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U.S. Remains No. 1 Choice for Foreign Investment – New Stats Released

December 3, 2015

This is a guest blog by Vinai Thummalapally, Executive Director of SelectUSA.

On Monday, the Bureau of Economic Analysis (BEA) released highly-anticipated data highlighting new foreign direct investment (FDI) expenditures in the United States.

These statistics capture the story of new FDI into the United States in 2014 and introduce a perspective on FDI never before seen in official BEA statistics. Highlighting data like this is not only part of SelectUSA’s mission to facilitate and promote FDI into the United States but it also gives our business and policy leaders a quantitative look at how the United States maintains its title as the number one destination for FDI.

In the new set of data, BEA produced statistics that specify two types of new FDI: acquisitions and greenfield investments. Greenfield investments capture how much foreign investors are spending to establish and/or expand U.S. businesses. Last year, new FDI expenditures made by foreign investors acquiring, establishing, and expanding U.S. businesses totaled $241.3 billion while greenfield investments accounted for seven percent of that total, exceeding $16.5 billion. Acquisitions accounted for the majority of new investment expenditure, totaling $224.7 billion in 2014.

The new data helps build a narrative around specific industries and geographies of interest. For example, greenfield FDI in manufacturing was very strong, with expenditures totaling over $2.8 billion. These expenditures were second only to greenfield FDI in the real estate industry in 2014.

Looking forward, this data also shows statistics that capture planned greenfield investment for FDI projects that may continue into the future. These investments in U.S. manufacturing sector industries total $9.3 billion, more than three times the total amount invested in 2014. We also see that the U.S. manufacturing industry dominates new FDI investment: almost 60 percent of new foreign investor expenditures – $139.1 billion – went to manufacturing, a fact that echoes and reinforces the growing “manufacturing renaissance” here in the United States.

BEA’s comprehensive snapshot of new FDI is an excellent tool for economic developers, investors, and policymakers. This snapshot enhances our understanding of how FDI is interwoven into the U.S. economy. According to latest available 2013 figures, majority foreign-owned U.S. affiliates employed 6.1 million U.S. workers with an average annual wage of $79,979 and accounted for nearly 23 percent of all U.S. goods exports. Reports like these reaffirm the United States’ place as the number one destination for foreign direct investment in the global, interconnected, and competitive economy of the 21st century.

 

 

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Five Things Entrepreneurs Should Know About Export Controls

December 2, 2015

This post originally appeared on the Department of Commerce blog.

The U.S. Commercial Service is having a Export Control Seminar in Salt Lake City, Utah on December 10, 2015. Learn more and register today.

A few weeks ago, Secretary of Commerce Penny Pritzker addressed more than 1100 industry representatives during the Bureau of Industry and Security’s (BIS) annual conference to discuss export control policies and highlight how, BIS has an enormous impact on the nation’s safety and competitiveness.

Secretary of Commerce

Secretary of Commerce Penny Pritzker Addresses the 2015 BIS Annual Update Conference

As National Entrepreneurship Month comes to an end, we will continue to celebrate American innovation. Entrepreneurs launching new businesses or looking to export can look to BIS as a resource and learn how export control laws may be relevant to their operations.

Export controls help protect U.S. national security and foreign policy, and address proliferation concerns. By administering and enforcing export controls, BIS seeks to keep some of the most sensitive goods and technologies out of the most dangerous hands.  BIS requires businesses to submit license applications for certain exports, and enforces the law against those who do not get required licenses. An export license grants permission to conduct a specified export transaction–to ship an item or to release software source code or technology. BIS then issues licenses after a careful review of the facts, and with input from other U.S. government agencies, including the State and Defense Departments.

The key issues involved in the review of a license, or whether a license is required include: What you are exporting, how the item will be used, as well as where and who the ultimate recipient will be. Although many items are not affected by export controls, high technology items and items destined for sanctioned countries, persons, or entities will often require a license from BIS; this includes commercial as well as some military items.

Here are the top five things entrepreneurs should know about export controls:

