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Issue N. 177 - October - November 2014
A Publication of the Monterey Bay International Trade Association (MBITA) and TradePort.org

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MBITA BOARD OF DIRECTORS

President
Tony Livoti
MBITA

Vice President

Shay Adams
AIM Medical Sales

Members


Dr. Edward Valeau
Els Group LLC
Hartnell College
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Marcelo Siero
IdeasSiero

Jim Faith
Jim Faith & Associates

Cristina Polesel
MBITA
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If you would like to publish an article in this newsletter please contact the editor by email.

This newsletter has been
created by MBITA's editor
Cristina Polesel
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IN THIS ISSUE

MBITA New Member:
Trade Facilitators, Inc.

Dawn of the U.S. Single Window: ACE and Beyond

Brand Monterey Bay Visits Jinan, China on Solar Highway Project

Streamlining Global Logistics Event Draws Attention to the Future of Global Trade

What's NewTrade Finance Update:

Thoughts on how to price open account Export Sales

Political Risk Insurance

What's NewNational Export Initiative (NEI) Update

Ayse's Corner
Exporting Wine:
The Good Life

MBITA Contact Info

MBITA / TradePort Events

MBITA / TradePort
PARTNER EVENTS

MBITA
Sponsorship info

UPDATE

Don't miss our 11th annual Global California conference to be held in Santa Cruz, Ca. this year. You can view all the details HERE.

In this issue we have the latest information on the new 'single window' revolution that is occurring in global trade logistics from Don Lewis, MBITA contributor, and the 'Streamlining Global Trade' TradePort.org event held at Pillsbury Law last July. We welcome Dan Gardner of World Trade Facilitators, Inc. as a new MBITA member who brings a world of global trade logistics experience to our organization, plus, some great updates in our trade finance section and a very interesting article in 'Ayse's Corner on the wine industry. Enjoy.

Tony Livoti

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Tony Livoti
President.

 
MBITA TradePort Event Presentations

 

MBITA New Member Trade Facilitators, Inc.

TFI logoTrade Facilitators, Inc. is a Los Angeles-based consulting and training firm with expertise in the fields of global supply chain management, logistics network design and international trade compliance. With roots in the Third Party Logistics industry and over twenty five years of field experience, TFI works to enhance the global competitiveness of firms from industries as diverse as aerospace, agriculture, consumer electronics, defense, energy, fashion, heavy industry and high tech.

Trade Facilitators, Inc. was founded by Daniel L. Gardner, a well known international business executive, author and multi-award winning adjunct professor of supply chain management. Prior to establishing TFI in 2007, Mr. Gardner held C-level positions with firms that include Ocean World Lines, Exel Global Logistics and DHL Global Forwarding. A native of Lynn, MA, Mr. Gardner holds an MBA from the University of Miami, is a licensed U.S. Customs Broker, holds a Black Belt in Six Sigma and is the author of four books on global trade.

Through its staff of trade professionals and a global network of country-specific Subject Matter Experts, Trade Facilitators offers advisory and educational services in areas that include international sales contracts, trade finance, supply chain design & optimization, logistics network analysis and U.S. import & export compliance.

Daniel Gardner

Daniel Gardner
President
Trade Facilitators, Inc.
Tel. (424) 257-7815
email: dgardner@tradefacil.com

Web: www.tradefacil.com

Dawn of the U.S. Single Window: ACE and Beyond

by MBITA associate Donald Lewis

The Single Window is Coming! Traders Prepare! The U.S. Single Window will fully launch by the end of 2016 completely transforming the face of international trade by ushering in a new era of Global Electronic Trade. Single Window development has involved decades of preparatory work by the U.S. and IGOs, including UNECE, UN/CEFACT, the World Customs Organization (WCO) and the WTO.

The "Single Window" has been defined as:

A facility that allows parties involved in trade and transport to lodge standardized information and documents with a single entry point to fulfill all import, export, and transit-related regulatory requirements. If information is electronic then individual data elements should only be submitted once.

Single Window vision

The two main drivers behind the deployment of the U.S. Single Window have been the adoption of the Trade Facilitation Agreement (TFA) at the WTO Bali Ministerial in December 2013 and President Obama's related Executive Order on Streamlining the Export/Import Process for America's Businesses issued on February 19, 2014.

The U.S. Single Window is called ACE (Automated Commercial Environment). ACE will provide the Trade with the ability to submit all required information by means of a single, electronic transmission, with the relevant trade data being distributed to the appropriate federal agencies for customs clearance and regulatory compliance purposes. ACE is managed by U.S. Customs and Border Protection (CBP).

