According to American Shipper magazine, both the U.S. and Indian government has announced an incentive to encourage small to mid-sized companies to trade bilaterally between the two countries.
“There is almost limitless potential for growth in trade between our two countries, and that can contribute to economic recovery and job creation in the United States and continued economic growth in India,” Ron Kirk, U.S. Trade Representative said in a statement.
In October 2009, Mr. Kirk and Anand Sharma, Indian Minister of Commerce and Industry met at the Trade Policy Forum meeting to create the necessary framework to support small to mid-sized companies and encourage trade. This week the two representatives will met again to host an advisory meeting of American and Indian trade experts to enhance their efforts for this new program.
“We can realize that potential by working together toward the goals set forth in the framework agreement, such as developing and enforcing policies that encourage technological innovation; increasing agriculture, services, and industrial goods; and increasing investment flows,” Ron Kirk added.
President Obama landed in China on Sunday to discuss some much needed topics with President Hu Jintao, according to Time magazine. One topic is trade. In recent months, trade issues has been heated between the two nations as both have thrown around the idea that each nation is participating in protectionism since the recession began.
“They’re working through a lot of scattered issues, but they are working through the WTO,” says James McGregor, the former chairman of the American Chamber of Commerce in China. “In the old days, every trade issue would become a very public and unstructured argument.”
China and the U.S. trade around $400 billion in goods each year. Many trade experts were concerned tension may get too high, making resolution difficult. But, U.S. officials dismiss that allegation, saying that the affected goods are only a small part of the total trade exchange.
Germany has seen positive economic growth as exports has increased and the government’s stimulus package encouraged corporate spending. Exports and investment in construction and equipment has been the main drivers of its economics growth for Q3.
“The bad times are over but the good times have not started yet,” said Carsten Brzeski, senior economist at ING in Brussels. “The export-driven recovery is all well and good but in order to shift into a higher gear, the German economy needs domestic demand.”
Some fear a possible export slow down may happen as the Euro continues to gain strength. Competition is stronger than ever as exchange rates are more important and global exports is still recovering from the recession. But, many others are still optimistic.
“Orders and sentiment indicators suggest that the economy will continue to develop favorably in the months ahead,” said Alexander Koch, chief German economist at UniCredit in Munich. “Growth will slow somewhat, but the recovery remains solid.”
U.K. Trade Minister claims trade is almost back to normal as exports are increasing, says the Wall Street Journal. The Office for National Statistics stated that the trade deficit widened to an eight-month high in September as a 3.9% rise in exports.
“Trade is gradually getting back to normal. The statistics from the U.K. reflect that,” Marvyn Davies, U.K. Trade Minister said. “More and more companies are exporting their way out of recession.”
The primary goal for the government is to supply the country’s nearly five million smaller businesses with the ability to compete in exports markets. He states that the U.K. has some of the world’s leading large exporters, but lacks the large spread of mid-sized exporters that a country like Germany has. To do this, Davies plans to look into expanding the role of the state-owned credit agency and to turn to other countries to learn how it manages its small to mid-sized exporters.
A great way for exporters to stay competitive and export with the big dogs, is to integrate a solution, like Management Dynamics’ Export On-Demand. The solution helps small to mid-sized exporters establish an Export Management System, automate many aspects of compliance and demonstrate reasonable care. Implementing this solution will help avoid potential fines and preserve export privileges.
The New York Times reports that European exporters has been confronted with more than 223 new and restrictive trade measures since the beginning of the trade crisis last year, but has avoided protectionism. A new report out last Friday introduces the new trade measures issues by EU Commission and its trading partners.
“Proliferation of the kind of beggar-thy-neighbor protectionist policies of the 1930s has been prevented,” adds the document, which was reviewed by the International Herald Tribune. “The current multilaterally based world trade system seems to have passed one of the most serious stress tests in its entire history.”
The report concludes that the 18 percent decrease in trade since 2008 is due to financial crisis rather than protectionism.
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According to the Journal of Commerce, the economy has seen a 3.5 percent increase in the third quarter, making experts believe the recession may soon be over. Economists feel the government stimulus plan helped consumers spend, particularly in the auto industry.
Imports of goods grew 20 percent after falling 16.5 percent in the previous quarter while exports of goods expanded 21.4 percent compared with a 6.3 percent decline in the second quarter.
Looking forward to see how the fourth quarter ends.
Anyone surprised by this new report? According to the New York Times, the recession has made companies more conservative on price. So now, these companies are looking to Chinese suppliers, who have reduced prices, making it possible to grab the majority of the market share. Companies around the world are switching to China to cut costs and save money, making it easier for Chinese suppliers to gain leads in old markets and obtain new ones. China has surpassed Germany on exports this year and has become America’s number one importer (formerly Canada).
How can China make such a leap into the global trade leader? According the New York Times, Chinese manufacturers cut wages, reduce production costs and hire migrant workers.
“China has a huge advantage,” says Nicholas R. Lardy, an economist at the Peterson Institute for International Economics in Washington. “They can adjust to market changes very rapidly. They have flexibility in their labor markets. And as consumers trade down the quality ladder, China can benefit.”
Recently, the European Commission is requesting an investigation into antidumping from Chinese exports and the International Montary Fund wants China to re-balance its economy by raising the value of its currency to match those of the Euro or the U.S. dollar.
Will China continue to hold the number one position in export?
“China is going to get stronger,” Mr. Tao at Credit Suisse says. “Its competitors are getting weaker in the downturn. And the Chinese state has helped bail out some industries, like the auto industry; so in the future some new industries may emerge as exporters.”
According to the Wall Street Journal, consumers do not show a postive outlook to the economic upturn although exports have strengthened.
”Since April, the sentiment index has fluctuated in a range of 65 to 71, which is characteristic of weak spending,” wrote IHS Global Insight U.S. economists Brian Bethune and Nigel Gault. “We don’t expect that consumer sentiment will break out of this range until job growth resumes next spring. Meanwhile, consumer spending is likely to show only sluggish growth and be a relatively weak contributor to the recovery.”
A recent survey from the University of Michigan asked consumers about their finances. One out of six reported they saw an improvement in their finances and only one in four expected growth in their income in the upcoming year.
But, on the brightside, exports have improved slightly by 16 percent. A vast improvement after if fell by nearly 60 percent at the beginning of this year.
“The outlook for U.S. exports is becoming increasingly positive,” wrote Michael Feroli, an economist for JP Morgan Chase Bank, who’s expecting the trade gap to narrow to $26.5 billion in July from $27 billion in June. “Foreign economic growth has returned” with U.S. trading partners growing at a 4% annual rate in the second quarter, on a trade-weighted basis.”
According to the article an improvement of exports is a key driver to helping the U.S. economy in its recovery.
With consumer debt decreasing with less spend, and exports improving. The U.S. may see a more postive outcome by the end of fourth quarter. Time will tell.
The Journal of Commerce has reported that China and the 10-nation ASEAN (Association of Southeast Asian Nations) signed a bilateral investment agreement this week completing the earlier signed trade agreement to cover goods and services and making it official. Implementation of this trade agreement is scheduled for January 2010.
The Investment Agreement establishes a free, transparent and equitable investment mechanism for investors from both sides, Chinese officials said. The most crucial clauses in the negotiations establish “national treatment” and the “Most-Favored-Nation treatment,” providing legal protection and guarantees that investors from both China and ASEAN nations enjoy fair and equitable treatment and non-discrimination in their bilateral business relationships.
Chinese officials reports that this is a postive step to show that the current global economic crisis hasn’t slowed down trade in the Asian region.