Topic Category: U.S.

A comparative analysis reveals that the leading U.S. exporting states tend to export the same types of products to the same foreign markets.

For example, California and Texas, the two largest exporting states, both rank electrical products and industrial machinery as their top two exports, and they both sell these products to Canada, Japan, Mexico and the United Kingdom.

What Products Are the Top Exporting States Selling Abroad?

In 1997, the eight leading U.S. exporting states were California, Texas, New York, Michigan, Illinois, Washington, Ohio and Florida. Companies located in these states sold slightly more than half of all U.S. exports.

Not surprisingly, industrial machinery, computers, electrical products, transportation equipment, and chemical products ranked among each state’s top seven exports.

In addition, scientific and measuring instruments, food products, refined petroleum, primary metals, fabricated metal products, agricultural goods, and livestock were often found at the top of the list of several leading exporting states.

What Foreign Markets Are Targeted?

All eight leading exporting states reported Japan, Canada and the United Kingdom to be among their 10 best export destinations. Six of the eight states also included Mexico and Germany in this list.

Florida was the only state whose top eight export destinations were in Latin America.

Exporters Will Benefit from Asian Economic Recovery

Based on first quarter 1998 statistics of the eight top exporting states, California was the largest exporter to the Asian 10. The Asian 10 consists of: China, Hong Kong, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand.

Washington ranked second, followed by New York, Texas, Illinois, Ohio, Michigan, and Florida, respectively. As Asia recovers from its financial crisis, exporters in these states stand to benefit a great deal.

Consider the Performance of Other States

Smaller exporting states share many similarities with the leading exporting states. For example, North Carolina, the 14th largest exporter, also lists Canada, Mexico, Japan, the United Kingdom, and Germany as its five best performing markets.

Additionally, North Carolina’s four largest exports include electric and electrical products, transportation equipment, industrial machinery, and chemical products.

But unlike the top performers, North Carolina is a major producer and exporter of textile mill products, and rubber and plastic products.

What Does This Mean for Your Business?

Depending on your company’s level of global competitiveness, it could mean a great deal. For example, if you’re willing to go head-to-head with the most competitive U.S. exporters, you may choose to follow the leading exporting states and target the same foreign markets.

On the other hand, if you’re not willing to do this, you may consider pursuing smaller, less popular foreign markets that may not be attractive to larger exporters, but just right for you.

As industries become more export savvy, the domestic demand for components — for use in products for export — will continue to increase. Thus, if you’re a small manufacturer without international experience, you might choose a third course: selling components to exporters in larger exporting states.

Information Is Key to Choosing a Strategy that Works for You

Depending on which strategy you choose — following the lead of successful exporting states, targeting smaller foreign markets or pursuing the domestic component market — you need to know the states and industries which are the most export active.

This article appeared in April 1999. (BA)
Topic: U.S.
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Most politicians, scholars and business people agree that exports are good for the United States and participating companies. But just how good has been difficult to determine. And the impact on U.S. workers has been questionable for some time.

Over the past few years, however, more data has been collected and analyzed. And the quantifiable results are very positive.

The Benefits Are Vast

It stands to reason that selling your products in more markets, located throughout the world, will not only raise your corporate sales figures, but spread the risk, should a particular country or region experience a period of slow or negative economic growth. But that’s not all.

According to the report, Why Exports Matter: More!, published by the Institute for International Economics and The Manufacturing Institute, “in U.S. plants that export, worker productivity is higher, jobs are compensated better and technologies are adopted more aggressively than among non-exporters.”

Exporting Plants Perform Better

The report contends that since the late 1980s, plants and firms that have sustained an export commitment, or that have initiated exports, experienced almost 20% faster employment growth than those that never exported or stopped exporting. Additionally, these plants and firms were 9% less likely to go out of business in an average year.

During the period of 1987 through 1992 (latest available statistics), employment at a typical plant fell 2.5%, while employment at exporting plants grew approximately 18%, indicating better corporate performance. In fact, the report states communities that hosted exporters benefited from a stable, growing high-performance workforce and tax base.

How Much More Do Workers Earn?

According to the Office of the Chief Economist at the Department of Commerce, workers in jobs supported directly by exports earn 20% more than the average national wage. Workers in high-technology jobs supported directly by exports receive 34% more. And workers in jobs supported both directly and indirectly by exports are paid 13% more.

This article appeared in October 1998. (NB)
Topic: U.S.
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To the benefit of Western New York, Congress recently decided to grant China Most Favored Nation (MFN) trade status for another year. But this year the stakes are higher.

In 1996, New York State ranked 41 out of 50 states in private-sector job growth. Even as New York's manufacturing sector has declined, exports sustained approximately 650,000 jobs in 1997. And compared to other U.S. states, New York ranked as the third largest merchandise exporter to the world, with shipments of approximately $50 billion.

According to a report published by the Business Council of New York State, Inc., export-related production is the primary source of new jobs in New York's manufacturing sector. The report also indicates that merchandise exports from New York have grown more than twice as fast as the state's economy since 1994, clearly indicating a strength that needs to be nurtured.

