Target List of U.S. Proposed Exports to China for Increased Tariffs

Please note that as of publication of this notice, the tariffs on these products had not gone into effect. (As of April 4, 2018)

  1. Yellow soybean
  2. Black soybean
  3. Corn
  4. Corn flour
  5. Uncombed cotton
  6. Cotton linters
  7. Sorghum
  8. Brewing or distilling dregs and waste
  9. Other durum wheat
  10. Other wheat and mixed wheat
  11. Whole and half head fresh and cold beef
  12. Fresh and cold beef with bones
  13. Fresh and cold boneless beef
  14. Frozen beef with bones
  15. Frozen boneless beef
  16. Frozen boneless meat
  17. Other frozen beef chops
  18. Dried cranberries
  19. Frozen orange juice
  20. Non-frozen orange juice
  21. Whiskies
  22. Unstemmed flue-cured tobacco
  23. Other unstemmed tobacco
  24. Flue-cured tobacco partially or totally removed
  25. Partially or totally deterred tobacco stems
  26. Tobacco waste
  27. Tobacco cigars
  28. Tobacco cigarettes
  29. Cigars and cigarettes, tobacco substitutes
  30. Hookah tobacco
  31. Other tobacco for smoking
  32. Reconstituted tobacco
  33. Other tobacco and tobacco substitute products
  34. SUVs with discharge capacity of 2.5L to 3L
  35. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for SUVs (4 wheel drive)
  36. Vehicles with discharge capacity of 1.5L to 2L
  37. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 1000ml, but not exceeding 1500ml for SUVs (4 wheel drive)
  38. Passenger cars with discharge capacity 1.5L to 2L, 9 seats or less
  39. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 1000ml, but not exceeding 1500ml for 9 passenger cars and below
  40. Passenger cars with discharge capacity of 3L to 4L, 9 seats or less
  41. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 3000ml, but not exceeding 4000ml for 9 passenger cars and below
  42. Off-road vehicles with discharge capacity of 2L to 2.5L
  43. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2000ml, but not exceeding 2500ml for off-road vehicles
  44. Passenger cars with discharge capacity of 2L to 2.5L, 9 seats or less
  45. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2000ml, but not exceeding 2500ml for 9 passenger cars and below
  46. Off-road vehicles with discharge capacity of 3L to 4L
  47. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 3000ml, but not exceeding 4000ml for off-road vehicles
  48. Diesel-powered off-road vehicles with discharge capacity of 2.5L to 3L
  49. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for diesel-powered off-road vehicles
  50. Passenger cars with discharge capacity of 2.5L to 3L, 9 seats or less
  51. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for 9 passenger cars and below
  52. Off-road vehicles with discharge capacity of less than 4L
  53. Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement not exceeding 4000ml for off-road vehicles
  54. Other vehicles which are equipped with an ignited reciprocating piston internal combustion engine and a drive motor and can be charged by plugging in an external power source
  55. Other vehicles that are equipped with a compression ignition type internal combustion engine (diesel or semi-diesel) and a drive motor, other than vehicles that can be charged by plugging in an external power source
  56. Other vehicles which are equipped with an ignition reciprocating piston internal combustion engine and a drive motor and can be charged by plugging in an external power source
  57. Other vehicles that are equipped with a compression-ignition reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source
  58. Other vehicles that only drive the motor
  59. Other vehicles
  60. Other gasoline trucks of less than 5 tons
  61. Transmissions and parts for motor vehicles not classified
  62. Liquefied Propane
  63. Primary Shaped Polycarbonate
  64. Supported catalysts with noble metals and their compounds as actives
  65. Diagnostic or experimental reagents attached to backings, except for goods of tariff lines 32.02, 32.06
  66. Chemical products and preparations for the chemical industry and related industries, not elsewhere specified
  67. Products containing PFOS and its salts, perfluorooctanyl sulfonamide or perfluorooctane sulfonyl chloride in note 3 of this chapter
  68. Items listed in note 3 of this chapter containing four, five, six, seven or octabromodiphenyl ethers
  69. Contains 1,2,3,4,5,6-HCH (6,6,6) (ISO), including lindane (ISO, INN)
  70. Primarily made of dimethyl (5-ethyl-2-methyl-2oxo-1,3,2-dioxaphosphorin-5-yl)methylphosphonate and double [(5-b Mixtures and products of 2-methyl-2-oxo-1,3,2-dioxaphosphorin-5-yl)methyl] methylphosphonate (FRC-1)
  71. 38248600a articles listed in note 3 to this chapter containing PeCB (ISO) or Hexachlorobenzene (ISO)
  72. Containing aldrin (ISO), toxaphene (ISO), chlordane (ISO), chlordecone (ISO), DDT (ISO) [Diptrix (INN), 1,1,1-trichloro-2 ,2-Bis(4-chlorophenyl)ethane], Dieldrin (ISO, INN), Endosulfan (ISO), Endrin (ISO), Heptachlor (ISO) or Mirex (ISO). The goods listed in note 3 of this chapter
  73. Other carrier catalysts
  74. Other polyesters
  75. Reaction initiators, accelerators not elsewhere specified
  76. Polyethylene with a primary shape specific gravity of less than 0.94
  77. Acrylonitrile
  78. Lubricants (without petroleum or oil extracted from bituminous minerals)
  79. Diagnostic or experimental formulation reagents, whether or not attached to backings, other than those of heading 32.02, 32.06
  80. Lubricant additives for oils not containing petroleum or extracted from bituminous minerals
  81. Primary Shaped Epoxy Resin
  82. Polyethylene Terephthalate Plate Film Foil Strips
  83. Other self-adhesive plastic plates, sheets, films and other materials
  84. Other plastic non-foam plastic sheets
  85. Other plastic products
  86. Other primary vinyl polymers
  87. Other ethylene-α-olefin copolymers, specific gravity less than 0.94
  88. Other primary shapes of acrylic polymers
  89. Other primary shapes of pure polyvinyl chloride
  90. Polysiloxane in primary shape
  91. Other primary polysulphides, polysulfones and other tariff numbers as set forth in note 3 to chapter 39 are not listed.
  92. Plastic plates, sheets, films, foils and strips, not elsewhere specified
  93. 1,2-Dichloroethane (ISO)
  94. Halogenated butyl rubber sheets, strips
  95. Other heterocyclic compounds
  96. Adhesives based on other rubber or plastics
  97. Polyamide-6,6 slices
  98. Other primary-shaped polyethers
  99. Primary Shaped, Unplasticized Cellulose Acetate
  100. Aromatic polyamides and their copolymers
  101. Semi-aromatic polyamides and their copolymers
  102. Other polyamides of primary shape
  103. Other vinyl polymer plates, sheets, strips
  104. Non-ionic organic surfactants
  105. Lubricants (containing oil or oil extracted from bituminous minerals and less than 70% by weight)
  106. Aircraft and other aircraft with an empty weight of more than 15,000kg but not exceeding 45,000kg

