When looking at international trade as a whole, one of the several contributing factors that can lead to sudden fluctuations is political uncertainty, particularly between the world-leading superpowers. As the U.S. and China continue to apply new tariffs and impede trade with one another, we will be looking into their building trade war and how this is affecting international trade.

The impact on businesses

The U.S. and China trade war has been running on for a while now, with over 300 days’ worth of negotiations and increasing tariffs. But how has this affected business as a whole?

When you look at business in the U.S., as well as internationally, it is smaller self-made businesses that have taken the hit first. With many losing the money that they are putting into their businesses, small business owners are seeing an increase in costs without the increase in sales. Though this is not the case for every business, price increases are seeing some small business begin to struggle.

Changes to personal finances are affecting businesses too

In addition to the impact that the trade war is having on business directly, it is also important to note the indirect impacts on businesses as the personal finances of their customers are affected.

As trading tariffs continue to escalate, there can be a knock-on effect such as increased prices for necessities like fuel, as well as a wide variety of imported goods. As the price for necessities such as fuel continues to rise, economic growth can slow and many begin to struggle with their finances. While some consumers continue to spend with quickly approved same day loans or easy credit options, many consumers opt to put alternative saving techniques in place to ensure their ability to cover the rising prices without putting themselves in financial risk.

As prices increase and customers become more averse to spending, many businesses may find sales decreasing and costs increasing, a dangerous scenario for any business.

The hesitation to invest

With tariffs now set on $250 billion dollars of Chinese goods, with plans for more on an additional $300 billion of goods, and a tariff on $110 billion set on American goods, this tariff war has shown no sign of slowing down.

This has led many businesses to be hesitant to invest. As a result, there has been a drop in tech deals year to date compared to years past and is only set to decrease. This presents issues for tech giants such as Apple and Samsung, as their parts and phones are produced in China. As this political uncertainty continues to escalate, their stocks took a hit but soon recovered, However, this sharp fluctuation is leading many to hesitate when investing in certain markets.

Reduction in supply and demand

The final way that the U.S.-China trade deal is affecting international trade is the reduction in demand for many products. With China’s weak exports in the first half of 2019, this could mean problems for a number of their major trading partners, as the technology industry and other major fields will begin to feel the pinch. However, there has also been an 8.1% drop in exports from the United States, demonstrating a drop in the demand and the significant damage being done to both sides by this ongoing trade war.

As tariffs continue to rise and exports drop, a number of major companies will have to start to pay more. This has already started to take effect in the U.S. as the economy has begun to slow, affecting industries like construction, which relies on imported materials such as aluminium and steel. With technology expenses already on the rise, tariffs could further increase expenses and cause technology, fuel and other necessities to increase in price, and exacerbate the existing decrease in demand even more.

As this trade war continues with no deal in sight, this could have a profound effect on the global economy. Only time will tell whether this is set to improve or not following the next round of negotiations. Where will you start in adapting to this new economic reality?

The post How is the U.S.-China trade war affecting international trade? appeared first on Trade Ready.

Afzalur Rahman’s interest in international business began after he moved from Bangladesh to Canada to study at the University of Windsor. Hoping to benefit from a Canadian education, his international perspective quickly sparked a lifelong passion.

“I had a natural interest in global business activities. I was fascinated at how businesses work differently from country to country, how tastes and preferences contrast from one marketplace to another, and how variances in political economy may affect the way of doing businesses from culture to culture.”

Upon graduating, he continued his education by earning his MBA with a focus on finance in Bangladesh, and then his Doctor of Business Administration from Argosy University in Tampa Bay, Florida.

How teaching has shaped his views on intercultural decisions

Since earning his doctorate, Afzalur has served as an international trade professor and instructor at several different educational institutions. He initially taught at two universities in Bangladesh before moving to Shanghai to teach, which he found to be a fascinating cultural experience.

“I taught at the Shanghai Institute of Technology in China in the winter of 2014 and 2015. It was very interesting to observe some of the core differences between Chinese and North American cultures.”

“For example, while it was quite common in China that students would present their instructor some gifts at the end of the semester, in Canada it may consider unethical to accept gifts from the students. Remarkably, in China, many students would feel depressed if instructors do not accept gifts from them. While Gunaxi (which means “relationship” in Mandarin) is a popular approach to build strong networks between businesses and government, in Canada it is seen as a corrupt and morally repugnant way of doing business.”

This experience shaped the way he perceives how business professionals should adjust their cultural behavior in other markets.

“For many professionals, there’s a cultural dilemma in other countries – for example, should we act like the Chinese when in China? I’ve decided that no culture is good or bad – they are simply different from each other. It is very important to avoid an ethnocentric attitude. Failure to understand local tastes and preferences would jeopardize the business on a foreign soil. Success in the home country doesn’t guarantee success in a subsidiary.”

Moving back to Canada to share his knowledge

Afzalur has now spent the past several years living and teaching in British Columbia, including the University of British Columbia and Simon Fraser University. Since 2017, he has taught at Douglas College, one of FITT’s educational partners, as a full-time instructor in their Faculty of Commerce and Business Administration.

“As a full-time instructor at Douglas College, I teach eight classes in an academic year. Usually, I have classes four days a week. The class time varies from semester to semester.”

Above: Afzalur (front, middle) with one of his classes at Thompson Rivers University.

Along with his teaching responsibilities, he also continues to research a wide variety of topics related to his courses, and periodically publishes his work. One of his career highlights was his first case study publication in 2014, “Nevado Roses and the Ecuadorian Rose Industry” in the Journal of International Business Education.

