US TRADE GAP WIDENS TO $45.7 BILLION IN JANUARY

(AP) — The U.S. trade deficit rose in January as American exports fell for a fourth straight month, the Commerce Department said Friday. Read more of this post

Is a Crackdown on Chinese Imports Looming Ahead?

Is a Crackdown on Chinese Imports Looming Ahead?

US concerns regarding unfair trade practices from China are on the rise. IBISWorld examines the reasons behind the protectionist sentiment and the potential impact on Chinese imports. Read more of this post

Slavery Taints Global Supply of Seafood

Seafood, Slaves, Shrimp, Tilapia

In this Thursday, Nov. 27, 2014 image from video, workers from Myanmar load fish onto a Thai-flagged cargo ship in Benjina, Indonesia. An intricate web of connections separates the fish we eat from the men who catch it, and obscures a brutal truth: Your seafood may come from slaves. (AP Photo/APTN)

The Burmese slaves sat on the floor and stared through the rusty bars of their locked cage, hidden on a tiny tropical island thousands of miles from home. Read more of this post

Japan, Laughing at TPP Negotiators, Raises Border Taxes by 60%

Posted on 01 October 2013 by Michael Stumo on CPA – Trade Reform

Prime Minister Abe economic planners in Japan have figured out how to do fiscal devaluation just like he does currency devaluation.  With fiscal devaluation, you raise consumption taxes and keep the benefits inside the economy.  The consumption taxes are charged on imports and domestic goods.  But you concentrate the benefits internally through (1) lowering other employer/domestic taxes; (2) avoiding a domestic tax increase that otherwise would have occurred and/or (3) spend the money domestically for increased competitiveness.japanese carmakers

“Mr. Abe told leaders of the governing coalition that he would raise the tax rate to 8 percent from 5 percent in April 2014. … [B]y returning most of the revenue to businesses and individuals he will show that his government is still focused on triggering sustainable growth.”

This is a fiscal devaluation because it raises the prices of imports in relation to domestically produced goods.  The key is in the differential impact on imports vs. domestic goods… just like in all trade rules or issues.  If you raise money from imports and domestic goods, then concentrate the benefits locally, you get your competitive differential (which can be weaker or stronger depending upon how you do it).

Its a really good idea for Abe to raise a consumption tax in Japan.  But the zombie export only crowd (those that don’t think net trade is important) in the U.S. think consumption taxes are trade neutral and refuse to take them into account during trade negotiations.  And the Congressional tax geniuses debate high vs. low taxes without talking about the tax mix… i.e. we need a U.S. consumption tax of about 12% to massively lower reliance on non-border adjustable taxes like income taxes (while maintaining progressivity) and substantially increase trade competitiveness.

We’ve seen this movie before.  Mexico and Canada had no border adjustable consumption tax prior to NAFTA.  But they enacted one during negotiations.  NAFTA was passed, tariffs across the board went down, and Mexico’s border taxes rose by 15%.  CAFTA countries had not consumption tax until CAFTA was negotiated, when they implemented a shiny new 12% consumption tax that we pay when sending goods there.  The zombie export only crowd is really surprised to hear these facts because their blinders have obscured that information.

What good are trade agreements?  Really.  On the numbers.  Our trade deficits have become the worst ever.  They refuse to deal with currency devaluation, fiscal devaluation (consumption taxes), state owned enterprises so other countries do a bait and switch.  The import penetration to Japan’s market is the same percentage in 2013 as it was in the 1980′s.

The U.S. needs a national strategy to balance trade.  And a national production strategy.  The trade negotiators and trade related committees in Congress are simply screwing up.

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Wal-Mart announcement aids symposium

Raymond Cheng

Raymond Cheng

It is unclear if Wal-Mart’s recent commitment to buy an additional $50 billion in Made In America goods over the next decade will spark a manufacturing revival in the United States.

What is clear is that the timing of the Wal-Mart push could not have been better for the upcoming U.S.-China Manufacturing Symposium set for November in Dothan.

While Wal-Mart officials actually announced the initiative in January, it received widespread publicity during a U.S. manufacturing summit in Orlando in August. Executives with the Arkansas-based company say that a focus to increase the purchase of American-made goods could not only drive the creation of more manufacturing jobs, but also add jobs in other sectors including transportation, accounting and industrial engineering as well.

