Business Beyond the Reef

• Hawaii Congressman Charles Djou has reiterated his support for the U.S.-South Korea free trade agreement.  Djou is Hawaii’s only Republican in Congress.  The rest of the Hawaii delegation continues to tow the line drawn by the White House and those unions that oppose the FTA.
• You win some and you lose some.  This time, it appears that China has won a WTO dispute with the United States.  China challenged Washington’s rules that appeared to limit Chinese exports of poultry products to the U.S. market.  Details of the WTO finding are not yet available.
• Sometimes the Congress does things that make sense.  The Senate has approved the Miscellaneous Tariff Bill, which allows temporary duty-free entry for several hundred products that are important inputs for U.S. industry, but do not compete with American-made products.  The Republican leadership opposed the MTB as being too much like an earmark package, but the Republican rank and file decided that the bill was healthy for American workers who might want their jobs back.  Keeping my fingers crossed that the President will see it the same way and sign the bill into law.
• I sat in on a webinar yesterday that took a look at the National Export Initiative and the President’s goal of doubling American exports in five years.  Everybody is saying we are on pace to do it, but few seem to be aware that the rise in U.S. exports is the result of recovering economies elsewhere.  There simply hasn’t been time for any of Obama’s export proposals to find traction yet.  I’ll give him credit for proposing an increased export promotion budget, but a proposal is all it is until Congress passes the FY 2011 budgets.
• Another U.S. – China spat.  The Congressional Steel Caucus is doing its best to block a Chinese investment in a new American steel company.  Steel Development Company (SDCO) is being established to build up to five small steel plants in the United States to manufacture reinforcing bar.  China’s Anshan Iron & Steel Group would own 20% of the new company.  Rebar is hardly a sophisticated, high tech product, but the Steel Caucus wants to block the deal on “national security” grounds.  What are these people thinking?  Shouldn’t we be welcoming new investment in a struggling industry?
• It isn’t trade, but there are times when it could be useful.  Check out Prieur du Plessis’ “When Insults Had Class”.  Here’s a sample:

An exchange between Churchill & Lady Astor:

She said, “If you were my husband I’d poison your tea.”

He said, “If you were my wife, I’d drink it.”

We’ve just had the Farnborough Air Show, so much of the world’s media has been writing about the aviation industry, all the contract announcements, and especially about military aircraft sales (Farnborough’s real specialty).  Much of it is simply hype by the companies.  You don’t really believe that all those contracts were actually done at the show, do you?  Billion dollar aircraft deals aren’t impulse buys.  But the show is still immensely important for getting things started, and meetings and displays at this year’s Farnborough may lead to the contracts announced at Farnborough 2012 (or Paris, Berlin or Singapore).

The Wall Street Journal published an interesting summary last week of the export dependence of U.S. arms and aircraft builders.  Assuming the Obama Administration really can extricate America from Afghanistan, U.S. defense expenditures may drop swiftly in coming years and U.S. suppliers, accordingly, are positioning themselves to expand their share of the worldwide armaments market.  The WSJ quoted the CEO of Lockheed Martin as seeing “significant” potential for export sales in the Middle East and Asia, and noted Boeing’s goal of upping the foreign share of its defense sales from 16% today to 25% in 2015.  This will require some creativity since the generally low-tech opponents that governments are likely to face obviate the need for such items as high-end stealth fighters.  The real action may be in lower-tech equipment and drones.

Some big deals have gone down already this year: United Technologies’ sales of helicopters to Australia ($2.1 billion) and Taiwan ($3.1 billion).  Boeing may get a $5.8 billion sale of cargo aircraft to India, and Canada is spending $377 million on mobile radars, radios and vehicles.  That said, defense budgets are getting leaner in many countries, especially Europe, so expanding overseas sales may be a good trick.  And non-U.S. competition is never to be underestimated.