“My research has focused primarily on the areas of international business, global management, and international marketing. Recently, I have concentrated on analyzing a variety of interdisciplinary topics such as international trade theory, regional economic integration (NAFTA, ATPDEA, BRICS), foreign direct investment, international entrepreneurship, international retail management, and cross-cultural communication. For last two years, I have also been a member of Douglas College’s International Education Committee.”

On top of his work at Douglas College, he has served as the chair of the Global Conference on Business Management and Economics (GCBME) for the past two years.

Continuing to add to his international trade credentials

In 2018, Afzalur earned his FITT Diploma in International Trade, earning all six credits through FITT’s Prior Learning Assessment and Recognition (PLAR) process. Shortly after, he successfully applied to earn his CITP (Certified International Trade Professional) designation.

Earning my CITP was one of my proudest and most rewarding career accomplishments. I already had a Doctorate degree in International Business, but I was lacking a professional certification – the CITP was the missing feather on my hat!

“The CITP is the world’s leading designation in international business and trade. Earning it will add value to my teaching and research at Douglas College, as well as my professional skills and abilities.”

Among the other benefits, he says the CITP will open new doors to his career and allow him to pursue additional opportunities on top of his current course load and research.

“Now, after having both my doctorate and the CITP, I have a wider range of options to work and research in different areas of international trade. In the future, I see myself consulting for multinational corporations and government agencies in addition to teaching international business courses.”

On top of his excitement about becoming a CITP, he also became a Canadian citizen in 2019, which he considers to be a personal highlight.

As he shares his knowledge with upcoming international trade professionals and expands his work into other areas, Afzalur is now perfectly placed to add new projects and achievements to his already impressive career.

The post Afzalur Rahman, CITP|FIBP – International Trade Instructor appeared first on Trade Ready.

Responsibility for a product defect that results in injury lies with all the sellers of the product within the distribution chain. Generally, given regulations that manufacturers must comply with, a product is expected to meet the ordinary expectations of the consumer. When a product does not meet these expectations, manufacturers and sellers are vulnerable to legal action from consumers.

A product can be found liable by contract breach or by law. Where the issue of product liability cannot be answered by the contract or the governing laws, private international law must be deferred to in order to fill in the gaps.

Product liability tort covers lawsuits to settle claims of injury or dispute due to negligence or strict liability on the part of the manufacturer or those responsible for the product in question.

As a result, product liability standards have steadily increased in most parts of the world including Europe, Asia and North America.

As with other aspects of both public and private international law, there is a need to govern or harmonize disparate national laws and proceedings more uniformly with respect to product liability.

This includes evidentiary standards, uniform reward of damages and punitive actions.

Many governments have passed legislation to limit the occurrence of product liability. The following examples provide a brief description of some of the legislative measures implemented by various governments around the world.

1. U.S.

Most product liability laws are enacted at the state level and while they vary from state to state with regard to standards of proof, since the 1960s most are based on strict liability as opposed to proving the manufacturer’s negligence.

Under the theory of strict liability, the manufacturer, regardless of whether or not they caused the defect, is liable for a defective product and must pay or compensate the injured parties. There is no manufacturer liability cap to date.

2. EU

As of 1977, the EU also began to move toward the theory of strict liability to reinforce its commitment to a common market where all members have common laws. The 1981 preamble to the Treaty of the European Union states, “liability without fault on the part of the producer is the sole means of adequately solving the problem, peculiar to our age of increasing technicality, of a fair apportionment of the risks inherent in modern technological production”.

Recent EU Court of Justice rulings regarding risk in the absence of proof of physical injury with regards to cardiac pacemakers and defibrillators that belong to a defective series will impact product liability proceedings moving forward.

Signed in 1985 and implemented in 1988, the Product Liability Directive holds producers and manufacturers responsible for damages caused by product defects.

The legislation only applies to products put on the market from the time the directive was enacted. The Directive provides a 10 year statute, and caps manufacturer compensation (per defect) at EUR 70 million.

3. Australia

Replacing the common law principles of tort that had governed compensation due to loss or injury from product defects, Australia’s product liability law enacted in 1992, closely resembles the EU directive of strict liability.

There is a 20-year statute of limitation in the Australian law as well as directives for representative action to be taken by the Trade Practices Commission on behalf of consumers.

Interested in a broader look at the topic that also includes service development? Then the FITTskills Products & Services for a Global Market course is for you!

4. Taiwan

In 1994, Taiwan imposed a strict liability law to replace the existing negligence-based laws that required injured parties to prove the manufacturer was at fault or negligent.

5. Japan

Going into effect January 1, 1995, Japan’s Product Liability Law holds a manufacturer (which also includes the processor and importer) responsible for property damage or personal injury caused by a defect (here, defect means a lack of safety a product should normally provide) in a product.

Instead of strict liability, Japan’s legislation provides manufacturers with a defence on the grounds of not knowing about the defect when the product was sold. Japan also puts a claim limit of 3 years from the time of injury for injured parties to seek compensation. Similarly, manufacturers cannot be held responsible if it has been more than ten years since the product was delivered.

6. China

Quality legislation enacted in China’s 1993 Product Quality Control Law holds manufacturers, producers and importers responsible to uphold national and international standards for products and their packaging, and to see that unreasonable danger is not posed to people or property. If found liable, manufacturers are responsible for damages or injuries to people and property.

Like Japanese laws, China’s claims have time limitations and are defensible if the manufacturer did not put the product on the market, did not know about the defect at the time due to scientific or technical limitations or the defect was not present when the product was put on the market.

A major amendment of the Law on Protection of Consumer Rights and Interests entered into effect in March 2014—the first major development in the product liability regime since the implementation of the Law in 1994.

