see you there!

Mari Smith McClafferty, MGTA President

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Upcoming Events

Africa, Near East, and South Asia (ANESA) Conference

May 11-12, 2010
Minneapolis, MN

Africa, Near East and South Asia (ANESA) comprise a rich market for U.S. exports. Key countries in this region are importers of technologies that enable them to export their wealth of natural resources. Bilateral trade is driving these countries to build their infrastructure creating additional demand for imports. As the affluence of their citizens grows, higher standards of living are opening up demand for other tiers of imported U.S. products and services. Download a brochure

May Seminar: Export Management – Export Management Compliance Program & Manual

May 18, 2010
St. Paul, MN

What Will You Learn?

  • What is an Export Management Compliance Program (EMCP)?
  • Why does my company need an EMCP?
  • How should my company implement an EMCP?

These are a few of the questions that will be discussed during the seminar. Local company representatives and government officials working with export controls daily will provide you best practices and practical advice for improving EMCP practices. Review and update or create your own EMCP manual during the workshop. Learn more

MGTA Port of Duluth Tour

June 9, 2010

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Your World, Today

National Export Initiative

  • During his State of the Union address, the President set a goal of doubling exports over the next five years – an increase that will support two million jobs here at home.
  • In a time when millions of Americans are out of work, boosting our exports is a short-term imperative. Our exports support millions of good, high-paying American jobs.
  • If you ask the average American what trade has delivered, they’d say they’ve seen the plant across town shut down, jobs go overseas, and communities shrivel. And you can’t blame them for feeling that way. Other countries haven’t always played by the same set of rules. America hasn’t always enforced our trade rights or made sure that the benefits of trade are broadly shared.
  • That’s why as we take more steps to compete in the global marketplace, we’ve got to look out for our workers. To look out for our workers, we’ve got to compete in the global marketplace. It’s never been as imperative for our short and long-term prosperity.
  • When 95 percent of the world’s customers are outside our borders, failure to compete for those customers is economic malpractice. The President refuses to sit on the sidelines and let jobs be created elsewhere when America still has the most innovative economy and the most productive workers in the world.
  • For the first time, the United States is launching a single, comprehensive strategy to promote American exports. It’s called the National Export Initiative (NEI), and it’s an ambitious effort to marshal the full resources of the United States government behind American businesses that sell their goods and services abroad.
  • Through the NEI, we will take steps to open up new markets, double our exports, and level the playing field for American workers.
  • Recently, the President signed an Executive Order instructing the federal government to use every available federal resource in support of this effort:

    • by creating an Export Promotion Cabinet made up of the Departments of State, Treasury, Commerce, Agriculture, Labor, and other federal agencies responsible for exports.
    • by re-establishing the President’s Export Council, the principal private sector advisory committee on international trade.
  • Over the next several years, we’ll continue significantly ramping up Export-Import Bank trade financing for businesses, especially small and medium businesses that want to export their goods but just need a boost.
  • We’re going to advocate for our workers, businesses and products abroad to make sure everyone knows what we already do – that American workers are the most productive and dynamic in the world.

    • As part of these efforts, Secretary Clinton is creating a Senior Visitor Business Liaison in every one of our embassies to proactively look for export opportunities and provide advice to American companies.
  • We’ll help US companies identify and gain footholds in new and emerging markets overseas by setting up one-stop-shops that provide a comprehensive toolkit of services – from financing to counseling to promotion – to help potential exporters grow and expand. Through employing new technologies and pursuing public-private partnerships, exporters can draw from the global shipping knowledge and resources of companies like FedEx, UPS and the US Postal Service.
  • We’ll enforce our current trade agreements and strengthen our existing relationships. We’ll increase the government’s attention on removing barriers that are hampering US companies because if we’re providing free and fair access to foreign markets, then we expect it in return.

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Japan's Exports Log Fastest Rise in 30 Years

From AFP

Japan's exports soared at the fastest pace in about three decades last month, helping the world's number two economy to extend a recovery from the worst recession in decades, data showed recently.

Worldwide demand for Japanese cars, electronics and other goods is rebounding after collapsing during the global economic crisis that erupted in 2008.

Exports in February leapt 45.3 percent to 5.13 trillion yen (56 billion dollars), the fastest year-on-year growth since April 1980, according to the finance ministry.

While exports are still about one quarter lower than their level two years ago, the picture has brightened significantly compared with February 2009, when shipments roughly halved from a year earlier.

