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.”

Sharks are revered in Hawaii.  Rarely seen, Hawaii is known to have one of the world’s largest hammerhead populations.  The marina I live next to is known as a shark nursery, though we see more rays than sharks.  The shark is a revered feature of Hawaiian culture, a respected aumakua, a family god, often protective.  I have seen sharks when paddling outriggers (we even hit one once, to our mutual astonishment) and my Hawaiian paddling buddies regard it as good luck to have a shark nearby.

Whale shark waiting for the pot in Bangkok (photo: Rob Stewart)

These benevolent attitudes run head long into the love for shark fin soup brought to our islands by Chinese immigrants, but it is now official in Hawaii: the shark has won and shark fin soup lovers have lost.  As evidence mounted that sharks are being fished to extinction, and videos emerged of still living sharks having their fins cut off, public opinion turned heavily in favor of the shark (despite some hangovers from “Jaws”).  Hawaii has long had a ban on finning in Hawaii waters, but the Hawaii Legislature this year voted to ban all possession of shark fins, including by restaurants.  You won’t find shark fin soup in Hawaii’s restaurants any more.  I believe this is the first such ban anywhere in the world.

I have been waiting for a backlash from Hong Kong, Taiwan or China, but it hasn’t materialized.  Indeed, last week, the South China Morning Post ran an article that mentions Hawaii’s shark fin ban, but said there is growing opposition to the shark fin trade within Hong Kong itself.  Why is Hong Kong important?  The entrepreneurial city buys half of the world’s total trade in shark fins. Most of the rest is purchased by China.  But the tide may be turning in favor of the sharks.

According to the article, there is growing recognition in Hong Kong that many shark populations, not just those on endangered species lists, are over-fished and sliding towards oblivion.  Indeed, there is even a Facebook group, launched by Hong Kongers, called the “Cut gift money for shark fin banquets” campaign.  That’s a reference to the Chinese practice of presenting money to new brides in red envelopes, and the 8,000 strong group is advocating that the amount in those envelopes should be cut by 30% if the wedding banquet includes shark fin.  The documentary film Sharkwater is apparently a blockbuster hit in Hong Kong and is building opposition to the shark trade.

A friend, who is an ardent devotee of shark fin soup, argues that if we ban finning and trade in shark fins, then we should also ban fishing of blue fin tuna.  I think he is right.  I trained as a fisheries economist and, if humans want to taste such species again someday, they need a rest now.  Hawaiians have a word for this.  Whenever a particular area seemed fished out, the chiefs would declare that area to be kapu until the fish became more abundant.  We recognize kapu in English today as taboo (from the Tahitian form of the word).  Perhaps we need to declare shark and blue fin and whale kapu for a while.  In trade terms, I believe that means embargo.

Are the Brits on their way to Hawaii?

Most of Hawaii’s visitor industry is fixated on an established customer base in North America and Asia, or relaxing in the prospect of increased travelers to come from South Korea and China.  So it was with some excitement that I read Tuesday that Thomson Airways is thinking about direct flights between Honolulu and the United Kingdom beginning in 2012.  British Air used to have Honolulu – Heathrow flights, but dropped out of the market years ago as traffic lagged.  Thomson’s plans are not a done deal, but they do reflect strong British tourist interest in Hawaii.  Thomson recently surveyed their U.K. passengers about possible new long-haul destinations and Honolulu was favored by three-quarters of them, a strong vote for the new route.

Honolulu-bound flights would likely originate at Gatwick, Manchester, Glasgow or Bristol, and Thomson would use new Boeing 787s.  Other long-haul destinations considered in the Thomson survey are Borneo, Madagascar, Namibia, Cambodia, Ecuador, Vietnam and Argentina.

Thomson’s interest, of course, comes at a difficult time for the visitor industry.  Using January to May data for 2010, Hawaii welcomed 14,733 visitors from the UK, a drop of 7.6% from the same period last year.  European visitors as a whole dropped by 4%, though neither decrease is surprising given what has been happening in European economies.

Nor are the decreases surprising in light of the relative lack of Hawaii promotion in European markets. The Hawaii Tourism Authority, which is supposed to be developing markets for new visitors, steadfastly ignores Europe (and much of the rest of the world).  It is hard to know exactly what HTA plans because they have now closed their board meetings, where the marketing budget decisions are paid, to public view.  Occasionally news seeps out and it is clear that HTA only spends $100,000 a year in Europe, all of it devoted to the UK and Germany.  That is out of an international marketing budget of over $67 million, the majority of it spent in Japan.