The Law puts in place new consumer-friendly provisions, reversing the burden on the consumer to prove non-conformity with quality warranties where such non-conformity is discovered within six months of receipt of the goods or services and conferring a right of return within seven days of consumers buying goods at a distance.

7. Hong Kong

The only product safety law in Hong Kong is the Toys and Children’s Product Safety Ordinance (1993), which states that reasonable safety is required for all toys manufactured, imported or supplied.

Manufacturers, importers and suppliers must ensure that general safety requirements are met according to one of a number of international toy standards (for example, the International Committee of Toy Industries’ Voluntary Toy Safety Standard).

While defensible, if found liable, enforcement and penalties start at a HKD 100,000 fine and a year in prison and grow with each subsequent offence.

The post 7 examples of how product liability laws change from country to country appeared first on Trade Ready.

Chengdu is one of China’s largest cities, with a total population of close to 15 million people – that’s more than the entire populations Sweden, Tunisia, Cuba or Bolivia.

Glace Bay, Nova Scotia, on the other hand, has a population of about 20,000 people, and is located over 11,000km away from Chengdu.

So how did Lan Zheng’s career take her from such opposite locales of Chengdu to Glace Bay? It all comes down to opportunities for training, which have had a fascinating impact on her career.

Finding early success in China

After studying foreign trade at Chengdu University, Lan secured a position at China Chengdu International Techno-Economic Cooperation Co., Ltd, a massive company conducting international trade in a wide variety of industries. Since the company was engaged in business across the Asia-Pacific region, the Middle East, Europe and Canada, working there offered plentiful opportunities for career growth.

Lan’s first role with the company was a logistics clerk position, where she prepared paperwork for shipping and coordinated the shipments of completed products to customers. After four years, she was promoted to purchasing officer, which included an entirely new set of responsibilities. This included negotiating prices, obtaining quotes, preparing purchase orders, facilitating the accreditation of new suppliers, and monitoring and addressing the performance of their suppliers.

Two years after that, in 2008, Lan moved on to the Hong Kong Economic Development Industrial Co. Ltd to start her new position as a sales representative, still working in Chengdu.

“In that role, I worked with clients in many parts of the world, including Asia and Europe.  Prior to coming to Cape Breton for my studies, my sales volume was $3 million in 2012.”

Along with finding prospective clients and maintaining relationships with existing ones, she also arranged client visits to factories and trade shows, and selected sites for new development and expansion.

Goodbye Chengdu, hello Cape Breton

Interested in continuing her studies in an in-class environment, Lan eventually made the decision to move to the Cape Breton region of Nova Scotia to take the International Business program at Nova Scotia Community College.

“People are always curious to find out why I studied in Canada, and Sydney, Nova Scotia in particular. It’s just because it was my dream when I was 18 years old to study abroad, but at that time, my parents didn’t have enough money to support me to move abroad and study. I had to wait until I was 30 and could afford to live and study abroad.”

I used a broker who introduced the school to me, so I did some research and it seemed like a good place to go. I bought ticket, got the visa, and off I went.

As the seafood and fisheries industry is one of the biggest in the region, it caught her attention during her studies and became a growing focus of her career goals.

“I specifically worked on a number of research projects in seafood. The projects ranged from identifying technical solutions to shipping challenges, or researching and finding new markets for seafood projects. I also worked on a large supply chain project which looked at shipping live seafood to Europe and Asia.”

“I also participated in a travel opportunity for the international trade program with NSCC where we went to London to visit the Billingsgate Seafood Market and learned about potential opportunities for exporting seafood to the UK. We visited the Seafood Global Expo in Brussels, where I made a number of contacts with local companies.”

An action-packed 2016

After graduating from the program, 2016 was a busy year. First, she registered her own consulting company, Abetter Worldwide Marketing Management, in January. Her consulting work focuses on offering market research, translation and interpretation services for businesses, particularly those interested in doing business between Canada and Asia. One of her biggest clients so far is the Sydney Ports Corporation in Nova Scotia.

That spring, she also participated in two exciting projects with NSCC, including paid consulting work.

“In March, 2016, Helen Graham from NSCC hired me as an interpreter and I joined in their “Doing business in China” program. We visited the Jingshen seafood market in Beijing and introduced the Nova Scotia lobster and snow crab to local companies. We also met the trade commissioner at the Canadian embassy in Shanghai, and learned more about the potential business opportunities for Canadian companies.”

“In April, I had another chance to participate in an international trade program with NSCC. We went to Cuba and learned about the culture and potential market there.”

The program wasn’t her only accomplishment that April – she also started her current position as international sales manager with Victoria Co-operative Fisheries Ltd, located in the Cape Breton area. With her experience, she has been able to help the companies make major inroads into Asian markets, with a bright future for continued growth in the sale of snow crabs and lobsters.

We went to the most important tradeshows in China and Hong Kong and met the potential clients. My main job is to promote our products in Asia. We sold three containers to China and four containers to Hong Kong last year. We built good business relationships with Chinese companies.

In April 2017, Lan applied for and earned her CITP®|FIBP® (Certified International Trade Professional) designation, which she says will help her continue to take on new international business opportunities in Asia and around the world.

After such an exciting and productive past couple of years, Lan is ready to take on any new challenge that comes her way.

The post Lan Zheng, CITP|FIBP – International Sales Manager appeared first on Trade Ready.

Outsourcing is one of the most difficult and complex decisions for any international trade professional to handle. Often a politically charged topic, it’s been a massively successful strategy for many companies, while others have seen it backfire in spectacular fashion.