Exports also are essential to our country's prosperity. During the past decade, U.S. exports of goods and services accounted for one-third of U.S. economic growth. In 1997, exports reached $930 billion, rising 74 percent since the decade's beginning. According to the U.S. Trade Representative Office of Economic Affairs, U.S. exports of goods and services supported approximately 12 million jobs in 1997. And many of these jobs are in high-tech sectors.

The Office of the Chief Economist, Department of Commerce, estimates that high-technology industry jobs supported directly by exports pay 34 percent more than the average national wage; jobs supported directly by exports pay 20 percent more; and workers in jobs supported both directly and indirectly by exports are paid 13 percent more.

Furthermore, companies that export expand their employment base approximately 20 percent faster than others, and are 10 percent less likely to fail. Thus, exports are very important to the prosperity of New York companies and workers.

As the relationship between exports and our national and local economies becomes more entwined, China becomes a more important export destination. In 1997, the United States exported $13 billion in exports to China. This sustained approximately 170,000 American jobs. In relation to other states, New York was the fourth largest exporter to China, shipping $776 million there. And New York's primary exports to China are high-technology products — manufactured by highly-paid skilled workers.

But that's not all. The six largest New York State export industries, responsible for 84 percent of all manufactured goods shipped to China, also employ roughly half of all manufacturing workers in New York State. These goods include industrial machinery and computers, food products, transportation equipment, electric and electronic equipment, chemical products, and scientific and measuring instruments. Consequently, the Chinese market has become very important to the welfare of state and local workers.

This year, the Asian financial crisis has elevated China's importance to the United States. According to Federal Reserve Chairman Alan Greenspan, “With the crisis curtailing the financing available in foreign currencies, many Asian economies have no choice but to cut back their imports sharply. Disruptions to their financial systems and economies more generally will further dampen demands for our exports of goods and services."

Certain U.S. regions that are more dependent on exports to East Asia will be affected to a greater extent than less dependent regions. Western states are expected to be affected the most; Northeastern states are anticipated to be affected the least. Nevertheless, New York is not out of the woods.

In 1997, approximately 25 percent of New York's exports were destined for the "Asian 10," which is comprised of China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Thailand. Most of these countries have been severely impacted by the crisis. And primarily for other reasons, Japan is undergoing one of its worst economic slumps in recent history.

China, however, has emerged relatively unscathed by the Asian financial crisis. Its economy, currently the world's third largest, is still anticipated to continue growing at one of the fastest rates in the world to become the world's largest early in the 21st century. As New York exports to other East Asian countries drop as a result of the Asian crisis, more exports could be redirected to China, home to 1.2 billion consumers with fast-growing incomes.

Now, U.S.-Chinese relations are even more important as a result of heightened tensions between Pakistan and India. As those two countries attempt to flex their military muscle and display their new nuclear capabilities, China and the U.S. need to cooperate as never before in order to check the increasing probability of a military miscalculation.

How does MFN trading status impact U.S.-China trade and relations? Despite its name, MFN is granted to 220 of our 228 trading partners. When a foreign country has this status, its goods enter the United States at a normal duty rate. If not, its goods are assessed duty rates exceeding 50 percent, making them noncompetitive here. Denial of MFN for China would result in the United States imposing such high tariffs on Chinese products that their access to our market would virtually cease. Those who believe our global trade deficit would decrease are mistaken. The import gap would quickly be filled by other Asian suppliers.

In response, the Chinese would retaliate and severely restrict or totally eliminate our access to their market. This greatly would hurt New York companies and workers. Additionally, denying China MFN trade status would inevitably lead to deteriorated U.S.-Chinese relations, fostering an environment of alienation and suspicion. Any U.S.-Chinese cooperation for the purpose of reducing Chinese trade barriers on U.S. goods and services, eliminating tension between Pakistan and India, or maintaining stability of China's currency — which is under competitive pressure to devalue as a result of fallen currencies in other East Asian countries — would be highly unlikely.

If MFN is not granted, our access to the Chinese market would undoubtedly come to an end. On the other hand, granting China MFN trade status will give U.S. and New York State companies secure access to that tremendous market. The United States, which accounts for only 4% of the world’s population, needs to sell to the other 96%. Passing MFN legislation will help us to achieve this. And although trade is not a panacea, it is one of the best tools we have to influence foreign government policies with which we don't always agree.

This article appeared in The Buffalo News, August 1998.
Topic: U.S.
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As we enter into the 21st century, a new era is approaching at warp speed that is affecting virtually every aspect of our lives. As a result, many economic assumptions no longer seem to apply — yet new realities still need to be defined. These ambiguities are causing us to question our business tactics and reassess our strategies.

Topic: U.S.
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During the last decade, U.S. exports of goods and services have increased more than 172 percent. Consequently, the need for trade financing has risen commensurably—especially by small and medium-size exporters. More companies are finding that their ability to effectively manage financial risk and offer more favorable terms to foreign customers has increased their level of global competitiveness.

The Export-Import Bank (Ex-Im Bank) of the United States has successfully provided U.S. exporters with financing solutions for years. In fact, in over 60 years, the independent U.S. government agency has supported more than $300 billion in U.S. exports. It guarantees working capital loans for U.S. exporters, lends to foreign purchasers directly, and provides credit insurance to protect against the risks of non-payment by foreign buyers for political or commercial reasons.