  1. BIS offers services for understanding export controls.  BIS offers a variety of services to help you comply, including live seminars, an online training room, and regularly scheduled conference calls on export control regulatory changes and Cuba updates.  We also offer consultations with export counselors who are also available by phone at (202) 482–4811, or (949) 660–0144 for our West Coast office.
  2. Export controls affect high tech industries, including items for commercial as well as military use. There is a misconception that export controls only affect military use items.  Export controls also apply to sensitive or high technology commercial items. Examples include high-end machine tools and semiconductors, encryption software, night vision camera equipment, and technology for unmanned aerial systems.  These and other items may require a license prior to shipment or transmission out of the United States.
  3. Exports to certain countries may be uniquely affected by export controls. Sanctions and other regulations can impose special restrictions that affect the export of many items—including “low tech” items in some cases—to particular destinations. BIS has a role in administering economic sanctions on countries such as Cuba, Russia, and Iran, among others. Exports destined for sanctioned countries will often require a license before they are exported, even if the items are not high tech.
  4. Export controls may affect companies and research institutions who employ foreign nationals or who collaborate with foreign nationals on research, even within the United States.  A “deemed export” is the release of technology or source code to a foreign national in the United States.  This is because our export control regulations treat such a release of controlled technology as an export to the individual’s home country.  Therefore, a license may be required before you release controlled technology to a foreign national who does not hold a U.S. green card.
  5. There are exceptions.  Even if your export would otherwise require a license under our regulations, it may qualify for a “license exception.”  A license exception is an authorization that may allow you to export or reexport, under stated conditions, some items that would otherwise require a license.  Four of our most common exceptions include allowing for replacement parts (License Exception RPL), shipments to certain government end-users (GOV), temporary exports (such as for exhibition, for tools of trade, or for repairs abroad) (TMP), and limited value shipments (LVS).  In addition, in 2011, BIS added a new license exception called Strategic Trade Authorization (STA).  STA facilitates trade with a list of 36 allied countries, and includes deemed exports to nationals of such countries.

For more information, please visit the BIS website at www.bis.doc.gov or follow us on Twitter @BISgov.

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TPP Founder Chile: Partner, Investor, Client, Supplier, and Friend

December 1, 2015

Join me in Chile for Trade Winds 2016!

This is a guest blog by Michael A. Hammer, U.S. Ambassador to Chile.

Eleven years after the United States and Chile signed our bilateral Free Trade Agreement (FTA), all trade is now tariff-free, topping $26.2 billion in 2014. That’s growth of 300 percent since the FTA entered into force in 2004, and the United States enjoys a sizable trade surplus with Chile. This isn’t just goods going back and forth.  The United States is the leading foreign investor in Chile, accounting for 24.2 percent of foreign direct investment (FDI) that spans all industrial sectors. Google’s only data center in South America is located in Chile, and companies like Pfizer and 3M have launched innovation centers in Chile. U.S. companies play an important role in the Chilean private pension sector, and energy companies – including a multitude of solar energy companies – have invested in this small, but dynamic country of 17 million.

Mike Hammern

Mike Hammerm, U.S. Ambassador to Chile.

With the highest GDP per capita in Latin America and home to the region’s largest retailers and airline, Chilean firms are also investing in the United States.  Chile is now the 12th fastest-growing source of FDI in the United States. Large Chilean firms have made major investments in the United States, such as LAN Cargo’s 2014 investment in a $15 million fleet maintenance facility in Miami creating 300 new U.S. jobs, and Arauco’s recent announcement of a $325 million greenfield investment in Michigan that will create 250 new jobs.  Smaller Chilean firms are also actively seeking to invest in U.S. companies, such as De Vicente Plasticos, which owns and operates plants in Tennessee and in Texas. I was proud to accompany the first-ever Chilean delegation to the 2015 SelectUSA Summit, and I am thrilled to announce I’ll be with another delegation of Chilean investors at the June 2016 Select USA Summit in Washington.

Given these overwhelmingly positive and liberalized trade conditions, the question often arises both at home and in Chile, what does the Trans-Pacific Partnership (TPP) offer in such an advanced trade and investment relationship?

To address this question, first I would point out that Chile and the United States, along with the other TPP partners, are leading the world by arriving at a high-standard, comprehensive, and ambitious agreement that sets new rules for trade for the 21st century. I’d like to also note that Chile is not just a member of the TPP – it was a founder in the P-4 process (with Brunei, Singapore, and New Zealand) that evolved into the TPP. Chile is a worldwide leader in tariff reduction, having already negotiated FTAs with 62 countries, including all TPP countries. Thus, TPP represents the next generation of agreements, moving beyond mere tariff reduction and addressing more complex issues to facilitate trade, such as investments, standards, harmonization, environmental and labor considerations, services, and IPR, among others.  Small businesses are among the biggest TPP winners in both Chile and the United States, enabling unprecedented access to global supply chains from TPP member markets. TPP is also opening several market opportunities for Chilean agribusiness exports, which in turn we anticipate will stimulate demand for U.S. exports of agricultural equipment and services.