Austrian Blackhawk (photo: Markus Gattringer)

We long wrestled with the ethical issues of arms sales when I was in the U.S. Commercial Service.  At times, we had instructions not to help sell weapons systems, but we would be told that assisting non-weapons sales to foreign militaries was OK.  It was sometimes hard to tell the difference and we often worked with U.S. companies to compete against foreign suppliers once a foreign government decided it had to get new weapons.  And some supposed “weapons systems” are actually dual-use.  I worked for two years to help United Technologies sell Blackhawk helicopters to the Austrian military.  Yes, a Blackhawk has offensive capabilities, but the real selling point was that the Blackhawks could do heavy lifting in the high Alps during avalanche season.  This was brought home pointedly to the Austrians during a disaster when they had to rely on U.S. Army Blackhawks flying in from bases in Germany to help trapped victims on mountain tops.  So, was selling Blackhawks to the Austrians a weapons sale – or a humanitarian program?  It counted as a foreign military sale in the export statistics.

Apologies to Ernest Hemingway for the headline.

SME Export (photo: Abhijit Tembhekar)

Yesterday, I posted about a new report from the U.S. International Trade Commission about the problems faced by small U.S. exporters.  My post was broad-brush, the best you can do when summarizing a substance-filled 314-page study.  Today, we’ll get into some of the solutions that SMEs have come up with themselves.

First off, the Small and Medium-Sized Enterprises (SMEs) interviewed by the ITC staff were overwhelmingly in favor of negotiating new and more trade agreements, whether completion of the Doha Round or, more likely, new free trade agreements (FTAs).  They see competing countries negotiating FTAs all over the world and they have experienced the stiffened competition that results – in the form of higher relative customs duties – for the countries that don’t play the FTA game.  For now, the United States is the primary trading nation that is ignoring or hindering FTAs, to the detriment of our own exporters, their workers and our general economic well-being.  SME exporters told the ITC that the “playing field” is fast tilting against them.  So when will the White House and the Democratic “leadership” in the Congress get off their okoles (that’s Hawaiian for posterior portion of one’s anatomy) and get back into the negotiation game?

Why do SME exporters want new FTAs?  Obviously, equal tariff treatment with competitors who enjoy FTAs is a big attraction.  NAFTA is the prime example of an FTA that has helped America’s SME exporters, while the lack of implementation of the FTAs with South Korea and Colombia has boosted competition with countries that do have FTAs with them.  Non-tariff market access has improved under the U.S. – Dominican Republic – Central America FTA – and SMEs want more of this in other markets.  Our FTAs with Singapore, Australia and Chile have demonstrably improved market access, SMEs say, for products such as cellphones, auto parts, computers, medical equipment and many others.  FTAs can also facilitate trade by making the trading and shipping process easier, a key benefit seen by SMEs from the NAFTA agreement.  Agreements to improve intellectual property protection are also important.  SMEs told the ITC that they are more likely to do business with the European Union, Japan or Singapore than with China because of IPR concerns in the the latter.

The ITC study then looks at exporting in seven sectors that feature competitive SME exporters: apples, wine, chemicals and nanotechnology, textiles and apparel, medical devices, computer services, and professional services.  They all face limited access to capital and daunting regulation, both foreign and domestic.  Apples and wine must cope with phytosanitary restrictions and high tariffs, and must overcome small production capacity.  Computer services, nanotech and chemicals each must confront export control issues.  Everybody runs into cultural and language barriers (services more than most), labeling or advertising restrictions, foreign support for their own industries and much more.

What do the SMEs in these industries do about all this?  Industry associations have been established for wine, apples, nanotechnology and professional services to join forces in overseas marketing, trade show participation and for promoting changes in trade policies that limit those industries.  Agricultural exporters have increased their use of the Department of Agriculture’s Market Acccess Program, while the others are turning more often to the Commerce Department’s U.S. Commercial Service for information about foreign markets, help in selling and lobbying for contracts.  Venture capital firms are helping medical device companies with finance and in finding overseas customers.

The devil is in the details, so I will periodically post about some of those over the next few weeks.  The broad brush is going back to my workshop.

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When I ran the commercial unit for the American Institute in Taiwan, we faced a hopefully unique problem in promoting U.S. apple exports.  The State of Oregon had hired our exhibition facility in Taipei to promote the state’s products – including apples.  Only the expected crates of Oregon apples never showed up, the freight forwarder having dispatched them to Thailand, not Taiwan.  I sent my staff out to markets all over Taipei to buy up as many Washington State apples as they could find.  We spent hours peeling the Washington labels off those apples and put them into the Oregon exhibits.  Nobody spotted the substitution and the show went on.