Luis Clay, Vice President HSBC Trade Services, a unit of Marine Midland Bank, said, "Ex-Im Bank has undertaken a shift of focus in order to assist small business. Of all Ex-Im Bank services, guarantees covering working capital loans to U.S. exporters is the most popular among small firms."

The Working Capital Guarantee covers 90 percent of the principal and interest on commercial loans to small and medium-size companies that need funds to buy or produce U.S. goods or services for export. The loan must be fully collateralized utilizing inventory, accounts receivable, or other acceptable collateral. The guarantees may be for a single transaction or for a revolving line of credit. Guaranteed loans generally have maturities of 12 months and are renewable.

The independent government agency does not compete with commercial lenders, but assumes the risks they cannot accept. It seeks to provide a level playing field for U.S. exporters by countering the export credit subsidies of other governments.

John Nemcek, President and CEO of Buffalo Technologies Corporation based in Buffalo, NY, couldn't be happier with the agency. The company recently received a $5.1 million order from China. "Without the $2.4 million working-capital loan from Ex-Im Bank, we couldn't have completed the project," said Nemcek. "And the approval process was very quick." "The project went so well that we'll be getting a second order from China," he added.

Ex-Im Bank's programs are easily accessible. "The idea is to increase the number of loans to small businesses while reducing risks and streamlining procedures," Clay said. In doing so, "Ex-Im Bank allows local banks and even state and local agencies, such as U.S. Export Assistance Centers and industrial development agencies, to make Working Capital lending decisions on its behalf." If you choose, you can also work directly with Ex-Im Bank. For more information call Ex-Im Bank (Tel. 1-800-565-EXIM), to retrieve information by fax, press 1, then 2 at the voice prompts), send e-mail ( This email address is being protected from spambots. You need JavaScript enabled to view it. ), or visit their website (

This article appeared in FedEx Global, a Federal Express corporation publication, August-September 1996.
Topic: U.S.
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The Port of New York/New Jersey performed exceptionally well in 1994 -- gaining in almost every measure of cargo activity. Last year the port moved almost $140 billion in air and oceanborne cargo.

In 1994, the United States exported $503 billion and imported $804 billion in goods worldwide (balance of payments basis). Thus, a whopping 11.3% of all U.S. exports and 10.3% of all U.S. imports, by value, were handled by the New York/New Jersey port district. This is a tremendous share when compared to other U.S. ports.

Air Export Volume Brisk in 1994 — Reaching 448,355 Metric Tons Worth $39.6 Billion

In terms of volume, air cargo exports carved out a 22.7% market share compared with other U.S. ports -- that's 65% higher than the next leading port. In terms of value, air cargo exports controlled 26.3% of the market -- 53% higher than the next busiest port -- and up 8.9% from 1993.

As expected, northern Europe was the top export destination in 1994, accounting for almost half of the value and almost 40% of the volume of the port's air cargo. The United Kingdom, Germany and France were the major partners in this region (see Via International May/June issue).

Exports to the Far East, the second major market, rose 13.1% by volume and 12.4% by value since last year. The region accounted for approximately one-fifth of air cargo exports by both measures. The economic recovery in Japan and strong growth in South Korea, Hong Kong and Taiwan fueled imports.

Southeast Asia generated the second highest increase in regional air exports by volume, taking in an additional 5,648 metric tons over last year. Singapore and Malaysia accounted for more than two-thirds of the growth.

In 1994, the Mediterranean ranked as the third leading export destination by volume, receiving almost 37,000 metric tons. Italy ranked first, accounting for nearly half of the exports to the region; Spain ranked second.

From 1993 to 1994, the value of exports to South America rose almost 22%, nearly 52% greater than the increase in exports to Southeast Asia, which ranked second. Brazil, Argentina and Colombia were the leaders in the region.

The New York/New Jersey port imports in 1994 performed very well. It maintained 28.3% market share by volume and 26% by value. Both categories showed improvement over last year with imports increasing 11.3% by volume and 6.9% by value.

Maritime Export Volume Reached 6.8 Million Long Tons in 1994, Exceeding $17.4 Billion

The volume of both general and bulk cargo exports and imports registered positive gains in 1994. From 1993 to 1994 the Port of New York/New Jersey handled a total of 46.5 long tons of oceanborne cargo, up 14.4% from the previous year. And the value of goods increased 11.7% to $62.9 billion.

Northern Europe and the Far East were by far the largest markets. The United Kingdom imported 303,970 long tons of general cargo, coming in second to South Korea, which imported 391,495 long tons.

From 1993 to 1994, Southeast Asia generated the largest volume increase in exports -- up 55%. Indonesia and Thailand were the regional hot spots, with exports up 113.2% and 37%, respectively, measured in long tons. Indonesia ranked third in exports by volume; Thailand ranked sixth.

Exports to South America were up 18%, led by Brazil and Argentina. Combined, these two countries imported almost 150 long tons in 1994.