There are so many different aspects of international business that can be outsourced and so many locations and partners to choose from. So, it’s important to do your research and think decisions through from a variety of angles.

To help you do that, here are 5 key pieces of advice to approach your research, weigh your options, and make the best outsourcing decisions for your business.

1. Do your analysis to see if outsourcing makes sense for you

In the FITT International Business Guide: Pros and Cons of Outsourcing Product Manufacturing and Services, you’ll review outsourcing as a possible strategy to consider by any company facing the challenges of increasing costs, shortage of labour needed to expand, or competition from home or abroad.

The guide explains that “the key to successful outsourcing is efficient global supply chain management. The decision to outsource or not must be made after a complete analysis of the existing and proposed alternate supply chains.

This process will identify the net benefit to the company of various options, which may include dismissing outsourcing altogether (e.g. too expensive, too complex to establish, too demanding of financial and personnel resources), or choosing to outsource domestically (e.g. simpler to implement within a domestic legal and transportation system), or outsourcing offshore.

Offshoring is more complex but offers higher margins if successful, and as noted above, positions the company closer to existing or potential markets abroad.

Outsourcing allows a company to potentially:

1. Lower operational and labour costs;
2. Focus on core interests and free up assets while delegating secondary processes to third parties;
3. Access world class technologies; and,
4. Move the production processes closer to world markets.

2. Decided to outsource? Don’t just assume it will be to China.

Amy Karam is a speaker, consultant, author and corporate instructor of Stanford University professional development courses, as well as her own workshops. She has diverse experience in Silicon Valley and over 50 countries worldwide. While many companies looking to outsource think of China first as a potential location, she argues that it’s certainly not the easiest.

“The Chinese have been learning from the West and developing their own innovation capabilities by acquiring companies, technologies, talent and resources worldwide. And the Chinese government has been subsidizing the growth and global expansion of many of their homegrown companies on an ongoing basis for almost two decades.

China is not changing course, but this is a building block along their course. By opening themselves up, they became manufacturing giants. By being the manufacturing source for the West, they learned from these other companies.

China wants to compete further up the value-chain and this is a natural evolution in their economic development. They want to be known as more than an outsourcing destination for low-cost manufacturing.

They have been evolving into innovators, not just replicators. China is also preparing for their next generation of advanced workers.

It makes sense. And why wouldn’t the Chinese want to maximize their profit share of their own highly sought-after domestic market?

What should foreign companies already in China do now? China is too big of a market opportunity for foreign companies to give up on entirely. However, the Chinese government makes it extremely difficult to do business in China, and it will likely only get worse. Currently, many foreign companies are required to establish joint ventures with domestic Chinese companies in order to have access to their market, and they are often required to give up majority ownership to the Chinese partner. This also leaves foreign companies feeling insecure about the protection of their intellectual property, among other concerns.

Foreign companies need to operate with their eyes wide open in China.”

3. Outsourcing employment can make sense for small companies or testing new markets

As the former Global Solutions Advisor for SafeGuard World International, Cody Silverman worked with organizations facing challenges in managing their global workforce. He advised them on available solutions in the market while cautioning on risks and limitations, including outsourcing employment.

“If you’re smaller and lack the resources to incorporate in a new country, or are less sure of your company’s long term viability in that market, you may want to consider alternative options.

Employment outsourcing is most commonly used for engaging smaller headcounts, testing market viability, contingent labor, or as an interim solution when speed to market is required.

Outsourcing the employment to a third party company has become an increasingly popular option, not only for businesses, but for non-profits and universities as well.

Some of you may be familiar with PEOs (Professional Employment Organizations), which utilize a “shared employment” model. Outside of the U.S. and Canada, PEOs typically do not exist, and in many cases are in fact illegal.

There is a newer trend in the market to use Employers of Record (EORs) that mitigate the risks of global employment. This has the same overall function of a PEO, except instead of shared employment, it is full employer of record; think of it as an elaborated version of the staffing model.”

4. Are the benefits of outsourcing distribution worth the distance from your customers?

Brent McNiven, CITP|FIBP is an international trade consultant with almost 25 years of experience, particularly in South America and Canada. He points out that outsourcing can separate you from your customers, costing you valuable data and opportunities to give the diversity of each market the attention it deserves.

“Exporters have long defaulted to outsourcing distribution of their goods through various types of partners. We argue that while distributors provide critical value-added services, the traditional approach in agent and distributor management isolates exporters from their end users, restricts flow of market intelligence, and fails to capture potential sales, making this approach ineffective in today’s hyper-competitive landscape.

You don’t “sell to China/India”: at best you sell to one region/sector. With dozens of languages and cultures, and diverse regional sectors, no distributor can reach the entire country. USA, Mexico and Brazil also consist of diverse regions with distinct economies. Yet exporters still assign exclusive rights to one distributor, shutting out huge potential markets.

Outsourcing marketing, sales, and often support functions to a distributor or agent demands significant investment on their part. Few will invest unless they have exclusivity, which is usually awarded countrywide. In contrast, having a foreign affiliate allows surgical precision in assigning exclusivity to multiple agents and distributors for specific sectors, regions and products. We have observed examples where sales immediately increased by over 400% simply by assigning one sector to a new distributor.”

5. There’s no one answer for every company – so what’s most important to you?

Regular TradeReady.ca contributor Bennett O’Brien concluded that there’s no one right answer. Each company must make outsourcing decisions based on its own internal priorities, as much as external factors.

There are both pros and cons to outsourcing manufacturing. Ultimately, it is up to the individual company to decide whether or not using a third party to meet its manufacturing needs is the right decision.