Hawaii’s visitor industry claims that it wants long-staying visitors who spend a lot over the course of their stay, which sounds like a prescription for attracting Europeans.  What HTA does, however, is devote its resources to short-staying Asians or lower-spending Canadians.  Go figure.

Thomson Airways provides us with a bit of hope, but we have to keep things in perspective.  About three years ago, Virgin Atlantic said much the same thing, but they have been silent ever since.

Kaneohe Golf Club

For years I watched the Hawaiian Open on TV.  The golf held little interest – I was mesmerized by the scenery.  Eventually, I moved to Hawaii and, for several years, lived on a ridge that overlooked the course.  If there was a segment of Hawaii’s tourism industry that I would have thought was booming, it would likely be golf.  Wrong.

The Honolulu Star-Advertiser ran a piece last week about how Hawaii has fallen behind in the world tourism sweepstakes to attract golfing visitors.  And, even as a non-golfer, I found some of the reasons fascinating.

Most golf visitors to Hawaii are from the U.S. mainland or from Canada.  Visitors play close to one-quarter of the rounds on Hawaii courses, though that goes over 50% at the famous high-end courses.  But where are the golf visitors from outside North America?  Mark Rolfing of the Golf Channel, and soon to host a new worldwide golf show on NBC, says Hawaii’s courses are too tough, too costly and take too long to play.  I’m not sure about the too costly part; according to the U.S. Commercial Service, average club memberships around Shanghai are $78,000.  I don’t think we’ve got anything that steep in Hawaii.  It’s true, the famous courses can have high greens fees, but my father-in-law was quite happy playing the many public courses, particularly Ala Wai and Hawaii Kai.

Rolfing’s point about too tough puts Hawaii’s courses in a similar league to Scotland’s.  He points out that Europe’s relative newcomers to golf (e.g., Swiss or Germans) take their golf vacations in Portugal, Spain and Turkey where the courses are easier and not too expensive.  It may be many years, if ever, before they decide to tackle St. Andrews or Royal Dornoch.  He thinks China’s legions of new golfers just aren’t ready to take on Waialae or Kapalua – and he may well be right.  Of course, Rolfing and many others note that U.S. visa requirements are also likely keeping Asian golfers away.  Talk about a tough lie.

Another factor is that, over the years, golf course ownership in Hawaii has become separated from hotel/resort ownership.  This means that, although concierges will happily tell you about golfing opportunities, their main task is to keep you doing things in their resort – not on somebody else’s golf course.  And the recession has taken its toll on sponsorship for Hawaii golf tournaments, resulting in less worldwide coverage, fewer shots of superstars playing Hawaii courses, and fewer people like me watching the magnificent scenery.  Finally, the experts say that it sure does help if a destination is the home of some of golf’s superstars.  Hawaii made a run at this with Michelle Wie and Tad Fujikawa, but both have faltered of late.

I’m no expert on golf, but it seems that some good, old-fashioned marketing is needed.  A good step would be for Hawaii, whether the Hawaii Tourism Authority or individual golf courses and tour companies, to participate in the Commercial Service’s Sino-U.S. Golf Tourism Expo this September in Shanghai, Chengdu and Beijing.  But focus on bringing those new Chinese golfers to the smaller public courses.  Don’t start them out with the tough ones, even if they are famous.

• Why do new exporters always want to sell in China?  I see so many neophytes try to conquer the Chinese market and get their heads handed to them.  I have lost so many potential clients by telling them to go to Hong Kong or Singapore first – markets where they have some chance of understanding what is going on and actually getting some good business done.  Here’s another reason to hit these markets first: they have richer customers than China does.  A survey of affluent consumers by HSBC reveals that rich folks in Hong Kong have average liquid assets of US$301,289 and that Singapore’s wealthy have $183,145.  Rich Chinese, though touted in the press for their lavish spending, have average liquid assets of $126,537 – only 42% of Hong Kong’s richest.  The Chinese, too, are quite nouveau riche, averaging 36 years old.  The Hong Kongers are 48, the Singaporeans 44.
• One of Hawaii’s most delightful exports is its coffee, among the best in the world to this biased observer.  (I drink two mugs of Kona blend every morning.)  See these articles from the Honolulu Star-Advertiser, published this week: here, here and here.  Gotta try the one with bacon in it.
• I saw a new (to me) on-line scam yesterday.  I received an email, purportedly from Amazon, that looked a lot like Amazon”s usual order confirmation messages.  Except that the items ordered weren’t listed, and the message tells you to click on a link to see what is was you had “ordered”.  The first link, in a message loaded with links, was really to Amazon, but all the others were for a site called raceobject.ru8080, which I take to be a Russian mob site.  Beware.
• USA Today just noticed that Asia is a big market for U.S. companies.  Too bad they only talked to giant corporations who have already spent years and many millions to enter these markets.