I am pleased to announce that Santiago will be the host of the next Trade Winds event from September 7-9, 2016. Trade Winds is a business summit that will feature consultations, sessions, and matchmaking for U.S. businesses.  The effort is being led by our U.S. Commercial Service team at the Embassy in Santiago, and will feature participation from Senior Commercial Officers from all Western Hemisphere and TPP countries, as well as high-level Chilean and regional businesses in best prospects sectors.  I’d like to cordially welcome U.S. businesses – large and small alike – to sign up for Trade Winds and explore the dynamic Chilean, regional, and TPP markets. My team and I at the Embassy look forward to receiving you in this action-packed market.

 

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Positive Progress at the 2015 U.S. China JCCT

November 30, 2015

Stefan M. Selig is the Under Secretary of Commerce for International Trade

Last week I was in Guangzhou, China, participating in the 26th Session of the U.S.-China Joint Commission on Commerce and Trade (JCCT). I was joined at the event by Secretary of Commerce Penny Pritzker, U.S. Trade Representative Ambassador Michael Froman, U.S. Secretary of Agriculture Tom Vilsack, and Deputy U.S. Trade Representative Ambassador Robert Holleyman. The JCCT brings together leaders from the world’s two largest economies to seek agreement on a path forward to expand and improve a two-way commercial relationship that has grown to nearly $600 billion since its inception more than 30 years ago.

JCCT

Under Secretary Stefan Selig co-chairs a roundtable discussion with U.S. and Chinese government officials and business leaders.

It was an intense trip, with negotiating sessions stretching well past midnight, only to ramp up again early the next day. I left South China a little sleep-deprived, but with a strong sense of accomplishment for all the positive outcomes achieved during this critical annual event. Through meetings with our Chinese counterparts, we reached agreement in several areas of importance to U.S. farmers, innovators, manufacturers and workers. We agreed on key outcomes in the areas of intellectual property rights and enforcement, pharmaceuticals and medical devices, competition policy, and technology policy.

In the area of IPR protection and enforcement, new commitments from China will facilitate much needed improvements in a wide range of industries that rely on the ability to protect and enforce their IPR in China. Building on several prior commitments, China also clarified efforts to revise China’s trade secrets system and provide more effective remedies to deter  theft of trade secrets.

We made progress on several areas related to pharmaceuticals and medical devices. We announced concrete outcomes on implementing mutually agreed goals of eliminating drug and medical device application backlogs and improving the time it takes to make these products available to Chinese patients. China also agreed that imported medical devices will be treated the same as domestically produced medical devices. These outcomes on pharmaceuticals and medical devices pave the way for significant increases in U.S. exports in healthcare, a key sector for future growth in China as its population ages and its economy matures.

We also announced advancements in the competition policy arena. The United States and China made meaningful progress in China’s enforcement of its Anti-Monopoly Law (AML). China agreed that it would protect commercial secrets obtained in the process of AML enforcement from unauthorized disclosure and ensure that other agencies do not try to improperly influence that enforcement, for example, in favor of domestic competitors.

Significant strides were made on technology policy as well. China committed to nondiscriminatory and transparent policies for ICT information security, including assurances that Chinese banks are free to purchase ICT products regardless of the country of origin.

I was pleased to participate in several programs this weekend that continued our efforts to “re-imagine” the JCCT that Secretary Pritzker and Ambassador Froman launched in Chicago last year. The reinvigorated forum included a full day of collaborative programing designed to facilitate private sector engagement with officials from the United States and China, as well as to promote the exchange of information on trade opportunities at the state, provincial, and local level.

I had the privilege to co-chair a roundtable discussion on corporate governance and business-government engagement featuring U.S. and Chinese government officials and business leaders from U.S. and Chinese companies at the historic Chen Family Academy. With these 25 business leaders from both countries, we were able to explore conditions and best practices for successful business operations in both our countries. The other collaborative events included a networking event and luncheon recognizing the importance of bilateral cooperation at the local level; a program highlighting mutually beneficial health and healthcare public-private partnerships; and a U.S. and Chinese stakeholder discussion regarding recent progress made toward safer and more reliable food chains.

As Secretary Pritzker noted at the conclusion of this year’s JCCT, “a close and productive U.S.-China commercial relationship, based on responsible partnership, is essential to the growth and stability of the global economy.”

I’m happy to report that we had a successful JCCT, and particularly pleased to note that the International Trade Administration was able to achieve this success through close partnership with other Commerce Department bureaus such as the Bureau of Industry and Security, the U.S. Patent and Trademark Office, and the National Oceanic and Atmospheric Administration.  I look forward to working with my U.S. and Chinese counterparts as we strive to continue our efforts to enhance and expand the U.S.-China commercial relationship.