“If a company can find a third party which can provide cheaper labour, less regulation and fewer taxes, but also treats its workers fairly and provides them with a safe working environment and better quality of life, as many do, it can be an excellent option.

However, negative brand implications for putting domestic workers out of the job, and the possibility of forcing foreign workers to work in what are sometimes harsh conditions, may lead other companies to continue their domestic manufacturing practices.

In an increasingly globalized world, opportunities for third party manufacturing will surely increase. The extent to which these opportunities will be taken advantage of is yet to be determined.”

Which of these tips do you find most useful? Have any of your own to contribute? Let us know in the comments below.

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When it comes to free trade in North America and Asia, the two continents appear to be heading in opposite directions. The U.S. has withdrawn from the TPP, while the implementation of the ASEAN Economic Community (AEC) has accelerated intraregional FDI to record levels.

Canadian businesses should be participating in the ASEAN region’s robust economic growth curve despite the absence of a Canada-ASEAN FTA. I believe the Canadian government is attempting to pivot and reach out to the Asia-Pacific region through the likes of the APEC Business Advisory Council (ABAC) and Canadian International Innovation Program (CIIP).

Canadian companies are also already perceived to be innovative, collaborative and trustworthy in the ten countries comprising ASEAN.

What seems to be missing, however, is a comprehensive plan to achieve an effective market penetration across the diverse, hugely fragmented, yet inter-related ASEAN countries.

On the fast track towards economic interdependence

With a regional GDP of USD $2.5 trillion, ASEAN is the fastest growing region on the planet. After a 4.6% expansion in 2016, GDP forecasts predict 4.9% growth for both 2017 and 2018. Myanmar is expected to be the fastest growing economy in the region, with a prediction for 7.4% growth, followed by the Philippines at 6.6% and Vietnam at 6.2%. Also expected to grow at a moderately quick pace is Indonesia (5.2%), Malaysia (4.9%), Thailand (3.2%) and Singapore (2.4%).

The region is seeing unprecedented construction activity, presenting an excellent growth opportunity for companies selling construction-related products and services. Earlier this year, Marriott announced plans to open 80 new hotels in the APAC region by the end of 2017, bringing 19,000 new rooms to the region. In addition, an astonishing 437 hotels are being built across the ASEAN region, focused mainly in tourist destinations to meet growing demand. Thailand, Malaysia and Indonesia plan to open 81, 79 and 113 properties respectively in each country in the coming years.

New rail lines will make ASEAN travel easier than ever

In addition to commercial construction projects, Private Public Partnership (PPP) mega-infrastructure projects building new rail lines, airports and seaports are on the rise across the region. A new rail project connecting Bangkok with Southern China with an estimated value of USD $5.2 billion has been approved by the Thai government. Its most interesting characteristic is that China will do the design for the project, and Thailand the construction.

Chinese end-to-end control over mega-infrastructure projects is becoming a contentious issue, and serves as a vivid example of China’s One Belt One Road theory becoming a reality at a rapid pace. ASEAN countries are beginning to negotiate that China-financed infrastructure projects contain local engineering, construction and supplier content.

The Singapore to Kuala Lumpur Malaysia multi-billion-dollar high speed rail (HSR) project has been approved and the EPC (engineering, procurement and construction) contracts awarded. The most notable aspect of this project is the high probability of coinciding commercial and residential construction projects emerging in close proximity to the stations. If you provide people with efficient transportation into the cities, new outlying communities will emerge. The areas near the stations will become urbanized, creating additional commercial and residential construction projects.

Other notable mega rail projects in the region include the Hanoi Vietnam metro project valued at USD $15 billion, and Malaysia’s 600 km East Coast Rail Line (ECRL), connecting the capital city of Kuala Lumpur with Malaysia’s east coast states through 23 stations, valued at USD $12 billion.

Major plans for port expansions and FDI projects provide new opportunities

Singapore continues to invest in major infrastructure projects as well. They have just completed T4 – a new passenger terminal building at Changi Airport, and work on the new Tuas mega-container-port has begun.

The multi-billion dollar mega-port investment project includes plans to move and consolidate all port activity to South Tuas by 2027, opening progressively from 2021 until full completion by 2040.

Construction is well underway, with reclamation ongoing for two out of four phases of the development and more than three kilometres of caissons installed. Singapore is also thinking long term, building for an eventual capacity of 65 million TEU’s (standard-sized 20-foot containers) annually, anticipating significant interregional and intraregional trade expansion.

Commercial construction and infrastructure is one growth story, and foreign direct investment (FDI) is another. FDI is entering the region at record levels as interregional and intraregional manufacturing multinationals move from labor intensive and higher cost locations in Asia to ASEAN countries.

Vietnam in particular is reforming and becoming more accessible to foreign investment. Recent years have evidenced steady and increasing FDI there. In 2016, FDI in Vietnam totaled USD $24.4 billion, with 63.7% (USD $15.5 billion) invested in manufacturing and processing capabilities. South Korea is Vietnam’s largest investor and Samsung has three projects currently under construction valued at USD $5.5 billion. The South Korean electronics giant is constructing a new plant in Northern Vietnam that will employ 30,000 workers, and a research and development center in Ho Chi Minh City.

An effective and coherent strategy, not an FTA, is your key to ASEAN market entry

ASEAN is now the fifth largest automotive market, offering new growth opportunities to companies supplying both OEM (original equipment manufacturer) and aftermarket products and services. The ASEAN region produces 4 million cars and trucks each year and sells 10 million motorcycles annually. China progressed from bicycles to motorcycles to cars over a period of 20 years, and ASEAN will similarly advance from motorcycles to cars rapidly over the next decade – especially in the Philippines, Indonesia and Vietnam, in line with economic development and rising incomes.

