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.

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.

Do we want jobs or not?

It’s been tough with my travel lately, but I finally got around to looking at the Chamber’s new study:  Opening Markets, Creating Jobs: Estimated U.S. Employment Effects of Trade with FTA Partners. Some of the stats in the study are eye-popping.  The Chamber study examined the agreements that the United States had in place with fourteen countries in 2008 and found that 17.7  million American jobs depended on trade with those countries.  More to the point, 5.4 million jobs were created by our much-maligned free trade agreements.  Can you think of any other way that more than 5 million Americans can be put to work with no adverse impact on the federal budget?  I can’t.  But this isn’t good enough for the Obama Administration which, while claiming to like FTAs, still doesn’t ask the Democrats in Congress to move forward the stillborn agreements with South Korea, Panama and Colombia.  The South Korea agreement is estimated to mean some 345,000 jobs. Our politicians should ask their voters if they would like a job or two.  And export-related jobs tend to be higher paying than other jobs in the U.S. economy.  Who besides an out-of-touch politician in Washington would say no to such a deal?

The fourteen FTAs that our politicians despise added 2.1% to our GDP in 2008, putting $3.4 billion into the hands of their constituents.  Our exports to these markets grew nearly three times faster than our sales to the rest of the world.  One wonders how this is bad?

The rest of the world has seen the light and is merrily negotiating and implementing new FTAs while our negotiators are left sitting on their hands – and while our exporters find themselves increasingly disadvantaged in foreign markets.  Yes, it would be nicer if our trading partners kowtowed to the wishes of our Congress on labor standards and environmental policies, but when did we get the right to legislate for other sovereign nations?  Would we allow another country to hold up an agreement if they wished to change, say, U.S. military policies in Afghanistan?  Somehow I doubt it, but that is what we are trying to impose on others.  By using FTAs as the tool, we are merely condemning U.S. export sales and killing jobs that our country desperately needs. Wake up, Washington.

Don't get them mad!

OK, the gloves are off and the fighters are coming out of their corners.  It’s organized labor versus the farm lobby at the Capitol Hill arena.  It’s mostly labor unions that have blocked action on the three free trade agreements that the United States has negotiated with Panama, Colombia and South Korea.  And now the farmers are coming after the unions.

A letter was sent March 1 from 57 agricultural trade groups to the Democratic and Republican leaders of the House and the Senate that diplomatically advised the Congress to get its collective butt in gear.  The signatory organizations represent farmers, ranchers, food processors and exporters, and, according to their letter, the products they sell in foreign markets provide 8,000 jobs for every billion dollars of exports.  If the Congress and the Administration are serious about doubling U.S. exports, then ratifying and implementing the FTAs with Panama, Colombia and South Korea is a perfect way to start doing it.  We sell about $7 billion to the three markets annually, or 56,000 farm-related jobs that could be grown if we enact the FTAs or diminished if we fail to act.

Passage of these agreements will also correct an imbalance in the conditions of trade.  The letter notes that American farm exports face significant customs duties in all three countries, but that U.S. tariffs on incoming farm products are far lower.  Ninety percent of Colombia’s agricultural exports to the United States enter duty-free.  The same is true for 95% of Panama’s farm exports to the United States.  Korea’s agricultural tariffs are four times higher than America applies to Korean ag products.  Congressmen talk a big game about “leveling the playing field”, but here we have a chance to do that and the politicians aren’t moving.

Other countries are moving into these markets while the United States dithers.  The letter says that, at the end of 2008, the world had 230 free trade agreements, but that America was only in 17 of them.  Perhaps another 400 FTAs are in the pipeline worldwide, but we only have the three that Congress refuses to act on.  Since we negotiated the FTA with South Korea, the Koreans have concluded or are negotiating further agreements with 52 other countries!  Why are we waiting to gain duty-free access to the world’s fifth largest market?  Do our political leaders think it is “fair trade” if we let 52 competitors beat us to the market?

So, it is the farmers versus the unions.  Gonna be a good fight.

Anyway, here are this weekend’s waves:

• We love pork in Hawaii, grinding on our favorite kalua pig, manapua and pork laulau.  So, a Wall Street Journal article about a battle over pork rinds grabbed my attention.  The U.S. Department of Agriculture (unusually) is making a unilateral change to loosen U.S. import restrictions on pork skins, opening up a market for Brazilian suppliers.  This was done at the request of an Ohio producer of fried pork rinds (I like ‘em spicy) who finds U.S. pork skins in short supply.  They are being opposed by some state agriculture departments and by competing pork rind producers, who argue to keep the imports out for fear of health problems.  We’ve got chicharrones here in Hawaii, too, going back more than 100 years to our first Filipino immigrants.  Yum.
• Spare a thought for poor foreign investors in Cuba.  Cuba lured investors in, but then put a moratorium on sending any of their profits back out.  Here’s an article in the Huffington Post about a European businessman in Havana reduced to trading Cuban food vouchers for convertible currency.
• This may take a few years, but Pakistan agreed this week with Turkey to invest $20 billion in a rail line between Istanbul and Islamabad could be big news for business in the Middle East.  It currently takes at least eleven days to send a container by rail on that route, but the new line promises to cut this to as little as three days, making rail shipments from Europe as as Pakistan feasible.  Now, if the Pakistanis can tie this line into the Indian rail system, we’d really have something going.
• It is encouraging that airlines are now competing for landing rights in Iraq.  The Wall Street Journal reports that Iraqi Airlines now has enough traffic to justify ordering new aircraft from Boeing, despite an influx of foreign carriers into Iraqi airspace.  An Iraqi Airlines spokesman takes an enlightened view: “Anything that connects Iraq to the rest of the world is good for the carrier and the country …”. Iraq’s international airports are seeing scheduled flights by Turkish Airlines, Gulf Air, Middle East Airlines, Bahrain Air and Austrian Airlines.  Austrian was a stalking horse for Lufthansa, which now plans to enter the Iraqi market this summer.
• Just Monday I posted about the “Communist Capitalists” in North Korea.  The Wall Street Journal ran an article yesterday about another money-maker for Pyongyang: monument-builder Mansudae.  Seems they are going after and winning contracts to build huge statues and monuments for cheap – based on all the practice they have had at home.  The WSJ piece details work they are doing in Senegal, and mentions contracts in China and Malaysia.  Libya is getting interested.
• The European Union and India resumed talks this week to negotiate a free trade agreement during 2010.  India did an FTA in 2009 with South Korea.
• That didn’t take long.  The United Steelworkers union and four steelmaking companies in Texas and Illinois have brought the first antidumping case of the year against China.  Chinese companies stand accused of selling oil well drill pipe at unfair prices.  These cases take months to investigate and the mere fact that there is an investigation does not mean that the Obama Administration has taken a stand on the issue – a fine point that will predictably be lost on Beijing.  Anybody can bring a case (given sufficient money for lawyers and a little evidence), but it is the decision that matters.  We aren’t there yet.