The four principal components of the ACE (and related ITDS) system are:
(1) PGA Message Set; (2) PGA Interoperability; (3) Document Imaging System; and (4) Automated Export System. There are two primary methods for Trade interaction with ACE: (1) filing transactions via the Electronic Data Interchange (EDI) interface, viz., the Automated Broker Interface (ABI); and (2) use of the ACE Secure Web Portal for B2G communications, certain filings and to run reports.

ACE components

ACE presents significant benefits for SMEs and global supply chains in the form of substantial transaction and compliance cost savings. SMEs should be able to more easily integrate into global supply chains.

There are important looming USG mandatory deadlines for the Trade to comply with and use the ACE system.

ACE deadlines

ACE is an impressive milestone in trade facilitation and global e-commerce, but is only part of the picture. Unsettled policy areas for the U.S. include: (1) subnational Single Window portals; (2) integrated B2G/B2B Single Windows (e.g., in Korea and Singapore); (3) international interoperability of U.S. and other countries' Single Windows; and (4) internet vs. EDI-based platforms.

For further information about ACE:
see http://www.cbp.gov/trade/ace

Don Lewis

Donald Lewis
International Trade and the 'Single Window' Chinese/USA Law Consultant
Tel. (408) 705-0676
email: lewlaw24@gmail.com

Brand Monterey Bay Visits Jinan, China on Solar Highway Project

By Tony Livoti, MBITA/TradePort President

Brand Monterey Bay (BMB) visited Jinan, China this past August after hosting a Shandong delegation in the Monterey Bay last spring. Jinan, China, the third richest province in China, is the capital of Shandong and is called the Spring City in China because of the numerous springs situated in the center and around the downtown area of Jinan and where city dwellers come on the weekends to enjoy and play with the fresh and clean spring water.

Shandong Springs

Jinan is a major commerce center for China close to one of the world's largest ports at Qingdao, about 40 kilometers from Jinan. More than 10 multi-national corporations, including Panasonic, Matsushita, Siemens, Pepsi-Cola and Volvo, have set up successful joint ventures in Jinan. At present, the city has more than 2,500 foreign enterprises in forms of joint ventures, co-operative businesses or foreign-funded enterprises, utilizing about US$ 3 billion in foreign funds.

During the trade mission, Tony Livoti, President of BMB and MBITA/TradePort, conducted a high level meeting with the chairman of Shandong High Speed Rail where subsequently a MOU was signed and agreed upon to work jointly on a project to build solar roadway and rail models in Jinan and the Monterey Bay.

Shandong meeting

After the meeting Mr. Livoti was the first foreigner to visit the newly completed and first solar highway model in China that was built by Shandong High Speed Rail and is a good model for the Monterey Bay to follow.

Shandong Solar Highway

Shandong group with Tony Livoti

"These solar highways and railways models can be a great springboard for renewable energy generation that can be adopted as a clean source of solar energy that would be located in the unused, 'right-of-way' land adjacent to the millions of miles of roadways and railways scattered throughout China and the U.S.", states Tony Livoti.

There was some time left for some sightseeing after a busy schedule of meetings with Shandong Ocean Investment Co. where discussions were held on business linkages to Monterey Bay's leading marine science community, as well as meetings with the China Council for the Promotion of International Trade (CCPIT) in Shandong- regarding the development of a sub-national, 'single window' trade logistic service for one-time eDoc entries that will streamline global trade logistics for importing and exporting and would become operational through TradePort.org and its counterpart in Shandong.

Danning lake in Jinan
Danning Lake at Jinan, China
5 story Chinese architecture building located at Danning Lake
5 story Chinese architecture building located in the center of Jinan, China
Modern Statue, Quancheng Square in downtown Jinan
Modern statue at Quancheng Square in downtown Jinan, China

Streamlining Global Logistics Event Draws Attention to the Future of Global Trade

MBITA/TradePort in partnership with Global 4PL conducted an event this past July at Pillsbury Law in Palo Alto, Ca. entitled 'Streamlining Global Trade'.

The conference featured experienced panelists and new companies with innovative technologies on the revolution now taking place in the global logistic industry with innovative online solutions now being implemented throughout global supply chains resulting in more cost effective and efficient trade.

The presenters and panelists discussed the need for new technologies to meet the increasing complexities of exporting and importing with the challenging process of meeting the security, political and efficiency aspects between the exporter, importer and the government and private entities involved in the transaction while providing the necessary documents for compliance to consummate a transaction.