U.S. International Trade Commission

Wow!  I’m impressed.  Government studies often help me to take a nap, but here is one that has some eye-popping stuff in it.  The U.S. International Trade Commission has released the second in its series of studies about exporting by U.S. Small and Medium-sized Enterprises (SMEs).  I know, that sounds like a snoozer, but bear with me.  The first ITC report, released in January and reported upon here, was a scene-setter that examined the scope and role of SME exporting in the context of overall U.S. exports.  The major conclusion was that most SMEs sell to only one foreign customer in one foreign market, usually Canada, so there is beaucoup room for improvement.

The new report looks at specific issues faced by SMEs and compares U.S. programs and conditions with those our European Union competitors use to help their small companies.  There is so much meat in the report that the executive summary takes up a full eight pages.  I’ll attempt to hit the major points here, but I suspect I will draw on the ITC report for several more posts in coming weeks.

The ITC begins by disposing of a semi-myth, that SMEs are far more prominent in the European Union’s exports than in those of the United States.  That’s true, as far as it goes.  Using 2005 data, the latest comparable, SMEs sold 31% of the EU’s manufactured exports but only 13% of America’s foreign sales.  They say not to make too big an issue of this, however, because the U.S. market is so large and well integrated that America has tended to grow more big companies than has the EU, thus it is no surprise that big companies dominate our exports.  I agree with the impact of a large integrated economy, but I know from personal experience that the Eurocrats have being doing everything possible to grow Europe’s SMEs into something larger.  Both in meetings in Brussels and at a conference about SMEs in Copenhagen, Eurocrats made it clear to me that, in their opinion, being small is a disease and that Brussels has the doctors to cure it.

I was surprised to see the ITC’s conclusion that U.S. financing for SME exports is no worse than in Europe, given the moaning I hear from small U.S. companies.  In fact, U.S. pre-export and short-term credit appears superior to what the Europeans are doing for their firms.  European exporters, however, may have better access to help in foreign markets – and far better support for participation in international trade shows.  (I have seen EU exporters laugh out loud when they hear how little official assistance is available to Americans at trade shows.)  The ITC also notes that European countries attact foreign investors with a view to building new export industries, something the U.S. Government cannot do because investment promotion is largely the preserve of individual states and cities.

There is a major difference in the structure of U.S. and European SME exports.  In Europe most SMEs do their own exporting, while American SMEs tend to sell their product to middlemen who then do the exporting.  I interpret this as part of our firms’ absorption in the huge North American market, though I suspect it also reveals a lack of willingness to take on the perceived risks of exporting.  If you can sell most or all of your product in a market you thoroughly understand, then you are less likely to take on markets you don’t know.  That’s understandable, if perhaps short-sighted.

The ITC then looks at barriers to exporting.  Most SMEs, anywhere, have difficulties with obtaining good and sufficient financing.  Their size makes them appear higher risk to the  banks, and a focus on foreign markets makes them seem even riskier to the green eye-shade people.

The U.S. Government sets up its own barriers to SME exporting.  Export controls are front and center due to their complexity and immense paperwork.  Visa issues are equally important, hindering efforts to bring potential buyers to the United States for contract talks or for training, and for stopping immigration of specialized foreign workers that a company might need.  SMEs also complained to the ITC about poor coordination among government agencies and unnecessary tariffs on inputs they need for production.  I wrote about the latter last week before beginning to read the new ITC report.

Transport costs are a big issue, especially the relative lack of availability of containers on the West Coast.  Foreign regulations are a huge hindrance for a small company that lacks the staff to fully understand and ensure compliance in multiple markets.  IPR protection is a big concern, especially for those SMEs trying to do business in China.  Ditto delays at foreign ports for perishable products, such as foodstuffs or pharmaceuticals.  Increasingly U.S. SMEs see “unfair” competition from foreign competitors who benefit from free trade agreements their governments have negotiated, while the United States remains inactive in FTA negotiations (is anybody in the Democratic leadership listening?).   Language and cultural issues, and limited knowledge of foreign markets, are yet more consequences of our over-reliance on our huge domestic market.