"Exports, the driving force of a recovery in Japanese corporate earnings, have maintained their steam," said Naoki Murakami, chief economist at Monex Securities.

"The momentum in the global economic recovery is becoming stronger thanks to a US rebound since late 2009," which followed upturns in the Chinese and other Asian economies, Murakami wrote in a note.

Last month Japan's trade surplus surged more than nine-fold to 651.0 billion yen (7.2 billion dollars) from 70.8 billion a year earlier, topping market expectations.

Shipments of automobiles more than doubled despite the safety woes of Toyota Motor, which has recalled more than eight million vehicles worldwide. Auto part exports rose 121.7 percent while electronics components were up 69.1 percent.

Imports increased 29.5 percent to 4.48 trillion yen owing to higher prices of oil and nonferrous metals.

Japan's surplus with the United States surged 173.0 percent to 395.9 billion yen and with the European Union it rose 69.9 percent to 165.9 billion yen.

With China, Japan's biggest trading partner, the trade balance slipped into a deficit of 24.6 billion yen from a year-earlier surplus of 10.6 billion yen.

Japan's exports to China grew 47.7 percent on robust shipments of cars and parts but imports rose by a brisker 54.3 percent due to increased purchases of clothing, audio and video devices, computers and other electronic equipment.

The Japanese economy is still relatively weak but domestic demand has been somewhat resilient helped by a recent slight upturn in wages, said Takeshi Minami, economist at Norinchukin Research Institute.

"As long as China's economy grows healthily, Japan will keep benefiting," Minami said. "On the other hand, China's credit-tightening policy, if excessive, could pose risks to Japanese exports."

Japan's economy plunged into its most severe post-war recession in 2008, with its heavy dependence on foreign markets making it one of the worst affected by the global economic downturn.

It returned to growth in the second quarter of 2009 but the recovery remains fragile with falling consumer prices, high public debt and weak domestic demand all major concerns for policymakers.

Toyota's US sales in February of this year dropped 8.7 percent but "exports of automobiles and auto parts from Japan to the United States were not affected," said Minami.

"Now that the recall problem seem to be easing, it is unlikely to have a big impact on Japanese exports in the future," he said.

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State Exports at $3.9 Billion in Fourth Quarter

From the MN Dept. of Employment & Economic Development

Minnesota manufacturers exported $3.9 billion in products in the fourth quarter of 2009, according to export numbers released today by the Minnesota Department of Employment and Economic Development (DEED). State exports fell by 6.3 percent from the same quarter in 2008, while U.S. exports fell 2.2 percent during that period.

For 2009, Minnesota-manufactured exports decreased 15.5 percent to $14.6 billion while U.S. exports fell 18.3 percent.

"Minnesota manufacturers have been staring straight in the face of an economic slowdown that has disrupted business globally," said DEED Commissioner Dan McElroy. "However, our export markets, particularly in Asia, are showing signs of recovery, and exports have increased in four of our state's ten largest markets."

Minnesota exports increased to the following four top 10 trading markets: China ($363 million, up 19 percent), Japan ($226 million, up 6 percent), Korea ($129 million, up 20 percent), and Australia ($112 million, up 31 percent).

Among all regions, exports to Asia experienced the strongest performance, growing 11 percent to $13 billion. Other Asian markets with strong export performances were Malaysia, Thailand and Taiwan. These gains helped blunt a 51 percent decline in the Philippines to $99 million and a 22 percent decline in the European Union to $957 million.

Minnesota's largest manufactured export is computers and electronics, in spite of weaker demand for computer components, integrated circuits and printed circuits. Computers and electronics declined 17 percent from a year ago to $901 million. However, strong gains in transportation equipment export ($527 million, up 27 percent) helped offset some of these losses.

Following up on emerging export opportunities in Asia, the Minnesota Trade Office (MTO) will lead a business development mission to Vietnam this May to assist Minnesota businesses in exploring trade opportunities, acquiring business contacts and partners, increasing exports, and developing relationships with key trade organizations. Vietnam was also a growth market for Minnesota in the fourth quarter; exports were up 158 percent to almost $13 million.

"U.S. export sales to Vietnam grew more than 11 percent last year, and are now more than $3.1 billion," said MTO Deputy Director Ed Dieter. "This is generated in part by the Vietnamese government's efforts to improve infrastructure and develop the country's manufacturing sector."

A full report of Minnesota's manufactured exports in the fourth quarter can be found here.