Building, deepening, and managing commercial relationships does not only define ITA’s work with our Chinese counterparts. This defines the singular importance of our agency as a whole. Between our consistent engagement with the private sector, our collection of trade specialists and industry experts, and the second-to-none global reach of our Commercial Service, ITA leads the efforts to work with and on behalf of U.S. business to promote trade and investment that makes U.S. companies more competitive abroad and encourages investment into the United States. You can expect that we will continue this important work well into the future.

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Doing business on the ‘Bayou’ just got a little spicier

November 30, 2015

Brittany Banta is the Acting Director for the U.S. Commercial Service’s Export Assistance Center in New Orleans.

Louisiana’s companies have something new to be proud about.

Earlier this month, the Louisiana District Export Council was recognized as the District Export Council of the Year for 2015. The DEC won the award during the National DEC Forum in Washington, D.C., and I was honored to participate in this special ceremony.

DEC Award

Alta Baker (L), Chairwoman of the Louisiana District Export Council (DEC), and Brittany Banta (R), Acting Director for the New Orleans U.S. Export Assistance Center and the Louisiana DEC’s Executive Secretary accept the International Trade Administration’s 2015 DEC of the Year Award.

Considering there are 59 DECs across the United States, winning this award is a big deal. And Louisiana companies exporting right now, or thinking about exporting, should take notice.

Since the fall of 2014 members of the Louisiana DEC have been quite busy. In December of that year, the DEC took part in the New Orleans’s International Workboat Show, where connected U.S. businesses with the Nigerian Maritime Administration and Safety Agency. In October of 2014, on the 100th Anniversary of the Panama Canal, the DEC led 50 business leaders from across several industries to the Central American nation. Leaders from industries to include the port, health care, higher education, seafood and economic development all attended, providing increased awareness between Panamanian importers and Louisiana businesses.

And several members of the Council played a major role in helping Copa Airlines secure the only direct flight service between New Orleans and Panama. Talk about impactful!

What does all this mean for Louisiana exporters? It means our dedicated District Export Council is ready to support small- and medium-sized businesses to help them successfully export anywhere around the world.

But it also means these volunteers have a wealth of knowledge about how to export the right way, and I hope companies will take advantage of their services.

Led by Alta Baker, the DEC’s chairwoman and CEO of Safe Haven Enterprises LLC in Jennings, the Louisiana DEC has worked tirelessly to educate and support small businesses across the state, encouraging them to take advantage of international opportunities.

And with more than 95 percent of consumers living outside of the United States, companies should certainly take advantage.

DECs work closely with local U.S. Commercial Service Export Assistance Centers — like ours in New Orleans — to educate and inform companies on exporting and international trade. If you’re interested in becoming one of the more than 3,700 companies exporting from Louisiana, email us  and visit our website for more information.

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The Great Mall of China

November 30, 2015

This is a guest blog by Doug Barry PhD, who until recently was a Senior International Trade Specialist with ITA’s Office of Communications and Digital Initiatives  

Despite slowing growth and a welter of government regulations, there are still good opportunities to be had in the China market, says the 2015 edition of the China Country Commercial Guide (CCG). Published by the U.S. Commercial Service in China, the CCG, now available online in bite-size nuggets, points out that while many industries remain closed to foreign participants, you’re on much more enticing ground if you’re selling medical equipment, health supplements, baby and environmental products and services, and using e-commerce to avoid most taxes and certifications to reach Chinese consumers directly.

E-commerce is rapidly increasing in China, and in May 2015 accounted for around 10.6% of all retail sales. There are over 632 million Internet users in China, of whom 47% are online shoppers. That’s slightly less than the entire population of the United States.

“The Chinese market remains strong, the retail sector underdeveloped, and logistics surprisingly improved,” says Joshua Halpern, a Commercial Officer with the U.S. Embassy in Beijing. “That combination, along with an expanding middle class, government policies that drive domestic consumption, especially in the 2nd and 3rd-tier cities and a degradation of trust for domestic-made products presents U.S. exporters with unprecedented opportunities across a comparatively streamlined and low-cost export channel.”
E-commerce sales in China totaled $449 billion in 2014, up 49.3% from $300.7 billion in 2013, according to the Chinese government’s National Bureau of Statistics (CNBS). In comparison, web sales in the U.S. totaled almost $305 billion in 2014, up 15.4% from 2013, according to Department of Commerce estimates (February 2015). China’s  e-commerce market is growing more than three times faster than that of the United States. Although the official average income of the Chinese online shopper is much less than their American counterparts, personal income of the Chinese middle class grew by 10% (CNBS). The Chinese research firm iResearch forecasts that China’s e-Commerce market will grow at a 27% annual rate over the next four years.