What do American SMEs do to overcome these reasons not to export, and what does the ITC recommend?  Check in again tomorrow.

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Oh, Sunday was fun!  We had an outrigger paddling regatta at Waikiki, right in front of the Outrigger, the Moana and the Royal Hawaiian.  What a setting!  And the waves were great, though boats were swamped or flipped in most every race.  My first race was the men’s 60s.  We powered our way out through the surf, taking big hits from the waves but surviving.  We made perhaps our best turn of the season at the quarter-mile mark, then accelerated back to the finish line at the beach, riding the surf much of the way.  There is an art to riding waves and breaking surf.  The acceleration is exhilarating and a good crew can stay on a wave for a long ride.  We were good Sunday and finished a strong second.

My second race, the mixed 55s, was even more exciting.  We never even made it to the turn.  I was stroking (that’s the first seat, the paddler who sets the pace), and we got hit three times in succession by big waves.  We kept going and were moving fairly well, though the boat was full of water.  Then I saw the monster.  Had to be twice the size of the others.  I shouted to apply all the power we had, but it was no good.  I was knocked into the lap of the second paddler (a rather petite woman) and then, in an instant, our canoe was upside down.  Our race was over and our focus turned instantly to making sure everybody was safe and unhurt.  Jetskis got us safely back to the beach and towed the boat in.  Our coach, standing on the beach, told me he saw that fourth wave and knew we didn’t have a chance.  Exciting!

What are the biggest challenges facing small businesses that want to export?  A panel explored this eternal issue during Small Business Week in Washington back in May.  According to the U.S. Department of Commerce, most SME companies that export have no particular export plan or strategy, getting into exporting more or less by accident – responding to inquiries from overseas markets.  (This, I suspect, is partially due to the Internet.  Every company is in international marketing as soon as they put up a website, but few seem to expect that anyone outside their home market will ever notice.  Then they are surprised to receive an inquiry from some place they have never heard of.)  Commerce also says that 58% of small American exporters sell only to one foreign market (usually Canada or Mexico) – and most of those sell only to one customer in that market, further increasing my suspicion that this is exporting by accident.

Call your local USEAC

What are the challenges these small companies face to growing their exports?  The Small Business Week panel was composed of some of the winners of the Small Business Administration’s exporter of the year awards, and all had succeeded in growing their international business.  In no particular order, the challenges they faced and mastered include: (1) selecting which new markets to try and figuring out how to sell in those markets; (2) access to capital, seemingly common to all small businesses these days; (3) dealing with complex paperwork; (4) figuring out how to comply with foreign regulations; and (5) achieving clarity in communications in other languages and cultures.  The U.S. Commercial Service can help with each of these, except for access to capital – and SBA may be able to help with that.  One-third of American SME exporters have never heard of any of the U.S. Government’s export assistance programs.  That means that two-thirds of small U.S. exporters have heard of the USG programs!  Frankly, I’m surprised and impressed, since the agencies trying to help exporters are not given budgets for their own advertising and marketing.

So, what did the winners of the exporter of the year awards have to say about meeting and overcoming the challenges?  Dan Nanigian, president of Nanmac Corporation in Framingham, Massachusetts, says that you have to make sure you have quality products and then market “the hell out of them.”  Scott Green, CEO of Pucker Powder in Alabama, says his company maximizes their use of Commercial Service programs, working with their local U.S. Export Assistance Center.  Green is particularly enamored of the Gold Key program, which, he says, is growing exports to more than half of Pucker Powder’s sales.  Other winners pointed out the importance of overseas trade shows, maximizing face-to-face contact and developing the contacts made at trade fairs.  Some emphasized multilingual company websites, too.

“The cultural barriers—even with English speaking countries such as the U.K. and Australia—are enormous,” noted Amy Frey, president of ATC International. “You have to be incredibly clear about … different measurement systems and time and date conventions.”

Plenty to think about.