Amber Road
Ty Bordner, Vice President, Amber Road

The conference highlighted new efforts from Customs and Border Patrol (CBP) and the Department of Homeland Security (DHS) to meet President Obama's directive to streamline the global trade process and for the U.S. to now take the lead to set the global standards for the implementation of the mandated 'single window' by the year 2020.

 

SINGLE WINDOW:

The new U.S. Single Window for the U.S. is called ACE (Automated Commercial Environment). ACE
will provide Importers and exporters the ability to submit all required information by means of a single,
electronic transmission with the relevant trade data being distributed to the appropriate federal agencies
for customs clearance and regulatory compliance purposes. ACE is managed by U.S. Customs
and Border Protection (CBP).

The conference also featured a project from TradePort.org for California to create a model for a seamless, integrated, responsive online system with global standards for import and export transactions of all sizes whether it's for multi-shipments across a global supply chain or just for a simple export or import transaction. The 'single window' through TradePort.org will provide a method for small and mid-sized enterprises (SMEs) to become more competitive in the global marketplace with effective and efficient logistic procedures while also giving them the capability to interact with multi-national supply chains as sub-contracting supplier.

Ryan Petersen with Flexport
Ryan Petersen, Founder & CEO, Flexports, Inc.

All of the presentations for this conference are viewable HERE. MBITA/TradePort is now planning a follow-up conference in 2015 on the progress of these major changes in global logistics and the 'single window'.

Panelists
Panel -L-R: Paul Tasner, CEO & Founder, PulpWorks Inc.; Subhash Chowdary, Founder and CEO, Aankhen Inc.; Arnaud Deshais, Director of Supply Chain Management, Art.com
What's New

Trade Finance

MBITA's trade finance column features articles from the experts in the field of EXPORT FINANCING.

Thoughts on How to Price Open Account Export Sales

Provident Traders Inc.by MBITA Member John Keevan-Lynch, Provident Traders, Inc.

Many years ago I exported spare parts for off-highway trucks and mobile cranes to mines in Mexico and South America.

Early on, I quoted $200,000 for a list of Fiat Allis Genuine spare parts to a large open pit mine in Mexico, payable by a Confirmed Sight letter of credit (L/C) with me picking up all the L/C charges outside Mexico.

A competitor quoted $220,000, same list, 30 days open account payment terms.

To my chagrin, I lost the order. Why? The payment terms were more important to the buyer than price.

Going forward, I knew I had to offer open account payment terms if I was to be competitive. I could do this for small quotes that I could finance myself (i.e., "carry the Account Receivable (A/R) on my balance sheet"). But for large quotes that I could not carry on my balance sheet because I didn't have the capital to finance myself, I would have to reduce my margins even more to entice a buyer to buy from me on L/C terms.

To protect myself from the risk of non-payment on the small open account sales, I purchased an Eximbank export credit (non-payment) insurance policy. The policy covered 95% of my invoice value (including profit) on sales of product whose US content was 51% or more (calculated using the product's Cost-of-Goods-Sold (CGS) and exported from the US. The premium rate was $0.55 per $100.00 invoiced.

To compensate for the risk, cost and aggravation of open account terms, I added an additional 9% margin to my L/C price and quoted 30 days open account terms, "subject to credit approval".

If I won the order and Eximbank approved the buyer, off l shipped.

Worst case: if l had to file a claim, I lost my 5% co-insurance, my 0.55% premium paid and whatever interest carrying costs I might have had. Still ahead of the game.

Best case: if the buyer paid me 30-45 days after due date (typical in Mexico for a "good" buyer), I earned 9% on my money for a 90 day tum (30 days open account plus 45 days slow pay) times 4 turns a year= 36% annual return on my money.

If Eximbank did not approve the buyer's credit, I would tell the buyer that I could not get credit approval for this sale but I could offer him a "one-time-only" 10% discount if he paid me with an L/C or Cash in Advance (CIA). Back where I was to begin with (and the beneficiary of Eximbank's free advice).

Watch out that you do not "unbundle" the open account cost component of your price because your buyer will use it to negotiate a lower price from you.

For example, what if you quote Cash In Advance (CIA) or L/C payment terms and the buyer says "We like your price but we [Pepsi Cola, Pemex, whomever] never have and never will pay CIA for anything; payment terms must be 30 days open account"? Imagine the buyer's shock if you added (in my case) 9% to your CIA price for 30 day terms. He'd say "that's usurious! 108% p.a. ?"