What You Need to Know About Recent Actions on Trade Tariffs

 

List of Proposed Exports for Increased Tariffs    Federal Program Survey

 

The past few weeks have produced a flurry of trade actions – both proposed and implemented – on China’s imports to the U.S. and U.S. exports to China.

The Florida Chamber’s International Trade & Investment Office has summarized recent actions and outlined steps you can take in response to proposed tariffs. Below is a timeline of events:

March 8

On March 8, through presidential proclamation, the U.S. imposed new tariffs on 25 percent steel and 10 percent aluminum, effective March 23, 2018.  The White House additionally issued a formal notice that steel and aluminum imports from Argentina, Brazil, South Korea, and the 28-member states of the European Union, would be excluded from tariffs for the time being. These countries join Canada and Mexico, whose exclusions were noted in the original proclamation.

The White House notice further notes that, for these countries, the tariffs “are suspended until May 1, 2018, pending discussions of satisfactory long-term alternative means to address the threatened impairment to U.S. national security.

Our sources suggest that steel and aluminum imports from the excluded countries will likely be subject to quota system, roughly equivalent to last year’s volume of imports.

April 2

Effective April 2, 2018, the Chinese government, in response to U.S. action on steel and aluminum tariffs, announced that they are increasing the tariff rate on various imported U.S. products, including pork, by 25 percent. It’s also imposing a new 15 percent tariff on 120 imported U.S. commodities. NOTE that this is not a proposed list but an actual list of U.S. export to China which are currently subject to increased tariffs.

The Chinese tariff increase will impact approximately $3 billion of U.S. exports to China.  The tariffs are as follows:

15 Percent Tariff On:

  • Nuts – including coconuts, cashews, almonds, hazelnuts, walnuts, chestnuts, pistachios, and macadamia nuts
  • Fresh or dried fruits, – including plantains, bananas, dates, figs, pineapples, avocadoes, guavas, mangoes, oranges, mandarins, clementines, grapefruit, lemons, grapes, watermelons, papayas, apples, pears, cherries, peaches, plums, strawberries, raspberries, blackberries, cranberries, kiwi, durian, persimmons, lychee, longan, rambutan, dragon fruit, and apricots
  • Grape Wine – including denatured ethyl alcohol
  • Ginseng roots
  • Seamless tubes, pipes, and hollow profiles of iron or steel

25 Percent Tariff On:

  • Aluminum waste and scrap and
  • Meat and edible meat offal of swine

April 3

The Trump Administration published a list of $50 billion worth of imports from China to impose with a 25 percent tariff.  The list specifically targets manufacturing sectors which the Chinese government seeks to strengthen through its “Made in China 2025” initiative. This action is the Administration’s response to China’s unfair practices which pressure U.S. companies to transfer technology and intellectual property to Chinese companies.

According to the U.S. Trade Representative (USTR), the list was refined to minimize “disruptions to the U.S. economy.”

See How Do You Submit Your Comments to USTR? to find out how to submit comments to the Trump Administration on these proposed actions.

April 4

In response to U.S. intended action on Chinese imports referenced above, the Chinese government issued a list of 106 U.S. exports (see full list below) valued at $50 billion for possible new tariffs.  The date by when these tariffs go into effect is yet to be announced.  Tariffs target U.S. exports of aircrafts, automobiles, soybeans beef and chemicals.

April 5

President Trump issued a statement saying that he had “instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs.” This additional action is in response to “China’s unfair retaliation” to previous measures imposed on by the Administration.

How Do You Submit Your Comments to USTR?

With the publication of this list, the Trump Administration kicks off a public comment period ending on May 22nd. The USTR has not yet stated when they would make a decision on the final tariff list.

For companies wishing to submit a comment, carefully review the submission schedule and follow the guidelines outlined below.  You have a small window to submit comments. The USTR will hold a public hearing on May 15 regarding a proposed determination on appropriate action on these imported products. Please see the USTR notice for more details.

  • April 23, 2018: Due date for filing requests to appear and a summary of expected testimony at the public hearing and for filing pre-hearing submissions.
  • May 11, 2018: Due date for submission of written comments.
  • May 15, 2018: The Section 301 Committee will convene a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW Washington DC 20436 beginning at 10:00 am.
  • May 22, 2018: Due date for submission of post-hearing rebuttal comments.

USTR strongly prefers electronic submissions made through the Federal Rulemaking Portal: http://www.regulations.gov.  It is important that you follow the instructions for submitting comments outlined in USTR noticeFor alternatives to on-line submissions, please contact Sandy McKinzy at (202) 395-9483.

Exclusion Request Process for U.S. Companies

The U.S. Department of Commerce recently issued a Federal Register notice on the process U.S. companies may follow to request that specific steel or aluminum products be excluded from the Sec. 232 tariffs, applied on March 23.

Per a press release from the U.S. Department of Commerce:

Only individuals or organizations using steel or aluminum articles identified in Presidential Proclamations 9704  and 9705 and engaged in business activities in the United States may submit exclusion requests.  Exclusion requests will be posted for a 30-day comment period on www.regulations.gov

Separate exclusion requests must be submitted for each unique steel or aluminum product import. For an exclusion request to be considered, the requester must provide a full factual description of the specific product, its properties, and its quantity.”