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I thought about outrigger paddling on Sunday.  Our regatta this weekend was at Maile, out on Oahu’s Waianae coast.  Beautiful broad beaches, bright sun and intense competition.  I had mixed results: I sat #2 in two crews, the paddler who calls the changes from side-to-side.  Our men’s 60s crew finished 5th and should have been better.  We did well with the mixed (men and women) 60s, taking 3rd place.  Next weekend, we’re racing in the surf at Waikiki.

• Trade stinks.  That’s the conclusion one might draw from Sweden’s seizure of 28 tons of smuggled Chinese garlic.  The garlic was hidden (how can you hide 28 tons of garlic?) in a truck crossing the Swedish border from Norway.  Norway has no duties on garlic, but Sweden is in the European Union, which has a 9.6% customs duty on the stuff – giving incentive to the smuggling trade.  The seizure, however, is only a small part of the 1,200 tons of garlic that Brussels says came in through Norway in the past year.  China, by the way, produces about 75% of the world’s garlic.
• Special for trade policy wonks: the Peterson Institute for International Economics has examined protectionism by the G20 countries – and finds most of them wanting.  Here are the rankings for most protectionist actions implemented or proposed between July 2008 and April 2010:

Who knew that Saudi Arabia would be the G20's best free-trader?

• I didn’t watch President Obama’s latest speech about the National Export Initiative until after yesterday’s post about the NEI was published.  But I didn’t hear anything to change my opinion.  The NEI is mostly good rhetoric, but the same rhetoric that has been used by every president since Lyndon Johnson (and probably earlier).  An increased export promotion budget is the main event here, and possibly better availability of small business export credit.  Obama reiterated that he plans to reopen the FTA with South Korea to renegotiate something that has already been negotiated twice.  Bet the Koreans hang tough this time.
• The Federation of International Trade Associations (see link to the right) had a couple of interesting links in its weekly e-newsletter, both dealing with living and working abroad.  One was to a site called International Business Etiquette, which is self-explanatory but with some good stuff in it.  The second site, International Living, takes a bit more explanation.  The site is aimed at people considering retirement overseas, but there is a lot of cost and other information that might be useful in investment decisions, or for marketing if your company targets lucrative expat communities.

I thought I was the only one not praising President Obama for his National Export Initiative, so I was relieved to see the criticism leveled at the NEI by David Speer, CEO of Illinois Tool Works, in the Financial Times last week.  It’s not that the NEI is a bad thing – it’s not – it is just that it is largely ineffectual.

The most effective thing about the NEI is the added funding it gives the Commerce and Agriculture departments to promote U.S. products in foreign markets.  This goes part way to restoring the massive cuts to the U.S. Commercial Service that they have endured over decades.  The rest of the NEI has nice rhetoric, but that is mostly all it is.  Headlines were made out of Obama resurrecting the President’s Export Council and his creation of an Export Promotion Cabinet.  Similar things have been done by earlier administrations and few of them are remembered.  The Administration’s new-found interest in the Trans-Pacific Partnership is interesting and laudable, even if we already have free trade agreements with most of the TPP’s current members, from whom there is not much more to be gained.

Listen to your chairman, Mr. President

Regular readers of Business Beyond the Reef are more than aware of my views about the Obama Administration’s refusal to implement existing FTAs or negotiate new ones.  I was happy to see that Boeing’s CEO, Jim McNerney, is pressing the White House to push now to pass the South Korea, Colombia and Panama FTAs.  McNerney was named in March to chair the new President’s Export Council, created as part of the NEI.  It would be nice if the President would listen to his own Council, wouldn’t it?

The Administration tries to sell the NEI by saying that it will create or preserve two million American jobs, which is pleasant to hear during a jobless recovery.  But exactly how is the NEI going to get that done?  Mr. Speer says it won’t be through America’s industrial companies, of which his firm is a prime example.  While our politicians like to say that the NEI will bring jobs back to the United States, Speer argues that we must look at the reasons why manufacturing operations have moved overseas in the first place: generally not because of lower costs, but to be closer to their customers.  If that is the case, the NEI will have no impact on large company decision-making and thus no effect on jobs.  I’m not sure I go that far.  Exports do create jobs, though often among the service companies that move the goods, rather than among the manufacturers.

