Posts Tagged ‘Free Trade Agreements’

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How to Avoid a Mid-life Crisis: Start a Business and Take it Global

February 27, 2014

Doug Barry is a Senior International Trade Specialist in the International Trade Administration’s Global Knowledge Center. 

Harold Cecil was in his early 40s when he decided to start his own business in Central Oregon. His initial investment: $2,000. That was back in 2008, just in time for the Great Recession.

Six years later, he and a team of five employees at Giant Loop are making world-class equipment carriers for motorcycles. The company does business in 21 countries with sales growing 20 percent per year. It has expanded overseas with the help of numerous government agencies, including Business Oregon, the Small Business Administration, and the International Trade Administration’s (ITA) Commercial Service.

Cecil spoke with Doug Barry of ITA’s Global Knowledge Center about how his small company has found success in the global market.

Barry: What’s been the best sales channel for your international business?

Cecil: I’d say trade shows. One of the best is a motorcycle show in Milan, Italy, called EICMA. This was our third year exhibiting, and we have come away with distributor agreements every time. We exhibit in the U.S. Pavilion, and there we meet buyers from all over Europe and many other places. We meet them face-to-face, they can see, feel, and learn about our products; and we can learn about their needs.

Barry: How has government helped you?

Cecil: I couldn’t have done it with without them. This is my first business. I’ve been a journalist, an ad copywriter, and a marketer. I’ve never manufactured anything.

As I got started, our local Small Business Development Center helped me learn how to actually run a business. I still meet with one of the counselors every month to get advice. SBA has been helpful with a working capital loan guarantee. They came through when we couldn’t get a commercial loan from any bank.

The State of Oregon was a big help through the Business Oregon program. They helped us apply for and get financial assistance, which partly covered travel to the trade show in Italy and to one in Sweden.

The U.S. Commercial Service through the Portland Export Assistance Center connected us with Commerce Foreign Service officers and staff supporting the U.S. Pavilion in Milan. The Export Assistance Center has provided great market data and seminars on export mechanics. And the agencies work together to help small businesses like mine.

They are invaluable, top notch.

Barry: What else has made a positive difference for you?

Cecil: The U.S. Free Trade Agreements have been very helpful to us. That lower or zero duty rate makes our products attractive in those markets. Distributors tell us that our product is at the high end of the market because of our product costs and shipping. So any way you can shave costs helps offset our pricing disadvantage.

Barry: What does the future look like for Giant Loop? What are your biggest challenges?

Cecil: Everything is a challenge. That’s what makes it fun.

We’re growing. Seventy percent of the business is domestic; 30 percent is international. Strategically it’s important to have a mix of international and domestic. We’ll never abandon our international markets, no matter how much the domestic market grows.

We added a full-time employee in January, and we plan to hire more seasonal workers. I feel really good about creating jobs. This part of Oregon was hard hit by the recession.

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Expanding Business One Year into Free Trade Agreement

March 15, 2013

Curt Cultice is a Senior Communications Specialist in the International Trade Administration’s Commercial Service.

Jimmy Wu is the founder of Infinity Air

Jimmy Wu

It’s 8:00 p.m. on a Tuesday evening, and there’s excitement on Jimmy Wu’s face as he hangs up the phone. Cracking a smile, he logs an order for a replacement aircraft engine from Asia. “Business is good and continues to get better,” he says, before picking up the phone to chat with another customer in Latin America.

It’s all in a day’s work for Wu, a native of Shanghai, China, who founded Infinity Air, Inc., in 1997, and serves as its president and CEO. The firm, a Los Angeles-based manufacturer and distributor of new and refurbished aircraft parts for the commercial aerospace industry, serves thousands of customers around the world each year.

Of all the countries in which Infinity Air does business, Wu is particularly impressed with the opportunities in Korea, Infinity Air’s largest export destination. Last year, sales of everything from flight-service controls and engines to interior equipment and cockpit windows to Korea totaled more than $10 million.

In March 2011, the U.S.-Korea Trade Agreement took effect, reducing barriers to trade and putting what Wu calls a “spring in the step” of his business endeavors. Infinity Air is taking advantage of the agreement to expand its business in the country.

“Korea is a huge market for us, and with the trade agreement in place, the market just got a whole lot bigger,” Wu says.

An Allflight Corporation (Infinity Air’s Repair Station) technician sands a repair of a movable flap track fairing in preparation for prime and paint.

A technician prepares a repaired aircraft part for painting.

Trade agreements play a large part in America’s recent growth trend in exports. In 2012, a year in which the U.S. achieved exports of $2.2 trillion, exports to trade agreement partners grew at nearly twice the rate of exports to the rest of the world and represented nearly half of all U.S. exports. For the U.S.-Korea agreement, the International Trade Commission estimates that the reduction of Korean tariffs and tariff-rate quotas on goods alone will add $10 billion to $12 billion to annual U.S. Gross Domestic Product and around $10 billion to annual merchandise exports to Korea.

