On Vacation: Revised Posting Schedule

 

lady on the beachI will be away on vacation this week. Posting will resume after Labor Day. May you all have a wonderful Labor Day weekend. Thank you for your continued support. Please share this blog with your friends and colleagues.

 

 

 

 

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Special Trade Programs for U.S. Textile and Apparel

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I just got back to Los Angeles after a wonderful couple of days in Las Vegas for the MAGIC apparel trade show. During my meeting with fabric and garment producers, some asked me about the benefits of trade agreements. Here is a description of the significance of U.S. trade deals for U.S. textile and apparel producers and their trade partners in select countries.

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Caribbean Basin Trade and Partnership Act (CBTPA)

The CBTPA is a unilateral trade deal, which means that the terms of the deal are shaped only by U.S. Congress. In other words, member countries do not engage in trade negotiations to determine the provisions within the agreement. CBTPA was signed in 2000 to allow garments from eligible Latin American and Caribbean countries to enter the U.S. market duty and quota-free. In turn, the fabric used in the final garment must come from U.S.-made yarn. This is known as the rule of origin.

North American Free Trade Agreement (NAFTA)

NAFTA took effect in 1994. The rule of origin for apparel trade between the United States, Mexico and Canada is one in which the yarn must come from any one of the three countries. As a result, the final garment can enter any of the three markets duty-free. (For a detailed list of NAFTA textile and apparel rules, click here.) The key here is establishing a market for these products and creating an incentive, such as duty-free entry, to trade between the three countries.

Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) 

The same rule of origin for apparel applies under DR-CAFTA, which was signed by seven countries in 2004. The yarn must come from one of the member countries (United States, Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and the Dominican Republic) to enter each other’s market duty-free.

African Growth and Opportunities Act (AGOA)

AGOA, a unilateral trade deal, was signed in 2000 by former U.S. President Bill Clinton. As mentioned in my most recent posts, AGOA allows garments produced in eligible Sub-Saharan African countries to receive duty-free treatment in the U.S. market. However, in order to quality for duty-free treatment, those same garments must consist of yarn, thread and fabric produced in the United States or in other AGOA member countries.

These are just a few trade deals that encourage textile and apparel trade between the United States and other countries. The Trans-Pacific Partnership negotiations surrounding rules of origin, especially in terms of textile and apparel trade between the United States and Vietnam, is the next possible agreement worth following. (Click here for the US Fashion Industry Association’s perspective on the TPP rules of origin.)

Now that textile and apparel producers have a better idea of how these agreements work, they can learn how to take advantage of these special programs. There is a newsletter dedicated to providing tips on participating in the aforementioned trade programs, which can be accessed by signing up for free at http://eepurl.com/T-KqT.

 

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Dr. Jackson Pushes for AGOA Renewal at Summit on Africa

IMG_8361 IMG_8414The African Growth and Opportunities Act (AGOA) is an important U.S. law signed by former U.S. President Bill Clinton in 2000. AGOA is set to expire in 2015. At the African Growth and Economic Development Summit at USC earlier this month, I encouraged everyone interested in doing business with African countries and African economic growth to ask U.S. Congress to renew AGOA. I continue to make the same appeal in this blog post and explain why.

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AGOA promotes trade between the United States and eligible Sub-Saharan African countries. For example, apparel manufacturers from the Sub-Saharan African region are able to export their clothing to the United States duty-free. Duties are the taxes placed on foreign goods entering into any country. Therefore, the importer or the buyer does not have to pay this specific tax to import garment from a Sub-Saharan African country.

The law helps U.S. textile producers in that one provision requires that the final garment entering the United States uses unlimited amounts of U.S. yarn, thread and fabric.

Debates continue as to whether or not the law truly helps the Sub-Saharan Africa garment manufacturers compete in the United States.

While I continue to push for a revised U.S.-Africa trade policy, AGOA is all that we have now. For this reason, we should not allow this law to expire.

 

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The Role of Modern Technology and Its Impact on Business Globalization

How has technology played a role in facilitating international trade over time? How can businesses take advantage of modern technology to benefit from the global economy? Guest blog contributor Megan Ritter provides a detailed overview of the link between technology and globalization from both a historical and contemporary perspective.