You will have the same problem if you submit two quotes, one on CIA terms and the other on open account terms.

So, decide what your payment terms will be before you quote prices and stick to them. If a credit-worth buyer insists on open account terms, quote on that basis up to the amount you can support but do so without revealing the cost of your open account financing.

Margins will vary according to markets, but the principle is the same: open account payment terms are a legitimate "value-added" component to a sale that you should be compensated for.

John Keevan-Lynch is President of Provident Traders, Inc., a Northern California based export finance consultancy and licensed export credit insurance broker with more than 33 years experience with Ex-Im Bank.

 

Contact:
John Keevan-Lynch
President
Provident Traders, Inc.
Tel. (707) 895-9353
Email John Keevan-Lynch

Web: www.providenttraders.com

Political Risk Insurance

Meridian Finance Group logoby MBITA Member Meridian Finance Group

International opportunities are no longer pursued only by large corporations. Middle-market US companies-and even small businesses-are selling to foreign governments, investing in overseas operations, etc.

When you venture abroad: you can secure your contracts, protect your assets, and arrange financing from your lenders and investors using political risk insurance. Once feasible only for major undertakings, political risk insurance is now available for all sizes of international projects, transactions, and ventures.

CONTRACT COVERAGE

When you're doing business directly with a foreign government, public-sector buyer, or government-owned entity, contract repudiation insurance can protect against non-payment of your invoices or non-honoring of your contracts, either before or after your shipment of goods or performance of services.

Coverage can also be written to indemnify against frustration of your contracts with private-sector entities that might be unable to perform due to expropriation, currency inconvertibility, political violence, or other local/international government actions or political events that would be out of your-or their-control.

If your business relies on licenses or permits issued by foreign governments, then you can obtain political risk insurance to cover against cancellation of import or export licenses or business permits, as well as embargoes, boycotts, sanctions, or decrees causing business interruption, payment defaults, or other losses.

ASSET PROTECTION

If your company has assets located abroad, you can insure them against expropriation, inconvertibility, and political violence-long-term or for the duration of a contract-in order to secure your own balance sheet and to facilitate arrangement of financing from your lenders or investors.

Expropriation insurance protects against confiscation, nationalization, and other foreign government actions or political events which would deprive you of your rights of ownership, security interests, or control of your assets situated in other countries. It also covers your ability to repatriate your assets, for example getting your equipment out of the country at the end of an operating lease or after completing a contract.

Inconvertibility policies cover your right to exchange local currency for US dollars or other hard currencies and protect against government prohibitions on transferring hard currency out of the country.

Political violence coverage insures against non-payment, business interruption, forced abandonment, or damage/destruction due to war, civil unrest, sabotage, or other government actions or political events.

MERIDIAN FINANCE GROUP brokers policies from every underwriter in the political risk insurance market, enabling us to quote the most competitive terms and premium rates. These policies work differently from other kinds of insurance, so Meridian provides comprehensive support to help our clients get the most out of their coverage. Contact: (310) 260-2130 or insurance@meridianfinance.com.

Gary Mendell

Contact:
Gary Mendell
President
Meridian Finance Group
Tel. (310) 260-2130
email: insurance@meridianfinance.com

Web:
www.meridianfinance.com

What's New

 

National Export
Initiative (NEI) Update

Statement of Fred P. Hochberg on the Release of Export Data from the Commerce Department
U.S. Exports Reach A Record-High $198 Billion in July

Washington, D.C. - Ex-Im Bank Chairman and President Fred P. Hochberg issued the following statement with respect to July's record-high export data released today by the Bureau of Economic Analysis (BEA) of the U.S. Commerce Department. According to BEA, the United States exported $198.0 billion of goods and services in July 2014, the highest mark for any month ever recorded.

"These record-high numbers show that exports stamped 'Made in America' are sought out for their quality, reliability, and innovation," said Ex-Im Bank Chairman and President Fred P. Hochberg. "Given a level playing field, U.S. exporters can compete with anyone in the world, and Ex-Im Bank is proud to support American exports, just as they support jobs here at home."

Exports of goods and services over the last twelve months totaled $2.3 trillion, which is 46.6 percent above the level of exports in 2009, and have been growing at an annualized rate of 8.7 percent when compared to 2009.

This press release was issued on Sept. 4th by Ex-Im Bank. Press release source article.
Contact Office of Communications: (202) 565-3200.