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Country of the Month: Czech Republic

by Zdenek Kuhn

The Czech Republic has one of the most developed and industrialized economies of the former communist countries in Central and Eastern Europe. Its strong industrial tradition dates to the 19th century, when Bohemia and Moravia were the industrial heartland of the Austro-Hungarian Empire. The Velvet Revolution of 1989 peacefully overthrew a Communist dictatorship and led to the election of dissident playwright Vaclav Havel as president of a democratic Czechoslovakia (Index of economic freedom, 2010). The Czech Republic separated from Slovakia, and became an independent nation in 1993. The Czech Republic joined the European Union on May 1, 2004. The Czech Republic has a well-educated population. The country's strategic location in Europe, skilled population, and workforce has attracted strong inflows of foreign direct investment. In addition, Czech infrastructure is also well developed.

The principal industries are motor vehicles, machine-building, iron and steel production, metalworking, chemicals, electronics, transportation equipment, textiles, glass, ceramics, and pharmaceuticals and brewing (Czech beer is world famous). The main agricultural products are sugar beets, potatoes, wheat, and hops. As a small, open economy in the heart of Europe, economic growth is strongly influenced by demand for Czech exports and flows of foreign direct investment (TDS, 2009).

Most barriers to trade in industrial goods with the EU fell in the course of the accession process. The process of accession had a positive impact on reform in the Czech Republic, and new EU directives and regulations continue to shape the business environment (TDS, 2009).

Free trade in services and agricultural goods, as well as stronger regulation and rising labor costs, will mean tougher competition for Czech producers. In addition, the Czech Government has yet to set a target date for euro adoption. According to U.S Department of State, the earliest the Czechs could begin using the euro is 2013.

According to the US Department of Commerce, in the Czech Republic there are ten free trade zones established in several cities throughout the Czech Republic. Materials, components and semi-finished products are exempted from customs duties or VAT if they are imported into a free trade zone. If the goods are then used in the manufacturing or processing of a final product that is then re-exported, they are also exempted from duties or VAT. Duties and VAT are applied on the declared value of the goods if they are cleared for free circulation within the European Union. Similar rules apply to goods placed in a bonded warehouse; however, manufacturing operations are generally not permitted there (Czech Republic, 2009). There are few trade barriers in the Czech Republic. As a member of the European Union, the Czech Republic's tariffs and norms must obey the rules to the EU standard. The Czech Republic has adopted a value–added tax (VAT) which is 19% for goods excluding foods and some services.

The Czech Republic has harmonized its standards with European norms. Products certified in the Czech Republic or another EU member state can be marketed in the Czech Republic. In addition, products certified to meet EU standards (identified by the "CE" mark) by authorized U.S. testing laboratories are acceptable. ISO 9000 standards are being used increasingly in the Czech Republic as evidence of high product quality (Background note: Czech Republic, 2009).

On the other hand, one negative aspect of Czech Republic is that corruption is still perceived as significant, as evidenced by the slow pace of legislative and judicial reform. In addition, although the regulatory environment is generally consistent with a market economy, bureaucracy and red tape slow entrepreneurial dynamism.
Relations between the U.S. and the Czech Republic are excellent and reflect the common approach both have to the many challenges facing the world at present (Background note: Czech Republic, 2010).

Bibliography:
2010 Index of economic freedom. (2010). Heritage Foundation. Retrieved from: http://www.heritage.org/index/Country/CzechRepublic

TDS. (2010). Travel Document System, Inc. Retrieved form:
http://www.traveldocs.com/cz/economy.htm

Background note: Czech Republic. (2009). U.S. Department of State. Retrieved from: http://www.state.gov/r/pa/ei/bgn/3237.htm

Czech Republic. (2009). U.S. Commercial Service. Retrieved from:
http://www.buyusa.gov/czechrepublic/en/118.html

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Who Said It?

"Leadership can be thought of as a capacity to define oneself to others in a way that clarifies and expands a vision of the future."
– Edwin H. Friedman

"An effective leader develops the ability to correctly identify the pertinent detail or details - incidentals in a market, industry or sport that might create an incremental advantage."
– John Wooden

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The Grab Bag

When working in an international context with college students I was always coming across interesting articles or pieces of information. I begin putting them in folders and one day I got the idea that it would be fun to provide all of these ideas for my students. In the same way, in international trade and business we all come across pieces of information that we find interesting and would like to share with others. We would love to hear from you our readers what kinds of interesting articles or ideas you have and then put them in our reader's "Grab Bag."