Infinity Air is one of many companies using the agreement to its advantage. Prior to the U.S.-Korea Trade Agreement, servicing Korea’s aviation market required payment of Korean tariffs of up to 15 percent on spare parts. Now, almost 80 percent of U.S. exports of consumer and industrial products to Korea are no longer subject to import duties. Nearly 95 percent of bilateral trade in consumer and industrial products with Korea will become duty free within five years – with most remaining tariffs eliminated within 10 years.

As this trade agreement matures, the International Trade Administration remains ready to help American companies tap into Korea’s $1.1 trillion economy. Whether your company is looking to grow business or seek new opportunities in the market, a visit to export.gov is a great way to start.

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Quick Approval of Trade Agreements is Good News for the American Economy

October 12, 2011

Francisco J. Sánchez is the Under Secretary of Commerce for International Trade

Earlier tonight, the millions of Americans concerned about jobs got some good news: Congress approved trade agreements with Korea, Colombia and Panama.

It’s been a long journey to this moment, so let me cut right to the chase: Opening new doors of opportunity for U.S. firms to sell their products in these three markets will strengthen our economy and sharpen our competitive edge in the global economy.

It will also support jobs.

Ford Motor Company employees at the Michigan Assembly Plant in Wayne, MI assemble a 2012 Ford Focus.

Ford Motor Company employees at the Michigan Assembly Plant in Wayne, MI assemble a 2012 Ford Focus, one of the vehicles targeted for the Korean market under the U.S.-Korea Trade Agreement. Photo by: Sam VarnHagen/Ford Motor Co. Used with permission.

For every billion in U.S. goods exported overseas, more than 5500 jobs are supported here at home.  In total, the three agreements will support tens of thousands of jobs and add billions to the U.S. GDP — reasons for all Americans to cheer.

I commend President Obama for his leadership in creating a balanced trade agenda.  He has worked tirelessly to get the best possible deal for businesses and workers.  Congress also deserves credit.  These measures were passed with bipartisan support.  That both parties were able to find common ground on these issues speaks to positive economic impact that these agreements will have on communities across the nation.

I also applaud the President and Congress for renewing the Trade Adjustment Assistance program.  Why?  Because whenever there is change, there are some who are negatively impacted; some Americans, through no fault of their own, have lost their jobs because of foreign competition.  But all is not lost: TAA will help them retrain and retool for success in the 21st century economy.

The world is rapidly changing, and we must change with it to succeed in this economic environment. That’s why these three trade agreements are so important; they’ll create new opportunities across all regions and sectors.   Take the auto industry, historically a backbone of the middle class:

In 2010, the U.S. exported approximately $1.5 billion in vehicles and parts to the three prospective markets despite facing relatively high average tariffs.  Because the agreements have passed, the tariffs on these products will ultimately fall to zero, expanding opportunities for growth in exports for U.S. companies.

This is a big deal.  As President Obama said in his speech to Congress outlining the American Jobs Act:

“If Americans can buy Kias and Hyundais, I want to see folks in South Korea driving Fords and Chevys and Chryslers. I want to see more products sold around the world stamped with three proud words: “Made in America.”

With the passage of these three trade agreements, chances are we will indeed see more U.S. products sold around the world.  That’s a victory for us all.

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Strengthening the U.S. Economy by Strengthening Trade Relationships

October 7, 2011

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Greg Bell is a writer in the Intenrational Trade Adminsitraiton’s Office of Public Affairs.

“Products stamped with the words ‘Made in America’ are still in demand around the globe.  We must seize these opportunities.”

That’s what Under Secretary for Commerce, Francisco Sánchez, wrote in an op-ed that appeared in today’s Miami Herald.  In it, he stressed the important role that exports play in strengthening the economy and supporting jobs for American workers.  In fact, for every billion in goods exported abroad, more than 5500 jobs are supported here at home.

Sánchez’s opinion piece comes on the heels of President Obama’s announcement earlier this week that he has sent three pending trade agreements to Congress for approval.  If ratified, the agreements – with South Korea, Colombia and Panama – would support tens of thousands more jobs, and increase the U.S. GDP by billions of dollars.

The agreements would also have a huge impact on the South Florida economy.  Sánchez writes that “as a native Floridian, I know how important trade is to the state. Take a look at the most recent numbers: In 2008, nearly 40,000 companies exported goods from Florida locations; 96 percent of these businesses were small and medium-sized enterprises, the very companies that serve as the backbone of our middle class … I expect these numbers to grow as our trade increases, especially throughout the Western Hemisphere.”

The full article is available at The Miami Herald.

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Making it Easier to Sell Products “Made in America”

October 3, 2011

Francisco J. Sánchez is the Under Secretary of Commerce for International Trade.

It was a good day for American businesses and workers.

Earlier this afternoon, President Obama submitted three free-trade deals — with Korea, Colombia and Panama — to Congress for consideration.  If passed, these agreements would be a big boost to our economy, providing new opportunities for U.S. companies abroad, while strengthening our economy here at home.