##########
The National Export Strategy is available also at
http://trade.gov/NEI and http://export.gov.
International Trade Update at
http://www.trade.gov/publications/ita-newsletter/
United States Department of Commerce
Office of Public Affairs - Tel. 202-482-4883
##########

Ayse's Corner

Ayse's Corner is a periodic feature of the World TradeWinds eZine'. Ayse Oge is a published author and global trade marketing expert and author of Emerging Markets.
 

Exporting Wine:
The Good Life

In June of 2014, I was invited to a fabulous wine and culinary tour in Bordeaux, France to celebrate the French "Art de Vivre" with my fellow Global Women Summit delegates. The trip's highlights included wine-tasting in some of France's most prestigious wine-producing regions: Medoc and Saint Emilion.

Top 10 Wine Markets Wine has always been an essential part of the French tradition, both culturally and economically, but the growth of the world's middle class has made it a global necessity. Worldwide wine consumption is expected to grow $180 billion by 2016, with a large part of the demand coming from China, Hong Kong, Japan and Singapore. In fact, international trade-in wine has increased by almost 200% from 1961 to 2005, becoming a popular export product in the world markets.

China is Bordeaux's largest market and takes around one in five of the bottles produced in the renowned area, where up to 55,000 jobs depend on the sector. Ubifrance's China-based sector manager told her audience during an address to the Wine Conference "Chinese importers want to listen to a story: they are looking for direct authenticity, for direct contact."

In the last few years, many well-known French wine companies have opened their wineries in Central China to produce sparkling wine. Bordeaux International Wine Institute is offering classes on business management in the oenological arts to wine enthusiast, vintners and vineyard owners coming from all over the world including Turkey, China and India. In Asia, the middle class equates wine with sophistication and "the good life," and wine conveys history, heritage and cultivation.

Globalization has made wine a popular drink, particularly among the world's younger generation who are joining wine clubs, taking wine courses and embracing wine tourism. A strong wine knowledge and opinion is growing ever more fashionable.

In the global wine industry there are two broad categories for the classification of wine producing countries: New World Producers and Old World Producers. The New World Producers comprise of the USA, Australia, Chile, Argentina, and South Africa. The largest of the Old World Producers are France and Italy. And now there are the new players in the industry, such as China, which has been developing its own plantings and has expanded by 20 percent over four years, fully expected to be top producers of wine within 10 to 15 years. This growth in Global Wine consumption is accelerated by the shift to a Mediterranean-style diet, the rise in the awareness of the health benefits of wine, and an increase in use during recreational activities and for general entertainment.

World wine consumption by country

Some key trends in the wine industry are: Premiumization and Craft. This started with craft beer and has become popular among beer consumers and continued into craft spirits and more boutique artisan wines. The millennials who are coming into the age of alcohol consumption can be the best target market for these types of beer.

Wine consumers trends 2012

The U.S. industry created an initiative in 1998 called "WineVision" based on the opportunities presented by the global wine market to the U.S. vintners who are pouring their heart into the craft to be more competitive, both domestically and internationally.

WineVision focuses on three fundamental principles: 1) become the leader in sustainable practices and keep U.S. producers environmentally sound, socially responsible and economically viable, 2) make wine an integral part of the American culture, and 3) position U.S. wine as a high- quality, high-value product.

Expanding WineVision to provide educational and training workshops to help equip U.S. wineries with the business and export tools and skills they need to compete in the global marketplace would be a good strategy. This could help promote the valuable and sought-after California image in the developing world and allow U.S. wine producers tap into global consumers who want more of the good life.

Ayse Oge at the Women Global Summit
Ayse Oge
Winery

Ayse Oge is President of Ultimate Trade, International Trade Consulting, Speaking and Training. She is also Board Member of California Business Education Association.

Ayse Oge

Contact
Ayse Oge
President
Ultimate Trade LLC
Tel. 818-708-9571
Email: oge@earthlink.net
Web: www.goglobaltowin.com


Must See Video on Global Trade

Click HERE to see the 'Making Hay' video by Dan Gardner of Trade Facilitators, Inc. This multi-industry webinar is a 'must see' for global trade students and practitioners of all levels and World TradeWinds considers it to be one of the most concise and informative webinars on the history, present state and the future of the Global Trade industry there is available today.

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Export Institute

Online Export Classes
This six-course series will cover all key areas of the export industry, including markets, sales representatives, pricing, agreements, shipping and payments. You can earn Continuing Education Units (CEUs) and a Certificate in Export Management. The classes are available online 24/7, so you can start immediately and learn at your own pace. More

Please go to MBITA newsletter archives to see other MBITA Members profiles and visit MBITA's Export Promotion Services.