The one creative approach I see under the NEI is a decision made at staff levels in the U.S. Commercial Service to focus their efforts on helping companies that presently sell in only one or a few foreign markets to enter new markets.  These aren’t the big companies, like Illinois Tool or Boeing, but small companies that have a bit of experience but haven’t fully exploited their export potential.  In other words, these are the companies who can most likely grow exports quickly and create at least some of those jobs that the NEI touts.  The vast majority of America’s small exporters sell to only one customer in one foreign market, typically Canada or Mexico.  Now’s the time to get them moving out.

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The U.S. Department of Commerce is looking for your views and ideas for how to implement the National Export Initiative.  Here’s what they are looking for:

Specifically, we are interested in input from exporters, other private businesses, trade associations, academia, non-governmental organizations, and other interested parties regarding:
1.     identification of Federal government programs or regulations that impede the ability of U.S. companies to export;
2.     effective foreign trade promotion programs and activities that could inform U.S. Federal government program development;
3.     identification of the most (or least) effective Federal government programs that support U.S. exports, including specific experiences with such Federal government programs;
4.     steps that the Federal government could take to improve its programs to support U.S. exports; and
5.     more generally, how the Federal government could better help U.S. businesses export.

This link is to the federal register announcement, which tells you how you may respond.

Business readers in Hawaii are reacting to my posts last week about the Jones Act (here and here), providing even more examples about how the Act hurts their profits.  A good friend, Tom Matthews, who owns Trade West/Nani Makana, a producer, importer and exporter of aloha party supplies, provided considerable detail about his company’s shipping costs.  Tom is also the current president of the Hawaii Tourism Wholesalers Association.  You have seen his products if you have ever entered one of the ubiquitous ABC Stores in Waikiki.  His are the top quality artificial lei.  His company also makes cosmetics, fragrances and plush toys, all with a Hawaii theme.

Ocean-going barge

Tom has shared with me actual recent quotes from his freight forwarder for shipping 8 cubic meters of goods from Shanghai to Honolulu.  The most direct route is to ship by sea from Shanghai to Long Beach, and then bring the shipment back west to Honolulu on a barge that is subject to the Jones Act.  The first and longest leg of the trip costs $440 on international carriers.  The back-haul from California to Hawaii costs nearly four times as much – $1660!  The total for the Shanghai-Long Beach-Honolulu shipment is $2100.  To be fair, we can’t charge all of the cost from Long Beach to Honolulu to the Jones Act.  That is a much thinner route than Shanghai to Long Beach, so you are not going to see the same economies of scale.  Still, a price nearly four times higher does seem a little strange.

Tom’s alternate route is to truck the shipment from Shanghai to Hong Kong ($728) and then ship it directly to Honolulu on NYK Lines ($1552), for a total shipping charge of $2280.  Needless to say, he takes the first route, Jones Act notwithstanding.  But it chafes that the price from Long Beach to Honolulu appears to be egregiously jacked up.

Tom also points out that he can ship a 40′ container from China to Colorado Springs for less than it costs him to ship a 20′ container from Honolulu to China, since the latter generally has to go to California (via Jones Act carrier) before beginning its journey to China.  Again, this isn’t conclusive evidence of the cost of the Jones Act, but it may be indicative.

A second company, an exporter of a Hawaii processed food product, exhibited at the huge ANUGA food show in Cologne, exciting interest from a potential large-scale distributor in Germany.  The Jones Act already hurts the firm’s bottom line by raising the cost of the glass bottles they have to bring to Hawaii from the mainland United States.  And to ship their products from Honolulu to Germany, the first leg of the voyage – from Hawaii to California – must be on Jones Act carriers.  The German customer took one look at the landed price in Germany and killed the deal.  Now the Hawaii company is looking into contract manufacturing on the U.S. East Coast to create products that are affordable to European customers – costing Hawaii jobs.