And exports to the Mediterranean rose almost 10%. Together, Italy and Spain totaled almost 230,000 long tons.

In 1994, oceanborne imports through the New York/New Jersey port district registered $45.5 billion, up 17.8% over 1993. The volume of imports rose by 16.4%, reaching more than 39.7 long tons. The volume of imports from Northern Europe were the highest in 1994, up 8.5%; followed by the Far East, up 5.9%; South America, up 8%; Southeast Asia, up 7.8%; and the Mediterranean, up 6.8%.

South Korea Is a Major Destination

South Korea ranked as the United States' 6th largest trading partner last year, importing more than $18 billion worth of American goods. This Far Eastern country was the number one destination for oceanborne general cargo (by volume) departing from the New York/New Jersey port district.

Over the past two decades, Korean economic growth averaged 8.7%. Growth rates in excess of 7% are predicted for the next several years. With 44.1 million consumers and a per capita income of $9,265 anticipated for this year, Korea offers New York/New Jersey port exporters much opportunity.

Over the next ten years, hundreds of billions of dollars are anticipated to be spent on new South Korean infrastructure projects -- boosting South Korean imports. Projects include construction of several electric power generation plants and transmission lines, worth $50 billion; new highway construction, worth $20 billion; new construction and expansion of existing ports, $20 billion; new subway lines for Seoul, Inchon and Taegu, $12-15 billion; and the building of a new international airport, and modernization and expansion of regional airports, $14-18 billion.

Additionally, expansion of Korea's telecommunications facilities and increased spending on defense is expected to yield opportunities for New York/New Jersey exporters.

According to Young K. Hah, a representative of the Port Authority of New York and New Jersey based in Seoul, Korea's imports from the NY/NJ region are expected to continue to increase for some time. Import liberalization policies, the birth of the powerful World Trade Organization, favorable currency fluctuations, increased consumer demand for imported products and continued increases in raw material prices will be contributing to rising imports from the United States.

Hong Kong Has Increased Re-exports to China

In 1994, the United States exported $11.45 billion of goods to Hong Kong, making it the 11th largest export destination. This ranking climbed from 14th place in 1991 to 11th place in 1993.

It has increasingly become a transit and shipping point for goods consumed in southern China, which accounted for 35 percent of Hong Kong's total re-exports in 1993. The United States was second, accounting for 21 percent.

Hong Kong's bright economic prospects, its open economy, focus on infrastructure development and its educated and sophisticated bilingual consumer population translates into opportunities for port exporters to sell everything from food products to airport equipment. Opportunities also exist to provide technical expertise, supplies and equipment to Hong Kong firms developing projects in China.

Taiwan Continues to Liberalize Its Markets

Taiwan, a country of 21 million consumers, imports nearly all of its energy needs and most of the raw materials needed to maintain industrial production. The country also imports a diversity of manufactured goods, including consumer goods such as automobiles, cosmetics and textiles, and industrial products such as machine tools, measuring instruments and construction equipment.

Last year the United States exported more than $17 billion of goods to Taiwan, an economy growing more than 6% per year. As its economy has become more dynamic, so has its need to upgrade its infrastructure. Projects include new highways, expanding the airports, improving telecommunications networks, building new power generation and pollution control facilities.

Taiwan, the United States' 7th largest export destination in 1994, has continued to liberalize its markets and promote greater consumer spending. This, combined with the strength of its economy, has created many export opportunities for New York/New Jersey port exporters.

Singapore Imported Almost $4,100 of U.S. Goods Per Capita

With a population of just 3.18 million, Singapore imported over $13 billion of goods from the United States in 1994 -- a large amount per capita -- making it the 10th biggest export market. Its economy grew by 8% last year, one of the highest in the world.

Singapore's major global imports consist of crude oil, petroleum products, electrical machinery, telecommunications equipment, office and data processing machines, general industrial machinery, transport equipment, and food.

The country imports a wide variety of goods from the United States, both for internal consumption and for re-export to other rapidly growing economies in Asia, including electronics, aircraft, chemicals and computers. Consequently, many American companies have come to rely on Singapore as a major distribution center to neighboring countries such as Malaysia, Indonesia, Thailand, Vietnam and the Philippines.

Italy Is the World's 5th Largest Economy

The Mediterranean ranked third (based on tonnage) among export regions via air for the New York/New Jersey port last year. Italy, the leader in the region and 16th largest U.S. export market, imported almost $7.2 billion worth of goods from the United States. It is the world's fifth largest economy with a gross domestic product of almost one trillion dollars. Opportunities will increase as its economic recovery takes hold.

The Italian economy is undergoing a major transformation as many state-owned enterprises are being privatized. The telecommunications, electrical utilities and energy sectors are anticipated to be next on the auction block.

Despite the lira devaluation, there are many opportunities to both maintain and expand the market for a variety of products. The realignment of the distribution sector toward larger chains and more competitive pricing should also aid U.S. exports. And the continued move toward a fully integrated Single Market should aid U.S. high value, convenience, and health food products.

Principal U.S. imports include aircraft and related equipment, coal, medical products, office equipment, and measuring equipment.

