The Panama Canal expansion project, which was initially scheduled to be completed in 2014, 100 years after its first opening, has been delayed for a number of reasons. Nevertheless, on December 31 last year the Panama Canal Authority said its new locks are expected to be tested at the end of 2015 and be ready for commercial transit in early 2016. Are American ports ready?
The imagined rewards that come with timing markets often tempt otherwise risk-adverse individuals with the prospect of easy money. The same psychology that lures humans toward gambling comes into play when making both personal and professional financial decisions. As tempting as timing the market might be, is it truly the right course for you or your business?
Let’s face it, companies competing in global markets often depend on their governments for export-related financing and support. With every nation trying to win jobs and promote exports for companies in their own countries, the Export-Import Bank of the United States does the same: it provides the financial scaffolding to support American business interests worldwide.
The specter of currency wars rises like a phoenix once again. This time around, most of the warriors reside in Washington, D.C. The strong dollar has inflamed the currency warriors led by Democratic Senator Chuck Schumer from New York and Lindsey Graham, a Republican Senator from South Carolina. These mercantilists argue that “cheap” foreign currencies give the U.S.’s trading partners an “unfair” advantage, something worth doing battle over.
President Obama’s Dec. 17, 2014, announcement that the United States will re-establish diplomatic relations with Cuba after more than 50 years is a paradigm shift that offers some immediate opportunities for the trade community. However, the more meaningful step of removing the longstanding U.S. economic embargo against Cuba will have to be taken by Congress.
U.S. Trade Representative Michael Froman is bullish on the trade agenda. But his estimate of completing the Trans-Pacific Partnership (TPP) negotiations in March discounts the possibility that Congress will issue tough demands in its Trade Promotion Authority (TPA) legislation. A congressional mandate to include enforceable “currency manipulation” provisions in trade agreements, for example, would push completion of the TPP into the next administration or kill it altogether.
The 114th Congress features a Republican majority that is larger than any since 1928 and ready to flex that GOP muscle. While a Democratic White House could create speed bumps to GOP efforts to advance certain legislative initiatives, both sides have said trade policy is an issue where they might find common ground.
Most economists agree that free trade works better than restricted trade to increase the size of the economic pie. By enlarging markets to span national borders, free trade increases the pool of potential producers, consumers, partners, and investors, which permits greater specialization and economies of scale — both essential ingredients of per capita economic growth.
In 2013, the United States exported merchandise to Mexico valued at $226.2 billion, nearly the same amount as U.S. exports to China, Germany, the United Kingdom and Russia combined. This surprises many since Mexico, the second largest U.S. export market, has an economy less than one-tenth the size of the United States’ and its population of 123 million is the world’s 11th largest. But the benefits don’t end there.
U.S. Foreign-Trade Zones have emerged as a valuable platform for U.S. exports and an attractive home for the re-shoring of manufacturing activity, according to the most recent report from the U.S. FTZ Board. In its Annual Report to Congress released in August, the FTZ Board reported that FTZ activity in 2013 reached new highs for merchandise received in zones, exports and employment.
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