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.

The Jones Act often comes up in conversations with businesspeople in Hawaii.  See yesterday’s post for some of the history and economics, but let’s focus on pragmatic business consequences today.

I asked a cattle-rancher on the Big island what his biggest business headache was, expecting him to say something about getting loans or meeting sanitary requirements.  But, no, he said it was the Jones Act.  Hawaii has a surprisingly large and robust cattle industry (some parts of the Big Island look more like Texas than Hawaii) that produces far more than can be consumed in the local market – which isn’t big enough to support an industrial-scale slaughterhouse and meat-packing industry.  So, the ranchers are faced with exporting live cattle to either the U.S. Mainland or to foreign markets.  They tried exporting to Japan many years ago, but that was at a time when Tokyo was saying that Japanese stomachs couldn’t tolerate non-Japanese beef.  Then mad cow disease came along, and shipments of Hawaii cattle and beef were cut off because of one Canadian cow that had been brought south of the border.  The world didn’t notice the long swim required for contact between Hawaiian and Mainland herds.  But I digress.

Hawaii’s cattle industry today requires transport of live cattle to U.S. West Coast slaughterhouses, which brings the Jones Act into play.  It’s not a huge trade, but when ships are available to carry the cattle, the prices, says the rancher, are prohibitive.  It’s cheaper for the cattle ranchers to charter vessels to carry their cattle to Vancouver, Canada and either slaughter them in Canada or have them trucked down into the Lower 48.  This, of course, subjects them to an additional layer of health and safety requirements, which only adds to their costs and cuts their margins.  Getting rid of the Jones Act may or may not make direct transport to the West Coast feasible, but the ranchers would sure like to give it a try.

Better deal in Switzerland than New Jersey

My friend Dana Gray owns Oils of Aloha, a small company on Oahu’s North Shore that produces cooking oils and cosmetics based on macadamia nut oil or kukui oil.  (Try Haleiwa Heat, a mac nut cooking oil infused with garlic and chilies.  Oh yeah.)  Oils of Aloha has developed an international clientele and routinely does bulk shipments to European and Asian customers, as well as the U.S. Mainland.  Dana was fulminating about the Jones Act one day last fall, so I asked him for examples of how the Act impacts his company.  Dana told me that he had recently sent a full container of his products from Hawaii to Switzerland for $4600.  The same day he got a quote to send another container – under Jones Act rules – from Hawaii to New Jersey for an exorbitant $5940.  He figures that the Jones Act costs his company $1340 per container load!

These are anecdotes, but they are indicative of the cost Hawaii pays for the Jones Act.  Getting rid of the Jones Act, however, will not necessarily solve the problem.  If one looks at trans-Pacific shipping, much of it is eastbound only – Asian exports bound for North America.  There is going to be little space available on those vessels even if they were allowed to pick up cargo in Hawaii.  There’s a ton of space available westbound across the Pacific, many ships filled to the brim with empty containers being returned for more Asian exports.  So there may be some scope for increasing Hawaii’s shipments to Asia.  Many such shipments now have to backtrack to California ports before they can head out again westbound, incurring Jones Act costs on the eastbound leg.  And westbound foreign-flag vessels could substantially reduce the cost of products shipped to Hawaii from the U.S. West Coast.

But there is a problem.  Container ships have grown so large that much of the world’s container fleet can’t fit into Hawaii’s small shallow ports.  Honolulu can handle many of the big ones, but not all, and the trend in container ships is to bigger and bigger.  Still, Hawaii’s companies would like to give life without the Jones Act a try.

Not allowed under the Jones Act

The Jones Act becomes a focal point for crisis in Hawaii every few years – and its that time again.  Formally known as the Merchant Marine Act of 1920, the Jones Act is America’s cabotage law – requiring that goods carried between American ports be carried in U.S.-flagged ships.  These ships must be crewed largely by American seamen, owned by U.S. owners, and built in American shipyards.  As such, the Jones Act is about as protectionist as legislation can get.  That said, many maritime countries have similar laws to promote and protect their own shipping and shipbuilding industries, as well as the heritage of their seamen.  (And the same can often be said for the aviation industry, which has similar but not identical protections in the United States and elsewhere.)