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On Monday, the Honolulu Star-Advertiser carried an op-ed piece in favor of the Jones Act, useful reading for either side of this issue.  The author is Robert G. Frame, an admiralty and maritime lawyer in Honolulu.  The one surprising thing I saw in his piece was mention of a 2003 study by the Maritime Cabotage Task Force that concluded that the Jones Act costs Hawaii residents only $5.52 each annually – or less than two cents day.  This is, of course, far below any estimates that I have seen by reputable economists, who tend to conclude the cost is upwards of $2,000 per person per year.  It turns out that the Task Force is hardly unbiased, founded by and composed of all the major players in the U.S. maritime industry, including both Horizon and Matson.  Their mission statement is clear enough:

“The Maritime Cabotage Task Force (MCTF) is dedicated to educating America on the economic, national security, environmental and safety benefits of the Jones Act and other U.S. cabotage laws so that domestic waterborne commerce remains a pillar of our national existence.”

Oh, and Mr. Frame’s law firm, Frame & Nakano, proudly lists Hawaii’s Jones Act carriers, Matson and Horizon, among its clients.  The Star-Advertiser apparently did not consider it important to mention that.

• President Obama said again this week that he wants to press ahead with the U.S.-South Korea free trade agreement.  Pardon my skepticism, but I’ll believe him when he goes to the Congress and tells them he wants it passed now with no changes.  I often disagree with the Heritage Foundation, but Anthony Kim got it right, fearing that Obama merely wants to re-open this FTA for negotiation a third time.  When do you think the White House will realize that their union buddies are requiring them to sacrifice more than 300,000 American jobs by not implementing the Korea, Colombia and Panama FTAs?  What was that about a jobless recovery?
• Pickled almonds with chili peppers? Yum!  It takes creative marketing to sell nuts in China, but American companies are getting it done.  A marketing friend, resident in Beijing, breaks the lessons down as follows:

1. Well-funded promotional campaign (US 3.3 million).

2. Continuous, uninterrupted marketing campaign.

3. Appealing to Chinese women who make most purchases in China.

4. Appealing to the Chinese desire for a “healthy and radiant life” instead of relying solely on taste appeal.

• I’ve posted several times about this negotiation, but the China-Taiwan trade agreement has been signed.  That’s good news on both sides of the Strait.
• How big is the World’s Largest Aloha Shirt, made by Hilo Hattie and exhibited at the U.S. Pavilion at the Shanghai Expo?  400XL!  That’s 168 inches at the chest and a 60 inch neck.  It took 26 yards of fabric, which is the amount, Hilo Hattie says, it takes to make shirts for thirteen sumo wrestlers.  You can see the shirt back in their Honolulu store on Nimitz Highway.  Big fella.

• Yesterday’s post about the Chinese yuan – or renminbi (RMB) – was timely.  About an hour after the post, Chinese vice foreign minister Cui Tiankai was quoted as saying: “The RMB is China’s currency, so I don’t think it is an issue that should be discussed internationally“.  Just a tad defensive, isn’t it?  Do you suppose this means that China will refrain from discussing other countries’ currencies?
• While I was prowling around the Collier’s International website earlier this week for my post on the world’s top retail corridors, I noticed some other potentially useful stuff for companies looking to set up offices in other markets.  Take at look at their summary chart of worldwide leasing guidelines.  And you don’t want to try to park in London.  Don’t even think about it.
• China plans to make another offer next month in its negotiation to join the WTO’s government procurement code.  This code is vital to China because it would ease China’s access to the procurement markets of the world’s major nations.  At the same time, China must open up its own procurement market.  China tried this once before in 2007, but didn’t make a good enough offer to open its own market – and were turned down by governments that had already liberalized their markets.  Let’s hope Beijing is more forthcoming this time.
• Hawaii’s new Republican Congressman Charles Djou is getting into the trade game.  Djou has drafted a non-binding resolution that would ask the Obama Administration to negotiate a free trade agreement with the Philippines.  Hawaii has long had close ties with the Philippines and has a politically active Filipino community.  This puts Hawaii’s Democratic senators and one Congresswoman in a tough spot: support the Filipino community or continue to roll over for the Administration’s anti-FTA stance.
• Fedex, in a bit of good news, argues that we have been underestimating the recovery of world trade from the recession.  The company is seeing customers (and shipments) with stronger than expected exports.
• If you have any interest in Mongolia, take a look at my friend Jargalsaikhan Dambadarjaa’s blog post about unregulated “ninja” mining in Mongolia.