Copies of the forms and additional information on the exclusion process will be available here and here.

For questions concerning the exclusion process, contact steel232@bis.doc.gov or 202-482-5642 for steel-related queries and aluminum232@bis.doc.gov or 202-482-4757 for aluminum-related queries.

 

The Florida Chamber Wants to Hear from You

As a long-standing advocate of free-trade, the Florida Chamber will continue to support expanding international trade and investment opportunities for Florida businesses, advocating for fair and equitable market access for Florida-origin exports abroad, and eliminating barriers that are harmful to Florida’s competitiveness as a global hub for trade.

Members of the Florida Chamber of Commerce Board of Directors will be traveling to Washington, D.C. in May 2018, to meet with members of Florida’s Congressional Delegation and federal agencies to urge support of Florida’s job creators.

Your input matters and we would like to hear from you before this important event. To make sure your voice is heard, please take a moment to provide us with your input by taking our brief survey.

For more information on how to join our efforts, please contact Alice Ancona at aancona@flchamber.com.

 

Trade Report from U.S. International Trade Commission

Shifts in U.S. Merchandise Trade, 2016 is now available on the U.S. International Trade Commission (USITC) web site.

The report focuses on changes in U.S. exports and imports with respect to ten sectors (agriculture, footwear, forestry, textiles, electronics, minerals, transport, chemicals, energy, and machinery) and bi-lateral trade with eight trading partners and/or regions (Canada, Mexico, the NAFTA area, China, the European Union, Asia, OPEC, and sub-Saharan Africa).

 

Take Aways for Top U.S Trading Partners in 2016 

European Union (EU) as a regional trading block continues to be the U.S.’s largest merchandise trade (imports + exports) partner accounting for 18.9 percent of total U.S. merchandise trade.

  • EU became the top ranking U.S. export market in 2016, surpassing Canada, which had ranked as the largest export market in 2015.
  • Leading U.S. exports to the EU included civilian aircraft, engines, and parts; medicaments (medicines); blood fractions (e.g., antiserum) and refined petroleum products
  • Leading U.S. imports were passenger motor vehicles, medicaments, blood fractions, refined petroleum products, and parts of turbojets or turbopropellers.
  • The EU was also the United States’ largest trading partner in terms of private services in 2016, accounting for 32.8 percent of total U.S. trade in private services (services exports).

 

China, for the second year in a row China remained the United States’ largest single-country trading partner based on two-way merchandise trade, accounting for 15.9 percent of total U.S. merchandise trade.

  • China was the United States’ fourth-largest single-country trading partner based on two-way services trade of $69.0 billion. U.S. services trade with China continued to increase in 2016, with particularly strong growth in U.S. exports, which resulted in a $4.2 billion increase (to $37.0 billion) in the U.S. services trade surplus with China.
  • S. merchandise trade deficit with China decreased $20.1 billion in 2016, it remained higher than that with any other trading partner.
  • Leading U.S. exports to China in 2016 were civilian aircraft, engines, and parts; soybeans; passenger motor vehicles; processors and controllers; and machines for semiconductor or integrated circuit manufacturing.
  • Leading U.S. imports from China were cellphones; portable computers and tablets; telecommunications equipment; tricycles, scooters, and related toys; and computer parts and accessories.

 

Canada was the United States’ second-largest single-country trading partner after China for the second consecutive year accounting for 14.9 percent of total U.S. merchandise trade with the world.

  • The value of U.S. merchandise trade with Canada fell 5.7 percent to $544.0 billion in 2016, U.S. exports to Canada were $266.0 billion in 2016, while U.S. merchandise imports from Canada were $278.1 billion.
  • Leading U.S. exports to Canada in 2016 included passenger motor vehicles; motor vehicles for goods transport; civilian aircraft, engines, and parts; and light petroleum oils.
  • Top U.S. imports from Canada included crude petroleum, passenger motor vehicles, natural gas, and coniferous sawn wood.
  • Canada remained the second-largest single-country U.S. trading partner for services in 2016, after the United Kingdom. Two-way services trade with Canada fell in 2016 to $83.0 billion, while the U.S. surplus in services narrowed to $24.4 billion, down 10.9 percent from $27.4 billion the year before.

Click here to visit The Florida Scorecard to Learn More About Imports and Exports in Florida.

To Trade or Not To Trade

The Florida Chamber of Commerce was in Washington, D.C. recently addressing many issues including international trade. Trade and free trade agreements were one of the key issues during the presidential campaign. President-elect Trump was particularly emphatic in his opposition to the TPP and his calls for a review of NAFTA as well as our trade relationship with China.

For decades, free trade agreements have been part of our economic tool kit  and international trade is one of the leading factors attributed to Florida’s economic recovery. Two and a half million Floridians are employed thanks to international trade. Our record-breaking tourism numbers benefit from international visitors and there are thousands of foreign companies operating in Florida that employ Floridians.

 

So What Happens Now?

It is all but certain that the Trans-Pacific Partnership (TPP) is no longer on the table. Our partners in the region still hope to revive trade talks with the U.S. and many are willing to reopen TPP and make revisions which might make it more palatable to the new administration. This weekend at the Asia-Pacific Economic Cooperation (APEC) CEO Summit in Lima, Peru, the future of trade and the role the U.S. would play in Asia was a top concern. China and Russia issued a statement that they will push for a free-trade area in the Asia-Pacific region. Neither country was part of the TPP.

China is pushing to finalize its parallel free trade agreement in Asia, the Regional Comprehensive Economic Partnership (RCEP), which includes all the ASEAN (the Association of Southeast Asian Nations) countries plus Australia, New Zealand, Japan, Korea, India, but it currently excludes the U.S.

 

Not Anti-Trade. Pro “Good Deals.”