Spain Is the Mediterranean's Second Largest Market

Last year the United States exported $4.6 billion of goods to Spain. Last year Spain was included in the top ten destinations for oceanborne general cargo departing from the New York/New Jersey port, measured by tonnage.

The Spanish market is composed of a series of regional markets joined to two major hubs, Madrid and Barcelona, where most of the economic power resides. As the country and region emerge from recession, many export opportunities are becoming more evident. These include telecommunications equipment, medical equipment, pollution control equipment, computer software, films and videos, paper and paperboard, and dental equipment.

The modernization plans for the telecommunications sector alone is estimated to cost $10 billion over the next 10 years. Exporters of materials and equipment used in the construction and modernization of infrastructure projects can benefit as $147 billion is expected to be spent through the year 2,010 on new roads, upgrading railroads, improving port facilities, refurbishing airport facilities, building new drinking water facilities, and to enhance the environment in downgraded areas.

Brazil Is Latin America's Largest Economy

Brazil moved up 4 places from the United States' 19th largest export market to the 15th from 1993 to 1994, with imports rising almost 52% to more than $8.7 billion. Brazil, a major destination in South America for New York/New Jersey port exporters, has a population of 153 million people and a gross domestic product of $466 billion. It is the largest economy in Latin America.

Following several decades of tight import restrictions, Brazil began a process of trade and economic liberalization in 1990 incorporating import duty reductions, elimination of most non-tariff barriers to trade and privatization of state-owned companies.

The country's demand for energy technologies -- in generation, transmission and distribution of electrical power -- presents enormous opportunities. Additionally, a large number of state/municipal sanitation and cleanup projects, worth more than $1 billion per year, provide excellent opportunities for exporters of environmental technologies.

Brazilian imports of U.S. medical devices are forecasted to grow at an annual rate of 7% between 1995-2000. Transportation (automotive and rail), aerospace, and pharmaceutical are a few other sectors that show promising growth in Brazil through the remainder of the decade.

Argentine Oceanborne General Cargo Imports Up 30% from the NY/NJ Port

The Menem government has embarked on a course of free market reform that includes fiscal responsibility, an open market, privatization and deregulation. Thus, as of mid 1994, economic stability was three years old. Although many Argentines remain cautious about the country's political stability, it no longer appears to be a major issue.

Argentina is now a world leader in privatization. A major challenge, however, lies in their ability to regulate the behavior of the newly privatized companies which are largely engaged in the provision of goods and materials related to energy and fuel generation; telecommunications; road, rail and river transportation; and steel production. These sectors will provide good opportunities for exporters of New York/New Jersey port.

U.S. exports to Argentina rose 18.3% from 1993 to 1994. Steady export growth is forecast for the future.

This article appeared in VIA Magazine, a division of The New York Times, July-August 1995.
Topic: U.S.
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The GATT Uruguay Round Agreements (URA), recently passed by Congress, is good news for U.S. traders and shippers. Held under the auspices of the General Agreement on Tariffs and Trade (GATT), the URA phases out quotas, many other non-tariff barriers, and cuts duties by about one-third on most products traded globally.

GATT, the international body that governs approximately 90% of world trade, is responsible for reducing international tariffs from an average of 40% in 1947 to 5% in 1990. This has permitted international trade to expand enormously, national incomes to substantially increase and international competition to flourish resulting in higher quality, lower priced goods.

The impact will be extremely advantageous for the world and the United States. GATT economists believe that by the year 2002, the URA will result in annual world income gains of $235 billion and trade gains of $755 billion. By the year 2004, the United States will likely gain approximately 500,000 new jobs and see an annual increase of $100 to $200 billion in gross domestic product, $150 billion in exports, and $1,700 in income per family

U.S. Exporters and Importers Stand to Benefit

In 1993, the United States exported approximately $660 billion in goods and services, supporting about 10.5 million jobs. This is up 57% from 6.7 million in 1986. Over $100 billion in goods alone were exported to Canada. Under the URA, U.S. exports of a vast range of products, such as agricultural goods, computers and pharmaceuticals, to name a few, are expected to increase.

Canada, like the European Union, Norway, Mexico and Finland, have operated a system of supply management with respect to eggs, poultry and dairy products. In 1990, one study demonstrated that consumers in Toronto, Canada, paid substantially more for these goods than consumers in Buffalo, New York. In fact, Toronto consumers paid 42% more for a dozen eggs, 128% more for roughly the same volume of milk (.5 gallons/2 litres), 97% more for one kilogram of chicken, and 22% more for 500 grams of cheese.

Under the URA, systems of supply management will be phased out -- allowing cost-efficient producers to more easily sell their goods worldwide. This is good new U.S. exporters of agricultural goods.

U.S. producers of computers and office equipment are very competitive internationally. The world market for these goods reached $220 billion in 1993. Many developing countries, however, have applied excessive tariff barriers on North American computers that have essentially prevented exports. For example, Brazilian tariffs have ranged from 30 to 35% and their customs and other taxes have added an additional 40% on top of that. Some of India's tariffs on computers and office machines were 130%.