ASEAN has arrived as the global growth engine of the next decade and beyond.

The absence of a Canada – ASEAN free trade agreement should not prevent SMEs from capitalizing on ASEAN growth opportunities. Furthermore, an FTA is not the silver bullet to establishing and growing your ASEAN business. An effective and coherent commercial strategy is.

Achieving more effective market coverage and penetration across ASEAN’s diverse, hugely fragmented, yet inter-related market is highly challenging and complex for any company. Basic templates or theoretical “cookie-cutter” market-entry formulae often falls short of delivering desired results.

What companies need is a distinctive market-entry and channel design process that caters for key variables which encompass the necessary agility to synchronize individually tailored business, multi-partner, multi-level network strategies with relevant opportunities, regional cultures and competitive scenarios – eliminating the wasted costs of trial-and-error market entry efforts.

Considering the absence of a Canada-ASEAN FTA, the federal and provincial governments might consider a funding strategy to assist Canadian companies with the expense of retaining outsourced specialty ASEAN marketing services. Procuring regional knowledge, experience, and expertise will make a major difference and help companies grow.

The post ASEAN has arrived as the global growth engine of the next decade. Are you participating? appeared first on Trade Ready.

Vivien Gomes earned her first job in international trade as the Marketing Manager for Bradley Smoker. She landed the position with the food smoker manufacturer in 1997, after completing her diploma in marketing and tourism from the British Columbia Institute of Technology (BCIT).

Her main responsibilities included research, as well as marketing the company’s commercial and household products. Vivien, bilingual in Cantonese and English, also played a fundamental role helping to develop Bradley Smoker’s flagship product: the ‘Bradley Smoker’.  Responsibilities included helping secure a joint venture with a mainland Chinese manufacturer.  The venture proved successful and product is now sold worldwide.

“The household product division required research and development with a manufacturer in China. It was at a time when China was not freely opened up to the world. Understanding the Chinese culture and the business ethics, as well as my ability to translate, were vital in forming the alliance,” she explains.

Elevating her market research expertise with training and certification

Her international work also sparked an interest in learning more about international trade, which led her back to BCIT and the FITTskills courses to enrich her practical skills in the field.

“The knowledge I gained from the courses was very useful.  It was able to help me with my research studies.”

Market research and marketing are fundamental for any business, and many businesses today are taking part in some form of international trade; whether it’s importing, exporting or both, so I’ve been able to use those skills through every stage of my career.

While completing her studies she also started a new position as a Marketing and Research Developer with M&A Partners, an advisory firm helping companies navigate mergers and acquisitions. There, her main duties included database management and conducting market research studies.

After earning her FITT Diploma in International Trade, Vivien leveraged her skills and experience to become an elite Certified International Trade Professional, and has now kept up her designation for many years.

“I believe the designation is well recognized internationally. Every aspect of my work for the past several years has been connected to international trade in some way, and helps keep my focus on the potential of international markets.”

Taking a turning point to a new career path

2001 was an important year for Vivien for two reasons: she had the first of her three children, and took on a new job with a film production company in Vancouver: 628581 BC Ltd. The company focuses on seeking and managing locations to shoot TV commercials, and her work there involves liaising between location representatives and production personnel, preparing filming permits, managing their location database and general administrative duties.

“A couple of big projects come to mind from this time. One Canadian political campaign needed to locate a BC forest for a TV commercial. We had one in mind, but when we got there we were shocked to see that the forest had been completely clear cut.”

We’ve worked on many big budget TV commercials, including, for example, a McDonalds spot featuring Britney Spears and Justin Timberlake. They performed in front of the restaurant, similar to a live concert.

On top of her work there, becoming a parent sparked a passion for learning methods and education. She is now a strong advocate of the Montessori methodology, and has devoted a great deal of time to volunteering, organizing and fundraising for the Montessori community and her children’s schools.

Recently, Vivien started Patterns Makers, a small publishing company intended to provide creative materials to teachers around the world. Books published through Patterns Makers end up all over the world, including an elementary school in Thailand, Spain, and a couple of schools in Vancouver, Canada. Patterns Makers goal is to provide aid to children and communities in developing countries through a reputable non-profit Montessori organization.

Vivien sees this as a great way to combine her international trade experience and her educational efforts.

“As a mother of three, I enjoyed working with children and will continue to support quality education. I do believe the future is the hands of the next generation. We as a community, both in business and our personal lives, need to unite to provide for and support children so the human race can live in harmony. International trade needs to be the pioneering industry to celebrate and enforce environmental and humanitarian concerns. Creative aid is in need, locally and internationally, to embrace culture, equality, history and art, so humans can learn to nurture themselves and the environment.”

Making headway in the lucrative global health and wellness market

On top of her full-time work with the production company and her educational projects, she is also a certified Bikram yoga instructor. After taking some time off to go through the training process and to travel and teach, she has returned to teach yoga regularly in her hometown of Burnaby and publish books for children about yoga.

“In the U.S. alone, over 32 million people practice yoga and it’s considered to be a $27 billion industry. I’m grateful that I have been able to teach yoga all around the world, and I feel my international trade background has been a part of that. Yoga is a service business, one of the most important elements of international trade today.”

Vivien is also currently working on a research study in the global health and wellness market, which was estimated to be a $3.5 trillion market in 2015. With so many intriguing projects and passions on the go, Vivien is sure to keep busy and make a positive impact around the world with her work.