From our meetings in Washington, D.C., it was clear that it was too soon to tell regarding the fate of many trade issues. Reviewing trade policy will be one of the first tasks tackled by the new administration. Re-negotiating and/or withdrawing from NAFTA as well as pulling the plug on TPP were at the top of the list. Trade would not be off the table completely however, and there is a greater appetite for bilateral trade agreements over the larger multi-nation deals like TPP. Should the U.S. withdraw from NAFTA, the new administration has proposed it would negotiate separate bilateral deals with Mexico and Canada. China and currency manipulation were also topics discussed in D.C.

It is also important to note that in 2015, Congress granted the President Trade Promotion Authority – or “fast track” – power for the President to negotiate trade agreements and move them more swiftly through Congress until 2018 and it could be extended until 2021.

 

Fair Trade, Not Just Free Trade – Leveling the Playing Field

Much like during the campaign, the new administration has outlined that they will be working to ensure agreements are enforced and that our trade partners are not engaging in “harmful” practices. They will also be reviewing country of origin labeling and environmental and safety standards, as well as considering the impacts trade policy has on the middle class, manufacturing and workers, and foreign direct investment.

The Florida Chamber will continue to monitor developments and we will be working in the in the best interest of Florida’s businesses to support trade agreements that help our exporters access the global market place and provide our workers access to high-wage jobs.

These discussions and more will be a key part of the conversation at the Florida Chamber’s 2017 International Days, Feb. 14 and 15 in Tallahassee. Be sure to join us by registering today!

What to Expect From Emerging Markets

India has ousted China as the emerging market with the most growth potential, according to Agility’s latest Emerging Markets Logistic Index.

The top 5 ranking positions for Market Connectedness with ports and infrastructure are:

  1. UAE
  2. Malaysia
  3. China
  4. Chile
  5. Saudi Arabia

The report also covers “Markets on the Move,” “Trade Lanes,” and an “Outlook and Overview.” Findings highlighted concern of volatility in the global economy and were reflected in eight of the top 10 emerging markets shifting positions.  China still remains at the top of the Logistics Index despite, economic concerns.  The Asian trade lanes are highlighted as the most promising for growth.

Among the top 10, countries that are taking steps to diversity and embark on economic and business climate reforms are UAE, India, and Malaysia.

What This Means For Florida:

As Florida strive to improve our connectivity and access to other markets, we should be mindful of opportunities that non-traditional markets bring.  Emerging markets are still ripe for growth in the coming decades but diversifying our trading partners is essential to stay ahead of the game.

The Florida Chamber has long advocated for policies that call for strategic investments in international economic development.  From continuing our support of Enterprise Florida export capacity building grants for small businesses and opening and supporting our foreign offices, to investing in a marketing campaign to promote the state globally – all are strategies that where highlighted in the Florida Chamber Foundation’s Trade and Logistics Studies and continue to be part of the Florida Business Agenda.

The New Suez Canal

With 90 percent of the world’s trade moving by sea, the expanded Suez Canal will be a game changer.

 

Quick Facts:

  • $8 billion, 44.7 mile extension to the Suez Canal will for the first time allow two-way traffic on the canal
  • The new channel allows for a reduction in transit times from 18 to 11 hours
  • Provides increased capacity for vessels with drafts over 45 feet (prior to the opening of the new channel, only eight vessels with drafts greater than 45 feet could be accommodated on the canal at any one time)
  • The extension to the canal has seen 72 kilometers (44.7 miles) of new canal created, parallel to the current channel. The projected included 35 kilometers (21.7 miles)of dry digging and 37 kilometers (23 miles) of deepening
  • The average size of ships on the Far East-U.S. East Coast route via the Suez Canal has increased by 73 percent since 2005 to 7,800 twenty-foot-equivalent units, while vessels on the same trade via the Panama Canal have grown by only 12 percent in capacity to 4,600 TEUs due to size restrictions.

 

What Does This Mean for the East Coast and Florida?

The Suez Canal has benefited from delays to the Panama Canal expansion as a number of carriers with larger ships in excess of 8,000 TEU ships, have taken advantage of the larger capacities the Suez Canal and have switched to this route. For a brief period during the U.S. West Coast ports disruption, the ratio of Asia-U.S. East Coast through the Suez surpassed those via the Panama Canal.  That ratio is now slightly back in Panama’s favor as carriers are preparing for the opening of an expanded Panama Canal.

The Asia-U.S. East Coast route is undergoing a period of dramatic changes based on strong eastbound demand, Beneficial Cargo Owners (BCOs) lack of confidence in West Coast ports, a changed shipping alliance structure and new services have helped boost the Suez route.  Drewry, a specialist research and advisory organization for the maritime sector, estimates that extent of cargo shift from the west to east coasts was at 375,000 TEUs between January and June and shows no sign of reducing. U.S. east coast ports have proven to be able to absorb this additional volume with minor disruptions.

The expanded Suez Canal and look forward to continuing to increase its service to the U.S. East coast market, but the degree to which it will increase service will depend on macro events such as how competitive it will remain against an open and expanded Panama Canal in April, Chinese export growth and South East Asian export growth to name a few.

 

A Tale of Two Canals

The opening of these two expanded Canals within a year of each other will deepen the rivalry between the two, particularly for services connecting Asia with the U.S. East Coast, which is now intensified in light of West Coast – East Coast cargo shift.  This is the route where the two canals are in in direct competition with each other.

The new expanded Panama locks, which are due to open in April 2016, will further the rivalry as trade may shift back in favor of an expanded Panama Canal.  The Panama Canal’s decision to temporarily reduce its draft from September 8 due to the draught caused by El Nino is not expected to have any significant impact on Far East-U.S. East Coast services, as it will affect less than 20 percent of the transits.

The average size of ships on the Far East-U.S. East Coast route via the Suez Canal has increased by 73 percent since 2005 to 7,800 twenty-foot-equivalent units, while vessels on the same trade via the Panama Canal have only increased by 12 percent in capacity to 4,600 TEUs due to size restrictions.

The opening of the new Panama locks will allow carriers to transit larger ships through the Panama Canal which will position it to recapture some market share lost the Suez Canal since 2008.