Feet on the ground, or mail it in

U.S. Companies wanting to sell products via Chinese e-commerce platforms, including Alibaba and its affiliates Tao Bao, Tmall and Tmall International, can choose a more traditional approach by establishing a physical presence in China, or use cross-border e-commerce to sell the products directly from abroad. A presence in China can be a subsidiary company, a JV, a wholly-owned entity or a local distributor/agent. The CCG contains information on these different options for establishing a presence in China and the Department of Commerce offices across China can help you identify the right option for your business.

Within the massive growth of e-commerce in China is an approach called “bonded online shopping,” the cross border element of online shopping via government-approved websites that enables foreign brands to sell products overseas. In cross-border e-commerce, goods imported by means of bonded import will be exempt from certain import duties, consumption tax and value-added tax, and are only levied with Personal Postal Articles Tax. Cross-border e-Commerce is in a trial stage, and is likely to experience significant changes as regulations are put in place.

Also, since potential Chinese distributors comb through popular e-commerce marketplaces in search of new products, your product’s presence could lead to orders for containers, rather than oneseys and twoseys (small quantities), which still could be considerable given China’s population of 1.3 billion.

The latest CCG also contains information on the U.S. Government’s export assistance resources in China, which are most significant in the world. Good thing, too, because being successful at e-commerce in China often requires more than a passive listing or virtual store on one or more marketplaces.

Another trend to keep an eye out for is what Commercial Officer Joshua Halpern calls “C-commerce”, which is the shift in consumer behavior away from static one-directional e-commerce platform shopping toward content-rich sites and social media groups that discuss and recommend products and lifestyle activities they are passionate about. C-commerce allows Chinese consumers to trust recommendations from passionate friends in their “inner circle”. U.S. Commercial Services offices in China can advise you on developing a proper e-commerce strategy, including local service providers who can help market your product on China social media.

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New Opportunities in Colombia

November 24, 2015

This post contains external links. Please review our external linking policy.

Laura Ebert is the Colombia Desk Officer in the International Trade Administration.

As a fan of Netflix’s drama series ‘Narcos’, I was both nervous and excited to see just how much Colombia has changed since the days of Pablo Escobar. I visited the country for the first time in July and returned a few weeks ago with John Andersen, Deputy Assistant Secretary for the Western Hemisphere. Our goal for the trip was to identify new business opportunities in cities across Colombia. I was impressed by the new, modern Colombia and can confirm that the country has indeed come a very long way. In fact:

  • Colombia is on the verge of completing a historic peace process to end 50 years of civil war.
  • Over the past 20 years, GDP has doubled and foreign direct investment into Colombia was more than $16 billion in 2014
  • The rate of Colombians in extreme poverty has fallen from a high of 21 percent in 2006 to 6 percent in 2013.
  • The country’s young population (25 percent of Colombians are under 14-years-old) means the country is bursting with new ideas, energy, and enthusiasm for the future.

During our visit, I saw many examples of the new and modern Colombia. For example, the city of Barranquilla has become Colombia’s international commercial hub. This city of 2.4 million people on the north Caribbean coast impressed me with its crazy traffic, heavy rains, and multitude of skyscrapers—all under construction. With a thriving port and major waterway, the Magdalena River is a natural hub for commerce. The city looks north, towards the United States, meaning there is a lot of interest in doing business with U.S. companies. Some of the reasons Barranquilla may be the next place a U.S. company does business includes the city’s:

  • Commitment to transparency and good governance.
  • Ambitious new plans and projects, such as a new 34,500 m2 expo center, Puerta del Oro, which means procurement opportunities for U.S. companies.
  • Convenient transportation options including an airport with big plans for expansion.
  • Business opportunities in major industry sectors like metalworking, chemicals and plastics, construction materials, transportation and logistics, internet and telecommunications services, health and pharmaceuticals, tourism and health tourism.

Another great example is Medellin, Pablo Escobar’s hometown. Medellin, a city of 3.4 million people, has transformed into an innovation hub for the country. Recently, Medellin was named the most innovative city of the year by the Wall Street Journal. Innovative clusters have developed in industries such as textile and garment manufacturing and design; business tourism and trade shows; electric energy; construction; medical and dental services; and information and communications technologies. Public, private, and academic partnerships are working together to develop new products. One example is public-private corporation Ruta N, which acts as a center of business and innovation in Medellin. The corporation promotes and develops successful knowledge-based businesses. Ruta N anchors a new technology cluster in the north of the city designed to attract businesses in the areas of science, technology, and innovation, particularly in the health, energy, and telecommunications sectors.

If you think the new Colombia holds promise for your growing business, here’s how to get started:

See you in Colombia!

 

 

 

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