Under the new GATT agreement, these barriers are coming down. As a result, an increase of computer products, especially to developing countries such as India, Thailand and Indonesia, is anticipated. Additionally, the U.S. computer industry expects to save hundreds of millions of dollars from duty reductions in Europe.

In 1993 the U.S. exported over $7 billion in pharmaceuticals worldwide. This represented an increase of 32% over 1989. For pharmaceuticals as a group, GATT tariff reductions will average 72% in the industry's major export markets. This will undoubtedly result in more exports.

Additionally, improved patent protection under the URA will better guard the interests of U.S. firms from patent infringements. And better standard setting procedures will limit a foreign country's ability to keep U.S.-made pharmaceuticals out.

Since 1974, world trade in textiles and apparel had been governed by bilateral quotas established under the Multifibre Arrangement (MFA). Under the MFA, in 1993 the United States applied quotas on textile imports from 27 countries that supplied 40% of imports, and on apparel imports from 41 countries that supplied 70% of imports. Additionally, these products have been subject to some of the highest tariffs of any sector. This has changed.

Under the URA, GATT members have agreed to phase out quotas and reduce tariffs on textiles and apparel over a period of ten years. This means that imports of textiles and apparel will gradually become less expensive -- resulting in greater imports. According the U.S. International Trade Commission, apparel imports are projected to increase 5 to 15%. As this occurs, the level of traffic will rise commensurably.

Logistics Managers Will Wear Two Hats

For any company to survive in today's increasingly competitive global environment, international expansion is necessary. And according to David Richards, (asked not to state his company name) logistics manager for a U.S.-Based apparel manufacturer, apparel producers are no exception.

"I think GATT is going to push more American apparel manufacturers to take a risk and jump into the international arena", says Richards. He believes that the U.S. apparel market will become even more competitive with imports of foreign clothing, forcing apparel producers to export in an attempt to gain market share elsewhere.

As apparel imports and exports increase under GATT, Richards anticipates that the responsibilities of the logistics manager will become more technical, complex and more of a specialty. "This is good for my career. Logistics managers will become more valuable to their companies and have to wear two hats. They'll not only have to know how to move merchandise -- they'll have to know how to clear it."

According to Richards, logistics managers will need to become more familiar with domestic and foreign requirements for hang tags, care instructions, fiber content, country of origin requirements, and also will have to be aware of trade policy coming from Congress and the Federal Trade Commission. Richards also anticipates his company hiring more logistics managers to handle the increase in traffic.

This article appeared in Global Shipper, a publication of Emery Worldwide, February 1995.
Topic: U.S.
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Global Competition Is Increasing and Economic Integration Is Changing the Landscape

For the past 200 years, the United States' enormous internal market has more than satisfied the needs of U.S. firms. But today, this is no longer the case.

The world is quickly becoming economically integrated, forcing unprecedented changes at every level of industry. U.S. companies, small and large, are facing record levels of foreign competition for domestic market share. In addition to this, the world landscape is changing as never before.

In an effort to achieve a higher level of productivity and, in turn, economic security, the world has emerged into three primary trading blocs composed of Western Europe, East Asia and North America. Based on past trade patterns and policies, and anticipated policies, these blocs will continue to develop, gaining increased strength and influence. Within each bloc, free trade has and will continue to become more entrenched. However, it is likely that trade among blocs will increasingly become managed by governments.

On December 31, 1992, the European Community achieved the elimination of physical, fiscal and technical barriers to trade. Now referred to as the European Union (EU), the 15-member bloc encompasses Belgium, Britain, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain; and on January 1, 1995, Austria, Sweden and Finland became members. In years to come, it is likely that East European countries will join the 350 million population of the EU, expanding the market to include 850 to 900 million consumers.

The demise of Soviet Communism and the fall of the Berlin Wall has exposed Eastern Europeans to the free market economy for the first time since World War II. In an attempt to shift from the Communist system of central planning to markets governed by supply and demand, much of Eastern Europe has been plagued with economic and political instability.

For the past several years, negative growth and rampant inflation were recorded in varying degrees in Eastern Europe and the former Soviet Union. Shortages of industrial equipment and spare parts, the breakdown of traditional distribution channels, hyperinflation, and the collapse of monetary controls have contributed to the economic decline of the region. According to the U.S. International Trade Commission, in 1992, the former Soviet Union registered a decline in gross national product of 18% -- a steeper decline than Eastern Europe as a whole. The eruption of ethnic conflict in parts of Eastern Europe, including the former Yugoslavia and elsewhere in the old Soviet Union, has accelerated the economic and political deterioration.

Much of the EU's vested interest in allowing East European countries to become full members is aimed at preventing a potentially large mass migration. It is estimated that emigration from Eastern Europe, especially former Yugoslavia, and North Africa has risen from roughly 1 million in 1985 to 3 million in early 1993. This poses a serious problem for the EU. By integrating East European economies with the EU, the economic and political stability of the region will likely improve.

In recent years, East Asian nations have moved markedly toward increased economic integration. For example, both the Asian-Pacific Economic Cooperation Forum and the Pacific Economic Cooperation Council have emerged to facilitate greater regional integration. Others, such as the Association of Southeast Asian Nations (Asean), have advanced without U.S. membership.