The Panama Canal’s share of the Far East-U.S. East Coast trade has decreased from approximately 90 percent before 2008 to a low of 48 percent in 2014 before recovering to 51 percent currently as a result of the recent launch of five new shipping services.

The Panama Canal’s share is expected to increase to over 70 percent by the end of 2016 as most of the Suez market share from China will likely return to the shorter Panama Canal route.  Trade from South East Asia is expected to preserve the Suez Canal route as that is the shorter route to the U.S. East Coast.

 

What Does This Mean for Florida?

The West Coast-East Coast cargo shift occurred earlier than anticipated due to the west coast port disruptions and delays in the opening of an expanded Panama Canal. The Suez Canal has grown in importance to the U.S. East Coast as manufacturing shifts from China to South East Asia have boosted trade to the U.S. via this shorter route.  Florida ports have captured some of this shift but opportunities remain to capture more.  An expanded Panama Canal will rebalance Asian trade bound for the East Coast in its favor.  Florida will have the first U.S. port of entry at 50 ft depth to receive the larger ships by the time the Panama Canal opens.  Our ability to capture this trade and demonstrate the strength of our connectivity due to our intermodal investments to increase capacity and connectivity to the larger U.S. market will be crucial to this effort.

Florida ports have experienced cargo growth since the West Coast Ports shut down, as shown in the below news articles:

The above are just a few recent headlines. In order for Florida to continue to remain competitive, continued investment in ports, transportation and logistical infrastructure is key for Florida to remain competitive.

 

THERE ARE SEVERAL WAYS TO GET INVOLVED:

  1. Join our legislative “Fly-In” in Washington, D.C. on September 9-10 and lend your voice to our advocacy efforts at the Federal level for these strategic investments in Florida’s future.
  2.  Register today and share your voice with Florida’s transportation infrastructure leaders at the Florida Chamber’s Transportation Summit in December.
  3. Download and share the Florida Chamber Foundation’s most recent Trade and Logistics study.

A Simple Guide to China’s Devaluation of the Yuan

What happened?

China devalued the Yuan against the U.S. dollar

 

Why did this happen?

China devalued its currency against the U.S. dollar to make Chinese goods cheaper and boost exports after Chinese exports declined 8.3 percent in July.

 

What does this mean?

The Yuan is loosely tied to the U.S. dollar and has been strengthening as the U.S. economy picks up. The U.S. Fed is considering a rate hike in the near future as the U.S. economy continues to move ahead, thus further strengthening the dollar.  As China is an export-oriented economy, this potential increase would put greater pressure on declining exports.

 

What are the impacts to the U.S.?

A cheaper Yuan will mean a decrease in U.S. exports as Chinese products will be less expensive.  As other nations consider the impact of the Chinese devaluation to their exports, they too may devalue their currencies to remain competitive with the Chinese goods further putting pressure on US exports.

 

What are the Impacts to other parts of the world?

The Chinese currency implications go beyond the devaluation as it’s a symptom of its overall economic health as the Chinese growth engine continues to slow down.  This will have far reaching implications for emerging markets that export heavily to China, particularly commodity exporters heavily dependent on China like Brazil, Russia, South Africa, Indonesia, and Malaysia. A weaker yuan is also a concern for developing nations that compete with China in exporting similar goods and services to similar destinations. Taiwan and South Korea face some of the greatest risks, but Thailand and the Philippines may also be affected and even Mexico may feel the impact of cheaper Chinese goods.

 

All this comes at a time when emerging markets are facing other factors and issues are affecting their growth.  While larger economies are able to sustain and mitigate the Yuan depreciation, China is still the world’s second largest economy, and emerging markets which heavily depend on China are important to the overall global economy. Their health will have an impact on global markets.

 

 

What does this mean for Florida?

 

The Chinese currency depreciation will have an impact on Florida exports, which compete with China.  Florida will need to remain vigilant to the currencies of Florida’s trading partners such as Taiwan and Korea, who are strongly tied to Chinese trade. As their currencies may weaken as well, adding to the fallout of the Chinese devaluation.  The Florida Chamber’s International Program will keep you up to date as this issue unfolds.

 

NEED MORE INFO?

For more information on how this affects Florida’s future, please contact the Florida Chamber’s Chief Economist Dr. Jerry Parrish at jparrish@flfoundation.org.

India and the Asia-Pacific Economic Cooperation

Asia Society Policy Institute (ASPI) launched an initiative, ‘India and APEC: Charting a Path to Membership,’ to develop the case and a strategy for gaining India’s membership in Asia-Pacific Economic Cooperation (APEC). The ASPI initiative will be supported in India by leading business association Confederation of Indian Industry (CII).

Joining APEC would be a game-changer for India and would position it for integration into global supply chains as well as serve as a bridge to one day joining the TPP.

India is Asia’s third largest economy and its participation in APEC would be a win for India and the region, particularly at a time when China’s economy is slowing down.  India’s entry will require it to update its policy and regulatory environment preparing it for greater market access and trade liberalization in order to fully participate in the global market place.

APEC had a moratorium on new membership for a decade, which has now been lifted.

APEC’s members include the U.S., Russia, China, Australia and Japan. It represents 2.8 billion people and accounts for 57 percent of the world’s gross domestic product and 47 percent of global trade.

What Does This Mean for Florida?

While India is not one of Florida’s top trading partners, its potential is tremendous.  Its large economy still remains a “sleeping giant” as it has not fully integrated into the global market place and still lacks critical infrastructure investments to maximize capacity and stimulate business growth. India’s integration into APEC could open doors for greater market access to U.S./Florida exporters and businesses looking to tap into its potential. Relationship building is important for Florida to be at the forefront of an emerging powerhouse that is India poised to become.

 

Learn More:

In order to remain globally competitive, Florida needs to diversity our trading partners and markets to expand and grow Florida trade.  This is a strategy identified in the Florida Chamber Foundation’s most recent Trade and Logistics study. To learn more about how the Florida Chamber is work to build Florida’s international relationships, contact Alice Ancona today at aancona@flchamber.com.