It’s International

Technology has done nothing but help businesses achieve their goals in a shorter amount of time. From the telegraph to call forwarding, allowing people to communicate over great distances has been beneficial to the global economy. If you’re planning to extend your business into areas outside your home country, there are plenty of tools that can easily help you achieve your goals:

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Technology and global business

 

 

 

 

 

 

Image Source: ShutterStock.com

 

If You Build It…

Ancient Rome was the first to establish an international communications system—roads reaching from one end of the empire to the other crisscrossed the entire empire and allowed for rapid exchange of messages via courier. This made the Roman Empire the star of the ancient world and allowed it to gain control over smaller kingdoms and empires quickly.

The next great leap forward was achieved by the British Empire. At one point, the British had a presence on every populated continent, so it was necessary to find a faster way to transmit messages. The invention of the telegraph allowed Great Britain to reach all of its colonial holdings in the late 19th and early 20th centuries, which included large parts of Africa, parts of the Middle East, India, and Australia and New Zealand.

Finally, the United States took global telecommunications worldwide via the cell phone. Many tech companies began to start producing cell phones and cellular networks can be found in every country in the world. Telecom company Nepali has even established a high-speed internet facility at the base camp of Mt. Everest (that’s 17,000 feet above sea level!). Tens of thousands of mountain climbers visit this camp every year, but they have had to rely on satellite phones in order to stay connected.

With this kind of technology available, this could give businesses the opportunity to operate from practically anywhere, and for a low cost as well.

Bargain Bin

Businesses tend to purchase their labor and materials from places where they are cheaper—if you look at any of your electronics or clothing, you’ll find that they were made in places such as China or Thailand. This is done not only for cost reasons—labor standards and environmental standards in these countries are more relaxed as well.

This doesn’t only go for tangible goods—companies have also outsourced their customer service functions to places such as India and the Philippines. In order to facilitate this, advances in telecommunications systems have been made in those countries, and call centers are employing increasing numbers of locals to work the phones.

Social Butterflies

Social media has allowed anyone with an Internet connection to obtain information about people and businesses, and allows for people to find out more about and engage businesses online and conduct business online as well. Countries such as Egypt, Russia, the Philippines, Tunisia, Indonesia, Jordan, Venezuela and Nigeria all boast more than 80-percent social media usage (by comparison, the United States only has 73 percent social media usage).

Four of these countries (Indonesia, Egypt, Nigeria and the Philippines) are listed as “Next Eleven” economies by Goldman Sachs—that means that these countries have a high potential for growth into developed country status, making these markets very attractive for businesses trying to expand their global reach. With economic development coupled with their active presence on social media, consumers in these countries are willing to buy up businesses’ goods and services.

No More Lag?

One of the most important technologies today to conduct business on a global scale is voice over Internet protocol (VoIP), which is used by Skype and Google Hangout. However, the Internet is not the same everywhere—more often than not, people complain about slow or spotty Internet connections, which can make it hard for businesses with a presence in developing nations to perform at their best.

The global average Internet speed is 19.52 Mbps download and 8.4 Mbps upload for global broadband Internet, and 8.8 Mbps download and 3.3 Mbps upload on mobile Internet. Only 50 countries break the global average. However, scientists have been experimenting with data teleportation, which will allow the secure transmission of data “states” (the spin state of an electron or quantum data) without having to move the actual, physical matter, which will have a huge impact on Internet speeds and will possibly push globalization into a whole new era in a little as ten years, at least for business use.

Globetrotting

Modern technology has allowed businesses to globalize at very little cost to the business. With technology moving forward at a rapid pace, setting up a business and taking it international will become second nature. Harnessing the use of social media will also allow everyday people to participate as well—the next advance in modern technology may not necessarily be from a developed nation, which would level the playing field and allow developing countries to also achieve as much as their already-developed counterparts.

 

Megan Ritter is an online journalist and tech enthusiast with a background in media marketing. In addition to discussing the many different ways technology can help transform nearly any business, she also enjoys covering social media, business communications, and globalization. You can find more of her writing here

The views expressed in this piece are those of the author and do not necessarily reflect the opinions of International Trade Examiner.