Landlocked Traders Fight for Flying Fish

by Christine Stebbins, Reuters

A quiet street in an American city a thousand of miles from the nearest ocean is an unlikely battleground in the world's fish trade.

But that is exactly what Brent Casper likes about it.

"People think you throw a line in the lake and pull up a walleye in Minnesota. But the majority of what we buy is being shopped for aggressively by all the countries of the world," said Casper, who founded his trading company, The Fish Guys, here in 1993 to buy and sell wholesale seafood.

"It's tuna that Japan is fighting for, it's tuna that France is fighting for, Spain is fighting for. So it's a global economy that's coming from everywhere," Casper says of his daily scrambles as a 21st-century fishmonger.

Casper and his partner Mike Higgins, who manages the logistics of keeping their fish fresh amid far-flung inspections, flight snags, truck snarls and weather surprises around the world, said they may not be jostled by ocean waves but they still like the action.

Fish trade, Higgins says, is "the wild, wild West of the food industry – the last completely over-the-counter market."

Casper and Higgins, both transplanted Chicagoans, have built their firm of 40 employees (www.thefishguysinc.com) into a $21 million business, the largest wholesaler in the Midwest, a region known for its corn-fed beef and hearty pork chops.

In fact, most fishmongers are on the U.S. coasts with just a handful like The Fish Guys in the Midwest.

Higgins, who exited the bustling world of the Chicago grain markets in 2003, moved north to Minneapolis and met Casper when he was looking for a new business venture.

Casper had started The Fish Guys after learning the seafood business during a 25-year career in the famous Randolph Street wholesale fish markets in Chicago.

"I can control maybe 20 percent of my day. The other 80 percent is totally at the whims of Mother Nature, the boats, the airlines, my customers, truck drivers," said Casper.

A recent nightmare was the Valentine's Day holiday weekend in February, when many of his restaurant customers had geared up orders for a crush of diners. But a blizzard snowed in many parts of the United States and, Caspar said, 4,000 lbs (1,800 kg) of their fish ended up in Salt Lake City instead of Minneapolis.

"It's a challenge and I love that kind of business," he laughed. "Every day is different."

A Hub for Flying Fish

Once a fishing boat docks in New Orleans, or Alaska's Aleutian Islands, or Halifax, Nova Scotia, brokers representing Higgins and Casper bid aggressively for the catch – wild salmon or halibut, say, or perhaps the occasional rouge fish.

Those brokers are bidding against high-end distributors in Japan, China, Europe and other areas of the world.

Fish are packed on ice or frozen and flown daily into Minneapolis-St. Paul.

The Fish Guys then use courier services for next-day delivery throughout Minnesota and into Wisconsin, Iowa, North Dakota, South Dakota and parts of Nebraska and Illinois.

Catches coming in from overseas are handled by forwarders who manage customs and logistics for international freight.

"Right now at 9 a.m. there is probably a boat pulling into one of our vendors at a port in Maryland with wild striped bass. That fish is put on ice, packed by 10 a.m. and on its way to the airport," Higgins said.

"The bass is shipped overnight, filleted here in the morning and ready for lunch at a Minneapolis restaurant by noon."

The Fish Guys begin their day at 4:30 a.m. as processing crews start filleting whole fish by hand.

"We are a commodity business, even though it's a fresh commodity," Casper said.

Occasionally Casper or Higgins will get a midnight call even before a boat docks somewhere from someone on the vessel describing their latest choice catch, such as a 250-pound (110-kg) swordfish, and asking if they are interested.

"You're trading in a spot market and it's cash over the counter," Higgins said. "We could have the fish sold before it ever lands in Minneapolis."

The U.S. fish industry brings in about $70 billion a year, according to the U.S. Commerce Department. About two-thirds of U.S. households buy fish for home consumption while 80 percent consume fish at least once a year at a restaurant.

Fish protein and oils are praised by nutritionists, but the recession has hurt demand for fish despite its health benefits. Annual U.S. per capita consumption was just under 16 lbs (7.26 kg) in 2008 versus 16.3 lbs (7.39 kg) in 2007, according to the U.S. Department of Agriculture.
The fish industry has also been a target of environmental and sustainability groups worried about degraded oceans, over-fishing, species loss and pollution. The Fish Guys have allied with commercial groups promoting sustainable fishing practices, such as the Marine Stewardship Council.

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Thank you Newsletter Sponsor:

Port of Seattle

2010 Annual Sponsors:

 

ZepolCH RobinsonBremerUS Bank
HMMNeville Peterson LLP

© 2010 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 Association
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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