New York has seized many of the challenges presented by globalization. However, in order to generate greater economic growth, much more needs to be done.
New York is the third largest merchandise exporting state in the United States. In 1999, New York exported $43.3 billion of goods worldwide — a significant source of economic growth. Based on the U.S. Trade Representative’s calculation of 10,917 jobs supported by $1 billion in merchandise exports (multiplier does not include service exports), this supported 473,000 jobs in New York. And if state service export data were available from the U.S. Department of Commerce and added, total exports would be considerably higher.
Export-related production is the primary source of new jobs in New York State’s manufacturing sector, according to The Public Policy Institute of New York State, Inc., the research affiliate of the Business Council of New York State, Inc. This is very important since New York’s exports support one out of every five manufacturing jobs, according to Export-Related Employment and Wages Estimates for Eight States, 1992 to 1996, a report published by the Indiana University Kelley School of Business.
Plus, on a national basis, the average hourly earnings in manufacturing were $14.38 (August 2000, Bureau of Labor Statistics). To generate more well-paying manufacturing jobs, exports need to become a priority.
The services sector is probably more important to the economic health of New York than to any other state in the nation. In 1998, private service-producing industries contributed $533 billion to New York’s gross state product (GSP), according to the Bureau of Economic Analysis’ Survey of Current Business. This accounted for 75% of the total GSP, a larger percentage than any other state. How much of this was exported?
According to testimony by David Catalfamo of the Empire State Development Corporation to the New York State Assembly, based on 1997 data, “A conservative estimate would attribute about 10% of national service exports to New York State.” Applied to 1999, this would translate into an additional $27.2 billion in New York State exports. Based on the U.S. Trade Representative’s calculation of 14,679 jobs sustained by $1 billion in service exports, this supported approximately 400,000 jobs in New York State.
New York State’s “non-merchandise exports of key industry clusters within the service sectors are at least as significant as are merchandise exports,” Catalfamo said. In his testimony he stated that, in 1997, New York exports of financial services were estimated to exceed $8 billion annually, distribution services accounted for $7 billion, and communications and media services accounted for more than $2 billion.
Financial, business, professional, and technical services are each an important element of the United States’ trade service surplus and extremely important to the New York economy. In 1999, U.S. financial services registered $13.9 billion in exports, compared with $3.6 billion in imports, and $24.3 billion in business, professional, and technical service exports, compared with $7.7 in imports, according to the report, U.S. International Services: Cross-Border Trade in 1999 and Sales Through Affiliates in 1998.
Service exports are anticipated to become a much larger generator of state economic growth — especially in the New York City region, the financial capital of the world. Trade agreements that open foreign service and financial markets will generate greater New York State employment and produce more revenue, laying the foundation for a stronger tax base.
U.S. Service export opportunities are booming. In fact, since 1980, U.S. exports of services have grown 130% faster than exports of goods. As a result, every year for almost three decades, the U.S. service sector has enjoyed a trade surplus that has consistently reduced the U.S. deficit.
In 1999, the United States captured a world marketshare of service exports and imports of 18.8% and 13.4%, respectively. The next largest share was held by the United Kingdom, with 7.5% and 9.9%, respectively — considerably less than the United States.
According to the U.S. Commerce Department, strength in business services, which includes software development, data processing, communications, and multimedia services has been identified with the “new economy,” and has contributed to rapid growth in many U.S. states. The U.S. service-producing sector has grown so large it now accounts for 80.5% of U.S. nonfarm employment, according to the U.S. Department of Labor.
There is no doubt that the benefits currently derived from services and the huge potential offered by the service sector in terms of economic growth, personal income, employment, and exports are tremendous. And, as the sector continues to grow, companies will increasingly develop new and innovative ways to sell services abroad.
Trade in services is conducted through two principal channels: cross-border trade (which entails sending individuals, information, or money across national borders) and U.S.-owned affiliate transactions (entailing U.S.-owned companies located abroad selling services abroad).
According to Recent Trends in U.S. Services Trade published by the U.S. International Trade Commission, a large share of cross-border trade in 1998 was the exports of intangible intellectual property (reported as royalties and license fees). This was followed by business, professional, and technical services; maritime and air freight transportation services; and passenger fares.