China’s Troubles Are the World’s Troubles

China’s troubles are the world’s troubles.  Its bandwidth cannot be underscored – in 2014 it accounted for 38 percent of global growth. Its reach goes even further as China has invested in many emerging markets and fragile economies around the world that have become dependent on it for growth.  Downturn in China will have far reaching implications.  There are growing concerns that China could very well trigger the next global recession.

 China’s economy is facing a variety of challenges:

  • By providing short term solutions to stabilize its economy it’s also putting pressure on and increasing its debt bubble
  • Diminishing returns on its stimulus efforts
  • Bailouts and plunging shares in the stock market- efforts to ease the fallout from many years of borrowing are all taking its toll
  • Putting a floor on plummeting shares is essentially another bailout on top of a previous one

A significant indicator of the widespread effect of China’s financial situation is the impact China’s slowdown is having on Singapore, an open and trade dependent economy. Singapore experienced a GDP drop of 4.6 percent last quarter, a decrease most likely linked to China. Singapore also experienced a 14 percent decrease in manufacturing from the previous three months; non-oil exports to China fell 4.3 percent in May, 5.1 percent in April and plunged 22.7 percent in February.

China’s impact on Singapore are certainly concerning as are the impacts on its other neighbors in the region which are reliant on a strong Chinese growth engine.  Several countries in Asia have experienced economic slowdowns and decreased exports which have exposed them to risk thus making them vulnerable. With more than 40 percent of global growth coming from Asia (according to Deutsche Bank AG), further slowdowns in China’s economy would certainly have implications on global economic growth.

India: World’s Fastest Growing Economy

India will be the world’s fastest growing economy, for the second consecutive year in 2016 at 7.5 per cent according to the World Economic Outlook Update recently released by the International Monetary Fund.

India’s growth projection for current year is at 7.5 per cent, which will be higher than China’s 6.8 per cent.  China was the fastest growing economy in 2014, at 7.4 per cent as against India’s 7.3 per cent, as per the IMF data.

India, in the coming years, has plans to expand its manufacturing base, simplify India’s regulatory bureaucracy, and improve its tax structure and to modernize its infrastructure and military and is looking to the U.S. for involvement and investment.

Trade between India and the U.S. and Florida for that matter is a shadow of what it could be.  There are opportunities in India for Florida. Forecasters predict consumer spending in India will exceed $4.3 trillion in 2023, nearly quadruple the level last year. The U.S. is now India’s second-largest supplier of military hardware, accounting for 7 percent of its military imports between 2009 and 2013.

US and Africa Aim to Boost Trade

By WILLIAM MAUDLIN and DREW HINSHAW

U.S. and African leaders meeting in Washington on Monday kicked off a campaign to renew a program that gives exemptions on U.S. tariffs and quotas in an effort to boost trade and stimulate the economies of sub-Saharan African countries.

Leaders in the U.S. and Africa are looking to spur economic ties at a time when trade between the two is sinking and China’s hunger for commodities is boosting Beijing’s influence on the continent.

U.S. Secretary of State John Kerry, center, discusses the African Growth and Opportunity Act on Monday during the U.S.-Africa Summit at the World Bank in Washington. AFP/Getty Images

American officials and lawmakers say extending the 14-year-old African Growth and Opportunity Act, or Agoa, is crucial to preserving trade ties with fast-growing African countries, especially when U.S. trade negotiations at the World Trade Organization and with other major economies have stalled.

China passed the U.S. in imports in 2012 and imported $88 billion from sub-Saharan Africa in 2013, according to the International Monetary Fund. Partly because of increased oil production at home, U.S. imports from the region plunged to $34.5 billion last year, from a peak of $78.2 billion in 2008, with exports showing some gains in recent years.

Agoa is part of a strategy to increase economic ties with a growing Africa—including in trade and power generation—as China strengthens ties on the continent and the European Union negotiates free-trade agreements there. The goal, U.S. officials say, is to replace foreign aid with trade.

Building economic ties could also help contain conflicts that have convulsed Africa, said Erastus Mwencha, deputy chairman of the 54-nation African Union.

But critics point out that the bulk of African trade is oil shipments from West Africa, and U.S. agricultural and textile interests have opposed efforts to expand the list of products eligible for tariff and quota breaks.

President Barack Obama’s trade policy has faced delays and dogged opposition in Congress, and a similar preferential tariffs program for the developing world was allowed to expire last year.

China and Brazil: Growing Together or Apart?

by Any Freitas

China and Brazil’s relations have been characterized by an ‘imperfect interdependence’ thus far. How will that change going forward?

Last April, Brazilian and Chinese Foreign Ministers met in Brasilia to launch the ‘First Strategic Global Dialogue’ between the two countries. Sino-Brazilian strategic dialogues would now be held annually, providing China and Brazil the occasion to regularly meet and reassess their common agenda. In a year when Brazil and China celebrate 40 years of diplomatic relations, a kick-off meeting of this kind bodes well for the future of their relationship.

Despite the distance, Brazil and China have grown remarkably closer in the last decade. Economically, there seemed to be a sort of ‘natural interaction’ between China’s export-focused, industrialized economy and Brazil’s economy which has been primarily an industrial commodities provider.

Quite naturally, then, trade flows between the two giants rose from $6.68 billion in 2003 to over $90 billion in 2013, making them the biggest partners within the BRICS. Since 2009, China has replaced the US and become Brazil’s main trade partner. Likewise, Brazil has been in China’s “top 10” partners list for some years now (7th in 2011, 9th in 2013) and is one of the key destinations of Chinese foreign direct investment (FDI).

Yet, cooperation between the two countries has gone well beyond mere trade and investment, encompassing areas such as education, agriculture, biofuels, nanotechnology and satellite technology. Politically, Brazil and China have also strengthened their links, promoting, inside or outside the BRICS (Brazil, Russia India, China, South Africa), a common agenda on issues of global concern, from development cooperation to international financial regulation.