In January 1992, the six-member Asean, comprising Malaysia, the Philippines, Singapore, Thailand, Brunei and Indonesia (325 million population) agreed to established a free trade area. Originally established on August 8, 1967 to counter the spread of Communism, Asean has recently begun to effectively deal with economic integration. The region grew by an average of 8% annually throughout the 1980s, among the fastest growth rates in the world.

Many fast-growing East Asian countries have a more favorable trade relationship with the United States than with Japan. However, due to Japan's economic power, investment and influence in the region, it has forged an informal trade bloc among East Asian countries. According to Harvard Professors Kenneth Froot and David Yoffie, Japan appears to be the only major industrial country whose domestic market remains protected from both foreign trade and direct investment. They conclude that with Japanese expansion in East Asia, North American firms may increasingly lack access to an East Asian bloc.

In an effort to better fortify our economic position, the United States implemented the United States-Canada Free Trade Agreement (U.S.-Canada FTA) on January 1, 1989. The North American Free Trade Agreement (Nafta), which built on the achievements of the U.S.-Canada FTA, was implemented on January 1, 1994.

Preferential access to Mexico and Canada, guaranteed by Nafta, put U.S. companies at a competitive advantage relative to rapidly expanding European and East Asian trade blocs. Nafta not only opens up the Mexican market of 92 million customers, but creates a trade area of 360 million consumers ensuring secure markets for U.S. products. Importantly, Nafta promotes greater efficiency, making our products more competitive not only in North America, but in Europe, Asia and throughout the world.

Last December 9th, the leaders of 34 Western Hemisphere nations met in Miami for the Summit of the Americas. The goal: to establish a free trade area of the Americas by the year 2005, further building on the achievements of Nafta. During the Summit, Chile was invited by the United States, Canada and Mexico to begin negotiations to accede to the trade bloc.

The Potential Effect on American Business

These trade blocs are continuing to liberalize trade among members. However, as intra-trade bloc barriers are eliminated, non-members are concerned that trade barriers applied to their products may actually increase. Fear that competing trade blocs will become inwardly focused and protectionist, not allowing cost-efficient, non-member producers to sell their products on the basis of competition, has promoted a race among nations to achieve the largest and most powerful trade area.

Should Europe or East Asia become inwardly focused, U.S. exports there could be severely curtailed -- harming U.S. business interests and the economy. According to Lester Thurow, a contemporary economist, "Those who feel they will be hurt in the economic integration (the Spanish banks feel threatened by the German banks) will go to their governments for protection. Their governments, however, cannot give them direct protection if integration is to go forward. In lieu of direct protection from bloc members, their governments will offer them protection from non-member competitors. So, less competition from American and Japanese banks will be offered to Spanish banks to compensate them for more competition from German banks."

The EU doctrine of reciprocity, for example, is based on equal treatment and access to one another's markets. If non-EU banks wish to do business in the EU, their domestic laws must parallel EU laws. Economists argue that the Europeans can keep American banks out of Europe or prevent those already operating there from expanding unless American banking laws are radically changed. For example, the United States does not allow interstate banking. Consequently, if a European bank does not have access to all of America, then American banks in Europe can be denied access to all of Europe. This can be interpreted as protectionism.

Even if existing barriers remain the same to EU non-members, the effects of trade diversion or regional trade preferences may have a similar impact as protectionism. Trade diversion occurs when members of a trade group buy more goods from each other, due to the elimination of internal trade barriers, displacing non-member goods. For example, due to preferential access, the British are likely to buy more German and French goods at the expense of the United States. Likewise, U.S. businesses will benefit from the creation of a trade bloc of the Americas, where members buy increasingly from each other.

In 1985, 53% of European Community trade was with member countries. This percentage has risen to 59.6 in 1991 and it will continue. There is concern that increased trade by EU members will likely come at the expense of non-members, resulting in trade diversion.

In 1988, 22% of East Asian trade (10 countries) was with one another. By 1991, this had risen to 35% according to the U.S. International Trade Commission.

The Uruguay Round Agreements of the GATT — Providing Balance

The GATT Uruguay Round Agreements (URA), implemented by the United States and over 100 other countries on January 1, 1995, phases out quotas and cuts tariffs by about one-third on most products traded globally.

GATT is the international body that governs approximately 90% of world trade. It is responsible for reducing international tariffs from an average of 40% in 1947 to 5% in 1990, which has permitted international trade to expand enormously, national incomes to substantially increase and international competition to flourish resulting in higher quality, lower priced goods. However, before the successful passage of the URA, the formerly perceived failure of GATT to effectively deal with rising world trade barriers resulted in a lack of confidence in the organization. Consequently, many individual countries took it upon themselves to establish regional trade blocs in order to secure market access to other countries.

During the phase-in period, the URA will eliminate many non-tariff barriers and expand intellectual property protection. The new World Trade Organization (WTO), created by the URA, is expected to be much more effective at enforcing internationally agreed upon trade rules and regulations and settling disputes among members. GATT and the new WTO will attempt to police the forces that may promote protectionism among trade blocs.