Since the sale of some services requires the service provider to be close to the customer or to sidestep foreign country trade barriers, the best way to sell the service is through a U.S.-owned affiliate abroad. For example, U.S.-owned employment agencies operating in Europe interview hundreds of European candidates each day for local jobs. Thus, this service could not be delivered without daily face-to-face meetings.
In 1997, sales by U.S.-owned insurance affiliates in foreign markets accounted for the largest share of total U.S.-owned affiliate transactions. Following were computer and data processing; wholesale; financial services; transportation; communication; architectural, engineering, and surveying services; accounting, research, and management services; and motion pictures.
The U.S. service sector is extremely advanced and internationally competitive. And, with the recent introduction and availability of new and inexpensive technology — led by telecommunications, computers, and the internet — millions of people and companies worldwide are obtaining the ability to purchase services from the United States.
As a result, it is anticipated that the export of business, professional and technical services (accounting, advertising, engineering, franchising, consulting, public relations, testing and training) will increase rapidly.
The United States plays a major role in international trade. In fact, it’s the largest world exporter and importer. And for many nations, it’s both the largest supplier and buyer.
In 1998, Canada, Japan, and Mexico were the United States’ largest export destinations, as well as suppliers of merchandise. Combining both exports and imports, Canada was the United States’ largest merchandise trading partner, with $330 billion changing hands.
Second place went to Japan at $180 billion, followed by Mexico at $173 billion. United States trade with China, including Hong Kong, totaled $109 billion, and with Germany, $76 billion.
In 1998, machinery and computers (Harmonized System two-digit category 84) ranked as the number-one United States export category, accounting for $136 billion. Second in line was electronic equipment (HS 85), valued at $108 billion.
In third place at $59 billion came motor vehicles (HS 87), with air and spacecraft taking the fourth slot (HS 88) at $52 billion. The number-five category (HS 90), which covers optical, photo, and medical equipment, generated $36 billion in U.S. exports worldwide.
The United States shipped $157 billion in exports to Canada and $79 billion to Mexico. Japan was in third place at $58 billion, followed by the United Kingdom with $39 billion. China, including Hong Kong, was the destination for $27 billion in American exports.
Canada and Mexico took the top two spots in buying American machinery and computers, followed by the United Kingdom. America’s next-door neighbors also led in electronic equipment, with Japan taking third place. The same order prevailed for motor vehicles.
The United Kingdom took the largest share of America’s air and spacecraft exports, edging out Japan and Saudi Arabia. Japan was the largest importer of American optical, photo, and medical equipment, ahead of Canada and Germany.
Not unexpectedly, the two largest destinations for United States exports in 1998 accounted for the highest percentage increases since 1991.
U.S. exports to Mexico increased by 136 percent and to Canada by 84 percent. In third place was China/Hong Kong at almost 89 percent, followed by the United Kingdom at 77 percent.
America’s largest international supplier in 1998 was Canada, accounting for $173 billion in United States imports.
Japan placed second with $122 billion. Occupying the third rank was Mexico at $95 billion. Following was China, including Hong Kong, at $82 billion, and Germany, accounting for $50 billion.
The leading import product was machinery and computers valued at $154 billion, with Japan leading the pack, followed by Canada and Singapore. The electronic equipment category, worth $127 billion, came in second, paced by Mexico ahead of Japan and China.
Vehicles placed third, accounting for $124 billion, with Canada leading, and Japan and Mexico in the next two spots. The category including petroleum fuels was the fourth-leading import sector, at $58 billion, headed by Canada, Venezuela, Saudi Arabia, and Mexico.
Rounding out the top five was optical, photo and medical equipment, accounting for $28 billion in imports, as Japan led the list, with Mexico, Germany, and China as runners-up.
America’s fastest-growing supplier in 1998 was Mexico, registering an increase of more than 200 percent since 1991, followed by China/Hong Kong at nearly 190 percent, Germany at 91 percent, Canada at 90 percent, and the United Kingdom at 89 percent.
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.
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.
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.
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.
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.
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.
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.
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.
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.”
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.
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.
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.
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.
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 (
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.
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.
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 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.
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, 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.
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.
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.
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 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.
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.
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
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.
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.
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