However, as solid as their relationship may seem, current trends in both countries may seriously challenge what once seemed like a ‘perfect match’. China and Brazil are now being called to face their own (economic) dilemmas and the result of such a revision may lead to a progressive cooling off of their relations–and possibly not only economic ones.

New Model, New Opportunities?

How to secure long-standing and stable growth? For China, at least since 2013, the answer should be found in its domestic market. Partly pushed by the global economic context, China has recently started a revision of its macroeconomic policies and, accordingly, of its growth model. As part of this revision, state investments should now prioritize programmes to stimulate household consumption and job creation, moving away from the focus on industry and infrastructure.

Chinese authorities should moreover promote a gradual liberalization of exchange and interest rates, which could lead to an appreciation of the yuan, which could have important consequences on the prices of Chinese products, domestically and at a global level.

 

Officially announced by Chinese authorities, these measures have been positively received by analysts who believe they should bring greater transparency and predictability to the Chinese economy. They should moreover open new opportunities to countries like Brazil, whose companies would finally be able to compete with China not only in its domestic market, but also in Latin America, where they have been losing ground.

Hence, all seems like good news to the world, in particular to Brazil. Even if there is some truth in this analysis, existing challenges, in Brazil but also in China, may prevent Brazilian companies from seizing the opportunities offered by this Chinese ‘transition’.

While the number of Chinese companies (and investments) in Brazil has been on the rise since 2010, Brazilian companies (with a few exceptions, like Embraer, Vale, Votorantim or BRF-Brazilian Foods) have been struggling to enter the Chinese market, considered too closed and difficult to penetrate. Brazilian authorities (and private sector) see this gap as problematic, and would expect China to be a bit more welcoming to Brazilian business.

Beyond the most evident barriers (linguistic, legal, infrastructure, etc.) they meet when trying to access the Chinese market, Brazilian industries also face important domestic limitations. Among these challenges are Brazil’s complex legal framework, excessive bureaucracy, heavy tax system, poor infrastructure, low-skilled labor force, high inflation and interest rates. Coupled with the lower growth rates of the last few years, these challenges have been increasing the so-called “Brazil cost”, and hence considerably impairing the competitiveness and global reach of Brazilian industries.

Just like China, Brazil is also at a decisive moment when it needs to reconsider the foundations and orientation of its economic model. Yet, while China should strive to invest less and spend more, Brazil needs to shift from a model that privileges domestic consumption, to one in which investment and production are placed at the center. For both countries, the challenges are huge and will imply (internal) struggles, political will and long adaptation periods.

China has so far managed to sustain growth while implementing reforms. In Brazil’s case, on the other hand, despite the government’s attempts, appropriate set of measures that meaningfully boost competitiveness and integration of Brazilian companies into the global market have yet to be found. However, as most analysts point out, without consistent, long-term strategies to tackle such a challenge, there are few chances that Brazil will be able to improve its economic performance–and hence benefit from China’s transition. This seem all the more pressing since commodity prices (that represent nearly 80% of Brazil exports) should progressively decline in the next years, negatively affecting Brazilian trade flow and economic results.

BRICS Ink $50 Billion Lender in World Bank, IMF Challenge

By Raymond Colitt, Unni Krishnan and Arnaldo Galvao

Leaders of the five BRICS nations agreed on the structure of a $50 billion development bank by granting China its headquarters and India its first rotating presidency. Brazil, Russia and South Africa were given posts or units in the new bank.

The leaders also formalized the creation of a $100 billion currency exchange reserve, which member states can tap in case of balance of payment crises, according to a statement issued at a summit in Fortaleza, Brazil.

Both initiatives, which require legislative approval, are designed to provide an alternative to financing from the International Monetary Fund and the World Bank, where BRICS countries have been seeking more say. The measures coincide with a slowing of economic growth in the five countries to about 5.4 percent this year from 10.7 percent in 2007, according to economists surveyed by Bloomberg.

“The BRICS are gaining political weight and demonstrating their role in the international arena,” Brazilian President Dilma Rousseff said after a signing ceremony.

IMF Managing Director Christine Lagarde congratulated the BRICS on establishing the reserve arrangement and said the Washington-based lender would be “delighted” to work together on the international safety net designed to preserve financial stability, according to an e-mailed statement.

Until the eve of the summit, India and South Africa had vied with China to host the headquarters of the bank, dubbed the New Development Bank, whose membership may eventually be extended to other countries.

Bank Governance

Russia’s Finance Minister Anton Siluanov told reporters that the BRICS decided in favor of Shanghai because the city offers better infrastructure, opportunities to capture private funding, and is home to more investors than the competitors.

Each member country got something out of the deal. The first chairman of the Board of Governors will be from Russia, while the first chairman of the Board of Directors will be Brazilian. South Africa will establish an African regional center for the bank, which may not get off the ground for two years, according to Carlos Cozendey, secretary for international affairs at Brazil’s Finance Ministry.

Founding members have equal voting rights. Of the total subscribed capital, $40 billion are callable shares. Payment of the remaining $10 billion of paid-in shares will be made over seven years.

Unlike the IMF and World Bank, which are managed by Europeans and Americans, the BRICS bank “is quite democratic,” Brazilian Finance Minister Guido Mantega told reporters. Yet the idea is not to compete with the Washington-based institutions but complement them, Rousseff said in Brasilia today on the second day of the summit that includes leaders from Latin America. “We have no interest in giving up the IMF — on the contrary, we we are interested in democratizing it, making it more representative.”

Withdrawal Limits

Each member country has the right to withdraw different amounts from the joint currency reserves, according to a statement from Brazil’s central bank. China can withdraw half the amount it earmarks or $20.5 billion. Brazil, Russia, and India may withdraw the same amount they commit or $18 billion, while South Africa can tap $10 billion, twice its contribution.

“It’s a type of insurance policy,” said Mantega.

The BRICS have evolved from the original term coined in 2001 by then-Goldman Sachs Group Inc. economist Jim O’Neill to describe the growing weight of the largest emerging markets in the global economy. In 2011, South Africa joined to give the BRICS a broader geographic representation.

