China: Exploring the Possibilities

China is a country that stimulates much curiosity for many people. This curiosity comes from the fact known by most people that China is a country churning with activity and a growing economy that has been among the most robust in the world. It is a country with tremendous dynamism and opportunity, while creating wealth at staggering rates. However, it must also confront its numerous social and environmental challenges that if not addressed, will eventually slow the country’s progress.
I recently had the good fortune to spend seven days in China as part of a delegation of presidents of Chambers of Commerce representing the Metro Cities Council of the American Chamber of Commerce Executives. I felt fortunate our trip was sponsored by a company known as Citslink International, Inc. They invited 30 Chamber executives to visit the People’s Republic of China to learn about economic development activities occurring in the four cities of Beijing, Shanghai, Hangzhou and Souzhou. Read Full Contribution

Monthly Contribution: The Future of NAFTA

Daniele S. Longo
Northern Kentucky Chamber of Commerce Business Journal, February 1, 2009

The North American Free Trade Agreement (NAFTA), signed by Canada, Mexico and the United States in 1992 and enacted in 1994, NAFTA links the economies of the three countries by gradually eliminating trade barriers. Since the inception of NAFTA, trade among Canada, Mexico and the U.S. rose from $293 billion to $909 billion and each day the three North American countries conduct well over $2.5 billion in trade. For example, for every dollar of merchandise exported to China, the U.S Exports $4 to Canada and $2 to Mexico.

NAFTA represents a key tool for the economic development and its main objectives of eliminating trade barriers, promotion of fair competition, increase of investment opportunities and effective protection of intellectual property rights (see complete text of the NAFTA Free Trade Agreement at NAFTA Secretariat, www.nafta-sec-alena.org) should be sheltered at a time when the new Administration is planning to renegotiate the agreement. Regional communities and businesses –most of whom export to the NAFTA countries- are encouraged to send a strong message in support of NAFTA and the pending Free Trade Agreements for Korea, Colombia and Panama.

“As the new Administration is getting organized in Washington, we must all realize that the rest of the globe wants to get a step ahead of the North American economy. Our collective task, as ambassadors of the Northern Kentucky economy is to send an unwavering message: we can compete in global markets,” said Steve Stevens, president of the Northern Kentucky Chamber of Commerce.

U.S. officials evaluate the possibility of trade restrictions. However, the rest of the world is opening to new market opportunities by ratifying international trade agreements (China and New Zealand), building transnational coalitions (i.e. Switzerland joining the barrier free Schengen area of the European Union on January 1, 2009) or executing large scale logistic infrastructures (i.e. railway connecting China with Germany).
During its enforcement, NAFTA helped the three members grow in terms of Gross Domestic Product (54% for the United States, 56% for Canada and 48% for Mexico) and most of all, jobs. According to the Bureau of Labor Statistics, in 2007 a total of 13.9 million manufacturing workers produced $870 billion worth of exports and more than one third of the manufacturing output ($330 billion) was exported to Canada and Mexico. U.S. agricultural exports destined for Canada or Mexico has grown from 22% in 1993 to 30% in 2007 with Mexico being a critical export destination for products such as beef, rice, corn, pork, poultry, eggs, and cotton.

See the complete text of the NAFTA Free Trade Agreement at NAFTA Secretariat at www.nafta-sec-alena.org.

The shifting World of U.S. Trade Policies

The New Year begins with a dynamic and complex trade environment that could have implications on the United States. Starting this month, the European Union will allow 16 developing countries (Armenia, Azerbaijan, Bolivia, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mongolia, Nicaragua, Paraguay, Sri Lanka and Venezuela) duty-free access to the EU market and will let Switzerland to become the 25th State to join the barrier-free Schengen Area. In the Pacific region, the Asia-Pacific Economic Cooperation (APEC) will reduce trade transaction costs by 5 percent by 2010, while China expands its market reach signing a Free Trade Agreement with New Zealand and planning the longest railway system that will link the country to Germany by Mongolia, Russia, Belarus and Poland. Middle East and Africa explore the opportunity of reciprocal Free Trade agreements; while in South America Mercosur strengthen its relationship with the European Union.

For the United States, these changes will impact how the new presidential administration supports the passage of three pending Free Trade Agreements (FTAs) with Colombia, Panama and South Korea. If approved, these FTAs will enable U.S. businesses to competition an equal paying field with other foreign enterprises. Currently, the only contract with Panama has a slight chance to be approved and if it is, th Panama FTA will allow U.S. construction companies to take advantage of the contracts related to the expansion of the Panama Canal. According to the U.S. Department of Commerce, 35 percent of U.S. exports go to Canada and Mexico, a figure that has nearly tripled since 1994, when NAFTA came into force.

The NAFTA market is especially important for U.S. manufacturers since a total of 13.9 million Americans are employed in manufacturing, according to the Bureau of Labor Statistics. These workers produced $870 billion worth of exports in 2007. Canadians and Mexicans bought approximately $330 billion of U.S. manufacturing output every year. Exports from the United States support an estimated 12 million jobs while an additional 10 million jobs are supported by imports, most of which are not just for large businesses. International trade impacts everyone from online fashion companies exporting their goods using web 2.0 technologies, the small business that imports parts to produce and export innovative goods, the small retailer who imports/exports merchandise overseas and the fashion designer selling online. Learn more about international trade by visiting www.nkychamber.com or contact Daniele Longo, (859) 578-6385 (D. Longo, Business Journal, Northern Kentucky Chamber of Commerce, January 1, 2008).