The post Vivien Gomes, CITP|FIBP – Manager and Publisher appeared first on Trade Ready.

However, those affected companies may avoid the 45% tariff on imports by using a Bonded Warehouse or a Foreign Trade Zone (FTZ). For example, in South Florida, numerous importers bring merchandise into the U.S. that is not intended for U.S. consumption, but rather for exportation and consumption overseas. Those importers can take advantage of either a Bonded Warehouse or FTZ to bypass the 45% duties.

What is a Bonded Warehouse?

A Bonded Warehouse “is a customs regulated warehouse which must comply with strict Custom and Border Protection requirements.” According to the CBP, any merchandise that is stored in the Bonded Warehouse “is under the joint custody and joint supervision of both CBP and the Bonded Warehouse proprietor.”

The most notable rationale to use a Bonded Warehouse is that it offers a duty exemption feature as “it is a secure location where imported goods are stored without the importer or warehouse owner having to pay any duty” before the merchandise has been withdrawn for consumption.

The major benefit is that duties are only paid to CBP “upon withdrawal of the merchandise” for consumption in the U.S.

Imported goods can be stored in the warehouse for up to five years, and those goods can be manipulated or undergo manufacturing operations. “With a Bonded Warehouse, you can store restricted items until you are able to move them elsewhere or get permission to bring them into the country,” according to the regulation.

What is a Foreign Trade Zone?

A Foreign Trade Zone (FTZ) is a secure area that is under CBP supervision, but is not considered within customs territory. The CBP explains that FTZs are “located in or near CBP ports of entry,” and are the American version of what are known in the rest of the world as free trade zones. Both domestic and foreign goods may be placed in an FTZ.

Under the FTZ procedures, there is no requirement for payment of duties on foreign goods while placed in the FTZ. Duties are strictly payable only if those foreign goods enter CBP territory and are for domestic consumption.

Similar to the Bonded Warehouse, the Port of Miami website explains that there are various advantages to choosing an FTZ. “While in the zone, merchandise is not subject to U.S. duty or excise tax” and goods can be transferred to another zone, or exported from the zone without being charged duties.

In contrast to a Bonded Warehouse, goods can be stored in an FTZ for an unlimited amount of time, and manufacturing and manipulation is also permitted within the zone.

Additionally, “[d]uty is payable on either the imported components or the finished product, whichever has the lower rate. There is no duty on waste material or on value added manufacturing such as labor, overhead and profit.”

With an ability to curtail the possible 45% import tax by opting for either a Bonded Warehouse or an FTZ, the time to apply is now.

The post What is Trump’s 45% tariff on Chinese imports, and how can I avoid it? appeared first on Trade Ready.

Although the RCEP has been in negotiation for several years, its significance has increased sharply following the decision by President Trump to pull the United States out of the Trans-Pacific Partnership on his third full day in office.

The TPP was signed on February 4th, 2016, involving 12 nations including the United States. However, there was a major disagreement between the Obama administration and the Trump administration about whether or not the TPP is favorable for America.

The result is that America has now pulled out of the TPP. Following America’s exit from the agreement, the RCEP has the potential to replace it as the dominant trade deal in the Asia-Pacific region.

Who would be included in the RCEP?

While the deal has not been finalized yet, the following nations are all said to be potential members of the RCEP.

South Korea                             Singapore

Japan                                        Brunei

China                                        Thailand

India                                          Indonesia

Myanmar                                  The Philippines

Vietnam                                    Australia

Cambodia                                 New Zealand

These 16 nations have a combined population of 3.27 billion people, or 46% of the world’s population, and a GDP of approximately 19.2 trillion dollars – 24% of global GDP.

What are the most significant implications of the deal?

One of the most significant implications of the RCEP is that the world’s two most populous nations, India and China, would be involved in a large trade bloc. Neither of these nations are a part of the TPP.

The RCEP is set to cover trade in goods, services, and investments, intellectual property issues, economic and technical cooperation, dispute settlement, competition, and a number of other concerns. This deal would be a landmark trade development in the western Pacific region.

The RCEP covers many of the same issues as the TPP, but does not contain as stringent protections for human rights, labor, and the environment as the former agreement.

Ultimately, the RCEP could create one of the largest free trade zones ever enacted and lead to an unprecedented amount of trade activity between member nations. However, both workers and the environment may not enjoy the same protections as they would have had in deals like the TPP.

China and America are moving in opposite directions on free trade

The greatest driving force behind the RCEP appears to be the fact that the leader of the United States believes that it is not beneficial for the country to be involved in enormous multilateral free trade deals, unlike China.

In fact, President Trump campaigned on a platform of opposition to both the TPP and NAFTA, a free trade agreement between the United States, Canada, and Mexico. President Trump even went as far as to call NAFTA “the worst trade deal the U.S. ever signed.”

Trump’s primary opposition to free trade deals is that he believes American workers are losing too many jobs to cheap outsourced labor. In other words, he wants to keep more jobs inside the U.S. Trump has also accused China of currency manipulation, and has stated that the U.S. needs to be reimbursed more for the security it provides around the world.

A combination of all of these things means that the world of international trade could see some major shifts. The U.S., the nation with the world’s largest economy, looks likely to take a much more protectionist stance on trade in the near future.

Perhaps because many jobs flow there due to cheap labor, China appears to be very open to free trade. China has the world’s second largest economy, with a GDP of $15.26 trillion (2016). Considering that Japan has the third largest, and India has the seventh largest, a trade deal involving all three of these nations could be very powerful.

What does this mean for the future of international trade?