BRIC Influence

“Separately, all the BRIC economies in the last two years have slowed, so there is quite a lot of attention on the declining economic influence of them,” O’Neill said in an interview with Bloomberg TV India. “But I think that the general Western view is just wrong. Even at the slower rate of growth, they are, their importance to the world continues to rise.”

There are still plenty of opportunities for business, and the newly-created development bank will help those opportunities become reality, said Jorge Gerdau Johannpeter, chairman of Brazilian steelmaker Gerdau SA.

“The bigger the financing possibilities, the bigger the chances of implementing projects,” Gerdau told reporters at the summit.

The biggest winner among the BRICS and its newly created bank may be South Africa, as it stands to gain financial expertise, investment and trade, said Colin Coleman, the Johannesburg-based head of Goldman Sachs Group Inc. in sub-Saharan Africa, who attended the BRICS Business Council meeting.

WTO Agreement

“Arguably we have the greatest amount to benefit because we’re partnering diplomatically and otherwise with some of the world’s most important emerging-market economies,” Coleman said in a phone interview.

While BRICS trade ministers in a joint communique said that member countries stood by the World Trade Organization’s Bali agreement, Brazil’s Trade Minister Mauro Borges said he understood India had certain concerns about its implementation and that the BRICS countries didn’t intend to forge a common stance on the issue.

BRICS share of world exports rose to 16 percent in 2011, from 8 percent in 2001.

Russia also proposed at the summit in the northeastern coastal city of Fortaleza the creation of an Infrastructure Fund during the summit, Kirill Dmitriev, chief executive officer of the Russian Direct Investment Fund, told reporters. The fund could start up as early as next year, he said.

In Brazil, Five Nations Plan Future Together…Again

Now that the FIFA World Cup is over in Brazil, it’s back to business in South America’s largest nation. And in the northeastern city of Fortaleza, leaders from Brazil, Russia, India, China and South Africa made more declarations about how they will become a winning team.

There was more talk about creating a development bank to fund projects in each others’ countries, and declarations on teaming up with mega sporting events. The Summer Olympics takes place in Rio in two short years.

Brazil, Russia, India and China have been meeting together for the past six years. South Africa is only a recent partner in what has become an emerging markets G-5 of sorts, with presidents hammering out growth ideas. Historically, the U.S. and former colonial powers in Europe have been the prime source of funding — and still are. But in the last seven years, for instance, China has replaced the U.S. as Brazil’s biggest market, thanks to soybeans and iron ore. And China continues to invest heavily in South Africa mining. Meanwhile, Russia has been touting its growing relationship with Chinese energy companies looking for natural resources and access to new technologies. On balance, however, the BRICS are still beholden to foreign investment from advanced economies, be it portfolio investors or multinationals based in the U.S. and E.U.

India’s new Prime Minister Narendra Modi is greeted by a representative of the Brazilian government in Fortaleza on Monday. Modi was attending his first BRICS Summit, where he met with the presidents of Brazil, Russia, China and South Africa.

The BRICS leaders said Tuesday that they were now exploring new areas of cooperation, including mutual recognition of university degrees; labor and employment and social safety net policies; foreign policy planning; trade insurance and building a seminar of e-commerce experts to move the five-some in the direction of the advanced economies, which dominate the high tech space.

For followers of the BRIC summits, it was more of the same, with this years theme being about sustainable and inclusive growth. This is a problem especially for Brazil, China, India and South Africa, and more so in China and India where income disparities are worsening.

In a declaration signed by the national presidents on Tuesday, deeper tights were center-stage. “We pledge to deepen our partnership with a renewed vision, based on openness, inclusiveness and mutually beneficial cooperation,” the signed document read. “We are ready to explore new areas towards a comprehensive cooperation and a closer economic partnership to facilitate market inter-linkages, financial integration, infrastructure connectivity as well as people-to-people contacts.

The BRICS continue to face significant financing constraints to address infrastructure gaps and sustainable development needs, particularly in India where poverty is most rampant. The leaders signed an agreement to officially launch the so-called New Development Bank (NDB), a World Bank for the BRICS, with the purpose of mobilizing resources for infrastructure and sustainable development projects in the four countries.

The NDB comes with authorized capital of $100 billion, with the bank’s headquarters in Asia’s new capital: Shanghai.

This year’s summit came with big money announcements.

The countries signed a treaty for the establishment of the BRICS Contingent Reserve Arrangement with an initial size of an additional $100 billion. This arrangement will be used to help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements, according to the declaration.

For investors who thought that China and Russia might open their economies to private enterprise, the declaration shows how the BRICS are firm believers in state owned enterprises. In Brazil, that includes oil giant Petrobras, the country’s biggest company by market cap. In Russia, that’s behemoth banks like Sberbank and gas firm Gazprom. For India, that’s basically ever bank on the mainland, not to mention the oil majors.

The presidents signed an agreement saying that they “encourage our state-owned companies to continue to explore ways of cooperation, exchange of information and best practices.”

Although each country has different problems, it was clear by reading the 72 paragraph declaration that each country had its input: from Russia being lauded for its role in hosting the G-20, to China reaffirming its interest in human rights.

Brazil-BRICS Trade: A Visual Breakdown

By Elizabeth Gonzalez

On July 15, several of the world’s most powerful emerging market leaders will meet in Brazil. Heads of state from the five BRICS countries—Brazil, China, India, Russia, and South Africa—will convene for the group’s sixth summit.The meeting marks the first official visit to Brazil by both Chinese President Xi Jinping and Indian Prime Minister Narendra Modi. The trade bloc, which first began heads-of-state summits in 2009, brings together a group of markets that the World Bank estimates will account for the majority of global growth by 2025. Ahead of the meeting, AS/COA Online zeroes in on the Latin American country’s trade relationship within the bloc.

China dominates trade relations among the BRICS, according to Brazil’s Ministry of Development, Industry, and Foreign Trade. In 2013, the value of China-Brazil trade was more than nine times larger than Brazilian trade with India—the Latin American country’s second largest partner within the group.

Click here to see the visual breakdowns.