The purpose of the Jones Act depends on who you talk to, so let’s go to the source.  The preamble of the Act itself says “It is necessary for the national defense and for the proper growth of its foreign and domestic commerce that the United States shall have a merchant marine …”.  The basic idea in 1920 was that a proper merchant marine was necessary for national defense (how could you rely on other countries’ ships during a war?) and for international trade (how can you rely on foreign-owned, foreign-flagged vessels to carry your goods?).  The second notion has largely disappeared; non-U.S.-flag vessels are ubiquitous in U.S. ports and our imports and exports have not suffered.  It is harder to dispose of the national security argument.

My first job out of college was as an economist with the U.S. Maritime Administration.  There was concern at the time about the “loyalty” of American-owned ships plying the seas under “flags of convenience”, mainly Panamanian or Liberian.  I was tasked to explore whether or not these ships would bolt for safety in wartime, rather than move desperately needed cargoes for their owner’s country.  The question can’t be answered in absolute terms, but my overall conclusion was that, if times are desperate enough, any country will seize whatever ships happen to be in their ports at the time they are needed.  Beyond that, we could assume that some unknown but large proportion of shipowners would be patriotic enough to make their foreign-flagged ships available.  And there would always be the “spot” market for hiring ships of any flag.  In other words, we didn’t really need to have a quantity of American-flagged vessels ready for military transport needs.  That wasn’t the answer my political masters were looking for.

The current Jones Act dispute in Hawaii arises from both politics and economics.  On the political surface, Hawaii has a new Republican Congressman, Charles Djou, who is challenging local Democratic orthodoxy by calling for a repeal of the Jones Act as it applies to Hawaii.  This guarantees headlines for Djou because the godfathers of Hawaii’s Democratic establishment, especially Senator Daniel Inouye, are staunch supporters of the Jones Act.  As an island state, Hawaii gets the vast majority of its goods by sea from the U.S. West Coast.  Since those cargoes move between U.S. ports, the Jones Act applies and U.S. carriers must be used, creating an oligopoly for Matson and Horizon, the two main carriers on the Hawaii-West Coast routes.

The older Hawaii Democrats vividly remember the longshoremen’s strikes of the 1950s and are quite content that the Jones Act provides for some stability in the Hawaii-West Coast trade.  Their usually younger opponents (Djou, former Democratic Congressman Ed Case and many Hawaii consumers) object to the economic burden of the high shipping rates that the oligopoly can charge.  Some estimate that the Jones Act costs Hawaii more than $3000/household every year.  They see foreign flag vessels moving between the West Coast and Asia and wonder why we can’t use them.  (In a similar vein, a U.S. International Trade Commission study in 2002 concluded that the Jones Act costs somewhere between $119 million and $9.8 billion annually (now there’s a range!) because it prevents use of low-cost non-U.S. ships.

I once tried to arrange a live debate about the Jones Act when Business Beyond the Reef was still a radio talk show.  Opponents were eager to come on the air, but Inouye’s office, Matson and Horizon refused to participate.  Their tactic is simply to discuss the Jones Act as little as possible.  The public discussion has begun, and we’ll continue with some insights tomorrow.

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I didn’t report on my outrigger paddling adventures last week as there was nothing good to say.  We stank.  This Sunday’s races were substantially better.  Windward Kai raced at Oahu’s Ke’ehi Lagoon and we actually had a victory.  I race with our old guys (the men’s 60s crew, sometimes the mixed 60′s or other crews).  In the men’s 60 race Sunday, we had a rocket start and a good turn, coming out of the turn in 3rd place with a quarter mile to go.  Halfway back, we had built a three-length lead over the 4th place boat, when it suddenly felt like someone had turned the ignition off.  We had no power left and were overtaken on the line, finishing about ten seconds out of 3rd and less than a second from 4th place.  Disappointing.

Two races later, our mixed 60s (mixed means three men and three women) went to work.  They had been finishing 3rd or 4th all season, but they nailed it this time.  Good start and they came out of the 1/4 mile turn all even with two other boats.  Then they put the hammer down to gradually eke out a lead, taking 1st place by about a boat length.  Magnificent!

• 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.