The RCEP has not yet been formally signed, but there is a good chance it will go through. In fact, Ganeshan Wignaraja, an advisor with the Asian Development Bank, said “An RCEP agreement seems probable in 2017 due to intensified negotiations.”

So, in the near future, the Pacific region could be dominated by a free trade haven that connects India and Australia with China and many other Asian nations, while the United States adopts increasingly protectionist measures on the other side of the Atlantic.

Countries who wish to trade with the United States in this new era could find themselves facing a new barrage of tariffs, taxes, and duties. It may also be significantly more difficult for American companies to outsource jobs to Asian countries, as the Trump administration looks for continued ways to protect American jobs at the expense of new multilateral trade deals, which would have the potential to create new jobs both in the U.S. and in other countries.

Whether or not other Pacific nations such as Mexico and Canada will ever join the RCEP is yet to be determined. However, if Trump also pulls the United States out of NAFTA, then these two nations may be eager to seek new free trade deals and look to the RCEP in its place.

By pulling out of the TPP, President Trump claims to be doing what he believes is in America’s best interest. However, it was estimated that the TPP could have brought the country an extra $77 billion in revenue per year. So, in order for America to make up this lost revenue, it will have to bring in a substantial amount of money from tariffs, and keep a   jobs in the country.

The tectonic plates of the international trade world are shifting. Once key decisions are made about the RCEP and NAFTA, the trade landscape could be entirely redefined, creating a whole new set of parameters for companies to consider as they do business internationally.

The post What is the RCEP and how could it affect global trade? appeared first on Trade Ready.

To some degree, that answer has to be yes; but not entirely.

Washington goes bilateral

For decades, trade policy has been led by Washington. No other capital has had a bigger influence on global commerce. Being the largest economic, military and geopolitical power certainly means that any major shift in U.S. trade policy will impact global trade policy as well.

This is seen most clearly with the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP). President Trump has already withdrawn from the TPP, though that doesn’t mean the deal is wholly dead (more on that below). If we extend his logic on the TPP to the TTIP, as investors would be wise to do, that agreement between the U.S. and the E.U. is likely at the end of its road as well.

Under President Trump, Washington has indeed gone bilateral. Trump decries multilateral trade deals as bad for America. His focus, he says, will be on establishing bilateral trade relations and negotiating from a position of strength. He thinks the U.S. can get better deals for its workers that way.

After all, the U.S. is the biggest economy in the world, and it can easily overpower many other countries in bilateral talks. The U.S. negotiators will have an enormous amount of leverage in bilateral negotiations, even with other major economies. By contrast, American bargaining power often decreases when it is negotiating with multiple countries, as was the case with the TTIP and the TPP.

NAFTA’s future is more certain than either the TTIP or the TPP, since it is an existing, entrenched trade deal. With established links and interests, it will be much harder to nix the regional pact. However, a renegotiation is almost certainly going to occur. Donald Trump’s re-election depends on it—he won office because of votes in the Rust Belt, and those voters feel passionately that NAFTA should be scrapped or renegotiated.

NAFTA renegotiations will be an historic challenge for Ottawa. While America’s sights are largely set on trade with Mexico, Canada needs to brace itself for what could be a rough ride as well. Though trade with Canada almost never made its way into a Trump campaign speech, complacency will not serve our policymakers.

Is the TPP dead?

There were two major players in the TPP negotiations—the U.S. and Japan. It was commonly believed during the negotiations that if either of those two countries failed to ratify it, the deal was dead. While Japan ratified the pact, the U.S. will not.

However, that doesn’t mean the TPP is dead per se. Australia is pushing for the deal to continue without the U.S., though this is unlikely. Even if the deal doesn’t get ratified and the TPP is gone in name and country make-up, many of the innovations that came from it may find their way into future trade deals. The TPP was often heralded as the new gold standard for trade—these ideas don’t go away with the end of the pact. Expect to see some of those processes replicated in future deals.

Is the world following the U.S. to bilateral trade?

As Washington pivots away from decades of multilateral trade policy, will the rest of the world follow? To some degree, they will be forced to. Countries that want a trade deal with the world’s largest market will be forced to negotiate bilaterally with the U.S. This includes Japan and the U.K.

However, there is no evidence yet that the rest of the world will only negotiate bilateral deals with other countries.

In Asia, China is still pushing the Regional Comprehensive Economic Partnership (RCEP), which consists of 16 Asia-Pacific countries. Furthermore, ASEAN countries are continuing their economic integration.

Multilateral trade isn’t dead in Europe either. After Trump’s election, Canada and the E.U. ratified the Comprehensive Economic and Trade Agreement (CETA). The United Kingdom, too, is keeping a multilateral E.U. trade deal on the table in its Brexit negotiations.

Nevertheless, there are still storm clouds for multilateral trade in Europe. While the TTIP has not been officially abandoned, anyone who took in Trump’s rhetoric on the TPP cannot imagine he supports the E.U. deal.

The TTIP is further complicated by an E.U. election calendar which is not favourable to the agreement. Over the coming years, France and Germany (the major E.U. players) will both have elections in which populist candidates are either leading in the polls or rising in popularity. The result is that French and German mainstream leaders will be forced to make concessions. While they are unlikely to abandon the TTIP altogether, they may have to tamp down enthusiasm and make some changes. Of course, the victory of right-wing populists in either country could kill the deal as well.

There is no doubt that Donald Trump’s election will change world trade, marking a break from the multilateralism that has become popular in recent decades. However, there is currently no evidence that the rest of the world will shift its policy framework just yet, placing the U.S. at odds with many other countries over the future of international free trade.

The post Does the Donald Trump era mark the end of multilateral trade? appeared first on Trade Ready.