 

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U.S. Businesses Are Missing Out in the African Continent

About 50 African heads of state were in Washington, D.C. last week for the U.S.-Africa Leaders Summit to discuss the economic potential of the continent. Despite the economic success of a number of African countries in recent years, two-way trade between the United States and Sub-Saharan Africa declined from $104 billion in 2008 to $63 billion in 2013, according to U.S. Department of Commerce trade data. U.S.-Sub-Saharan African trade in 2013 was small compared to the European Union’s trade with the continent at more than $200 billion and China’s at $170 billion.

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Economic success refers to the high GDP growth rates, declining inflation, growing middle class with greater purchasing power and development of industries such as the banking and retail sectors.

Unfortunately, common stereotypes surrounding African countries—disease, war, corruption, poverty, and poor infrastructure—continue to prevent many business owners, especially small business owners, from taking advantage of the opportunities in different African countries.

It is imperative that U.S. business owners let go of these anxieties and fears and engage the growing African market through exports and imports to increase their sales and competitiveness. When I discuss the opportunities in Africa with small business owners, the responses touch on similar themes—corruption, red tape and exploitation. However, there are programs and policies put in place to address these concerns.

Corruption

Corruption is not unique to the continent of Africa. Many business owners are mainly concerned about buyers failing to pay for goods and services. Non-payment can also take place right here in the United States and throughout other regions. Notably, options exist to reduce the risks associated with international trade.

The Export-Import (Ex-Im) Bank is one such option. (The U.S. Congress will determine whether or not to reauthorize the Ex-Im Bank before it expires on Sept. 30, 2014.) The 80 year Ex-Im Bank backs loans offered by commercial lenders to exporters to reduce the lenders’ risk and allow exporters to increase their revenue through export sales. The same institution also offers an export credit insurance program to exporters to cover any losses due to non-payment or political instability.

Red tape

Although there is still room for improvement, a number of African countries have made significant enhancements in terms of ease of access to their markets. The number one destination for U.S. exports, South Africa, has reduced the amount of time and documents required to export to the country through its Customs Modernization Program, according the International Finance Corporation (IFC) and World Bank Doing Business survey. More than half of the Sub-Saharan countries have implemented at least one reform measure to facilitate smoother international trade, according to the same IFC/World Bank survey.

A number of trade facilitation projects funded by the U.S. Agency for International Development (USAID) have helped to streamline documents, improve customs procedures, and enhance transport corridors. These projects, one of which I worked on for the Southern African region, operate out of the trade hubs in the Western, Eastern and Southern African regions.

Outsourcing and Worker Exploitation

Outsourcing is one component of international trade, in which a company moves its production facilities and labor source to take advantage of cheaper labor. Exporting allows U.S. business owners to sell a good or service in a foreign market so that they can boost their bottom lines. Also, purchasing goods from African countries helps African business owners to increase their sales and possibly have the ability to invest back into their own economies.

In addition to the efforts of the African countries themselves, policy measures exist that extend opportunities for U.S.-Africa trade such as AGOA.

African Growth and Opportunities Act (AGOA)

AGOA is a U.S. law signed by former President Bill Clinton in May 2000. This law encourages Sub-Saharan African countries to become more involved in the global economy by giving its exporters special access to the U.S. market. For example, eligible African apparel exports enjoy duty and quota-free access to the U.S. market.

At the same time, the U.S. textile producers benefit, because the law requires that the fabric, yarn and thread used in African apparel originate in the United States in order receive that special access. In other words, AGOA provides U.S. fabric, yarn and thread producers guaranteed access to the Sub-Saharan African market.

Africa’s growing economic strength continues to present opportunities for U.S. business owners. U.S. business owners must take notice of the growing potential of the many countries throughout the Sub-Saharan African region and engage the region to increase their sales, lower costs and expand their presence around the world. To gain a competitive foothold in the region, U.S. business owners should invest the time and finances to avoid costly mistakes that occur regardless of geographic location.

 

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