As the President said: “These agreements will support tens of thousands of jobs across the country for workers making products stamped with three proud words: Made in America.”

President Obama has long said that exports are a key to the nation’s economic recovery.  Nearly two years ago, he launched the National Export Initiative with the goal of doubling U.S. exports by the end of 2014.  And, last month, in a speech before Congress where he unveiled the American Jobs Act — a bipartisan proposal to put Americans back to work — he stressed the economic benefits of these free-trade agreements.

The President has correctly recognized that exporting provides U.S. businesses with new opportunities to sell their goods and services in markets overseas.  The pending FTAs before Congress would ensure that this trade — with three important markets — is both free and fair.

This is important.  Consider that, in 2010, the United States enjoyed a $9.9 billion non-oil trade surplus with our FTA partners, as compared to a $371 billion non-oil trade deficit with the rest of the world.  In addition, last year, 41 percent of U.S. goods exports went to our FTA partners, even though those countries only account for 9 percent of global Gross Domestic Product.

Clearly, fair trade is good for our economic health and future.  If passed, the pending FTAs are sure to enhance these benefits.  Now, there have been a lot of misconceptions about these FTAs.  To set the record straight, here are some basic facts:

Korea

The U.S. –Korea trade agreement will:

  • Support at least 70,000 American jobs, and boost annual exports of American goods by up to $11 billion through tariff reductions alone.
  • Create new opportunities for U.S. exporters in Korea’s $1.5 trillion economy, the 12th largest in the world in 2010, based on purchasing power parity exchange rates.

Colombia

The U.S. – Colombia trade agreement will:

  • Generate new possibilities in the 3rd largest economy in Central and South America.
  • Reduce barriers to U.S. exports, spurring new opportunities for our businesses, workers, farmers and ranchers, thereby supporting more and better jobs for Americans.

Panama

The U.S. – Panama trade agreement will:

  • Provide new possibilities with one of the fastest growing economies in Latin America, expanding 6.2 percent in 2010, with similar annual growth forecast through 2015.
  • Enhance U.S. competitiveness by eliminating tariffs and other barriers to U.S. exports and expanding trade between our two countries.

Bottom line: By ensuring that the American people have a level-playing field to compete on in these three important markets, the FTAs would spur billions in economic activity, support tens of thousands of American jobs, and sharpen the United States’ competitive edge moving into the future.

The President has worked hard to strengthen these agreements to, in his words, “get the best possible deal for American workers.”

Now, I join his call in urging Congress to pass the FTAs without delay.

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FTA Tariff Tool Demystifies U.S. Trade Agreements for Exporters

April 27, 2011

Justin Hoffmann is an International Economist in the Office of Trade Policy Analysis.

America’s Free Trade Agreement (FTA) partners are attractive markets for many U.S. companies looking to expand into new markets or export for the very first time. Through these agreements, the United States has negotiated the elimination of tariffs, the removal of non-tariff barriers, and secured non-discriminatory treatment for U.S. goods and services.

However, for a new exporter, especially a small exporter, researching the tariff treatment for your good in an FTA partner market can be costly and extremely time-consuming. For example, if you look at the U.S.-Peru Trade Promotion Agreement, the tariff schedules alone for that agreement go on for nearly a thousand pages. If an exporter is lucky enough to find out where his specific product is in the tariff schedule, he will learn, for example, that the tariff charged on his product before the agreement went into effect is 20 percent. Additionally, after some further digging around the agreement text, the exporter would also learn that the tariff on his product “shall be removed in ten equal annual stages beginning on the date this Agreement enters into force, and such goods shall be duty-free, effective January 1 of year ten”.

It is pretty clear that these lengthy documents are crafted by trade negotiators and lawyers and are really not written for U.S. manufacturers who are simply trying to export their goods to new markets.

But now, the new FTA Tariff Tool provides this information instantly and almost effortlessly. The FTA Tariff Tool has three functions: 1) a searchable database to find the tariff treatment of industrial goods covered under the U.S. FTAs; 2) creates market access reports and charts across industrial sectors or product groups; and 3) creates a snapshot of current tariff and trade trends under different U.S. FTAs.

Using this tool, the exporter can instantly search and see the tariffs applied on his product in the FTA partner markets. For example, he can see that the 20 percent tariff Peru used to charge on his good has been reduced to 14 percent under the U.S.-Peru Trade Promotion Agreement. Next year, the tariff will drop to 12 percent and will completely disappear in 2018. The user can search various industrial sectors or product groups and see the amount of trade or products assigned to the various duty-elimination categories as negotiated under the agreement. Users can also  compare the levels of market access across the U.S. FTAs. The user can obtain a snapshot of current tariff rates and trade under the various U.S. FTAs by industrial sector or HS chapter.

This information has never been available before free of charge and in one searchable, consolidated database. Completing this project was a real labor of love, but worth it as it provides valuable information to U.S. industry. The tool can be access from http://www.export.gov/FTA/FTATariffTool/. The website also contains an instructional video, quick start guide and user’s manual.

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