New Strategies Are Required in Order to Successfully Adapt to Global Realities

In the past, an abundance of natural resources once secured competitive advantage. This has changed. Abundance too often can lead to waste, misuse and abuse. Conversely, limited resources have forced companies to achieve higher levels of efficiency, as the Japanese have proven. For example, technical progress in the development of stronger and lighter materials is quickly replacing raw materials. In today's global environment, knowledge, not an abundance of natural resources, is key to success.

In order for U.S. companies to sustain themselves and generate growth well into the next century, they are advised to establish strategies designed to gather and analyze information from throughout the world, and use this to achieve international expansion.

Its no longer "business as usual." If your company does not take steps to expand internationally, your competition will. Your level of risk will likely increase, market sectors will become more competitive, and market share may be lost.

With the advent of Nafta and the benefits derived from the GATT Uruguay Round, international trade and investment opportunities will flourish. However, these opportunities will only benefit those companies whose corporate cultures view the world as one global village -- and act on it.

This article appeared in Delta Airlines magazine, January 1995.
Topic: U.S.
Comment (0) Hits: 17684

The GATT Uruguay Round Agreements (URA), recently passed by Congress, is good news for the United States, New York State and Western New York. Held under the auspices of the General Agreement on Tariffs and Trade (GATT), the URA phases out quotas and cuts tariffs by about one-third on most products traded globally.

GATT, the international body that governs approximately 90% of world trade, is responsible for reducing international tariffs from an average of 40% in 1947 to 5% in 1990. This has permitted international trade to expand enormously, national incomes to substantially increase and international competition to flourish resulting in higher quality, lower priced goods.

During the phase-in period, the URA will eliminate many non-tariff barriers, expand intellectual property protection and improve the current dispute settlement mechanism. The impact will be extremely advantageous for the world and the United States. GATT economists believe that by the year 2002, the URA will result in annual world income gains of $235 billion and trade gains of $755 billion.

By the year 2004, the United States will likely gain approximately 500,000 new jobs and see an annual increase of $100 to $200 billion in gross domestic product, $150 billion in exports, and $1,700 in income per family

New York State Stands to Benefit

In 1993, the United States exported approximately $660 billion in goods and services, supporting about 10.5 million jobs. This is up 57% from 6.7 million in 1986. And the wages of non-farm workers directly supported by exports pay 18% higher than the average U.S. rate.

Last year New York State, the second largest exporter among all U.S. States, exported $40.7 billion worth of goods globally. This marked a 38% increase since 1987, the fourth largest increase in exports compared to all other states. New York State is the second most populous state in the nation and if viewed as a sovereign nation would rank as the world's tenth major economic power. The URA will benefit numerous New York industries, including producers and distributors of computer equipment, industrial & analytical instruments, machine tools, motor vehicle parts, paper & allied products, pharmaceuticals, printing & publishing, processed foods, telecommunications equipment, and much, much more.

Western New York to Win

Western New York's auto parts industry is a growing sector and the largest employer in the region. This industry will benefit under the URA.

Western New York has cited its medical product industry to be among the top most promising sectors in the region. As a result of the URA, major pharmaceutical export markets will reduce tariffs an average of 72%. Improved patent protection and better standard setting procedures will protect U.S. trade secrets and reduce unfair trade practices.

Western New York producers of medical equipment and pharmaceuticals will prosper -- creating more jobs in Western New York. This high-tech sector employs skilled workers and pays higher wages -- the type of industry to gain the most from the GATT agreement.

Our Sovereignty Is Not Compromised

In order to ensure that all trading members are playing from the same rule book, the URA will soon create the World Trade Organization (WTO). It will be more effective than the current system. For example, a new dispute-settlement mechanism will provide for a speedy remedy when foreign countries violate international rules and raise new trade barriers -- and does not allow decisions to be indefinitely blocked by violators.

Under the URA, no rule by a dispute-settlement panel can become a part of U.S. law without Congressional approval and Presidential signature. Should a panel find that a U.S. domestic law (Super 301 for example) is inconsistent with GATT principles, the United States may disregard a decision and take unilateral action suiting our national interests. In return, the complaining country will be allowed to take action and institute tariff penalties against the United States. This tactic puts the United States in no worse a position than existed prior to the URA.

One Country, One Vote Is Not a Hindrance

Substantive GATT decisions have normally been made by consensus -- 100% of GATT members in agreement. Should a consensus not be achieved (which has not happened since 1959), a set of improved voting procedures would be enacted. Thus, a substantive measure lacking U.S. support will require a two-thirds majority vote. If passed, still a second vote resulting in three-fourths majority would be required in order to compel the United States to accept the amendment. This scenario is very unlikely for two reasons:

  • The United States would almost certainly be able to generate enough support to prevent a gang-up;
  • The WTO would risk losing the world's strongest economy as a member -- thus creating uncertainty and instability in the world trading system.

The GATT Uruguay Round is worth five Nafta's -- and less than one year after implementation, Nafta has proven to be a winner. And the WTO improves the United States' ability to fight unfair global trade practices -- while not compromising our sovereignty.

This article appeared in Business First, December 4, 1994.
Topic: U.S.
Comment (0) Hits: 6757

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