Raymond Cheng, founder and CEO of the SoZo Group – the organizer of the upcoming U.S.-China Manufacturing Symposium in Dothan – said the Wal-Mart announcement is beginning to have an impact in China.

“The Chinese manufacturers are starting to hear about Wal-Mart’s decision. This subject of Made in USA was brought up by top Chinese trade and manufacturing practitioners during the meetings that we hosted in Beijing with U.S. Under Secretary of Commerce Francisco Sanchez (Monday),” Cheng said. “I expect Wal-Mart’s decision will alert some of the Chinese manufacturers, and prompt more Chinese manufacturers to rethink manufacturing and look for a new place to be, especially as we are entering a new era of manufacturing.”

U.S.-based manufacturing is becoming more attractive to companies that have been opening manufacturing facilities in other countries, and to companies in other countries that never considered opening manufacturing facilities in the United States. Several factors are leading to the increased interest:

» Lower U.S. energy costs. A recent Dallas Morning News story cited the “shale boom” as a factor in the location of three international steel manufacturing plants in Texas. The story stated Texas industrial natural gas costs are 25 percent lower than costs paid by Asian manufacturers.

» Increased wages in China.

» Stiff anti-dumping tariffs for certain foreign products.

The China-based Golden Dragon Copper Tubing recently began construction on a $100 million manufacturing facility in Alabama’s Wilcox County. When complete, the plant is expected to employ 300. Locating in the United States will allow Golden Dragon to avoid the tariff and save a bundle on transportation costs.

“As manufacturing in the U.S. is becoming more affordable — plus the attraction to the “Made in USA” stamp — we are seeing more and more Chinese manufacturers becoming interested to invest in America and manufacture here,” Cheng said. “That’s why when we announced the symposium in June, we decided to use this symposium to bridge the United States and Chinese manufactures. We believe that the symposium and its precursor events such as the SoZo 3D Technology Tour (kicked off last week in Dothan) can bring U.S. and Chinese manufacturers together and help to create jobs in communities like Dothan.”

Dothan will host as many as 400 Chinese business executives interested in United States expansion during the three-day symposium Nov. 10-12. Dothan, as well as several other cities and counties, are expected to aggressively pursue companies in order to find jobs.

Posted on September 10, 2013 on http://www.dothaneagle.com/news/article_5a9adc66-1a55-11e3-8798-0019bb30f31a.html

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The new global demand for Made in USA

salt lake tribune

By Francisco J. Sanchez

There’s no doubt about it: Doing business in America is changing. And businesses with even the most loyal customers are finding that their customers are changing, too. In an increasingly global marketplace, business owners across the United States are realizing that their next major customer may no longer come from across town, but beyond our borders.

While news of American exports may not capture the headlines as government shutdowns and political impasses do, the proof is in the thousands of regional businesses that are witnessing its value firsthand.

Not only did U.S. exports outpace the growth of imports in 2012 for the first time since 2007, exports have helped support creation of more than 6 million private sector jobs during the past 35 months. So how does this relate to the business climate here in Salt Lake City? Simple: Our nation’s success with exports has in part been driven by business owners in the Beehive State.

Take, for example, Albion Minerals of Clearfield. One year ago, the company participated in a trade mission to Vietnam that was organized by a collaboration of public and private sector groups, including the state government, the U.S. Commercial Service of Utah, and our strategic partner Zions Bank. The company has since opened a distribution center in Vietnam in a $100,000 deal and expects to see profits grow.

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Intel’s First Factory Customer Touts Made-in-USA Chips

Wall Street Journal

By Don Clark

A chip company called Achronix on Wednesday is announcing that the first fruits of Intel’s new build-to-order service are emerging from the factory. That’s a milestone for both companies, and a surprising sidelight could play into the story–worries about dependence on non-U.S. manufacturers.

The Silicon Valley startup in 2010 turned to Intel, which opted to break from long-standing practice and use its sophisticated factories and manufacturing processes to serve customers beyond Intel’s own chip-design groups. Achronix became one of two publicly announced users of the new Intel foundry business, as such services are called.

Intel believes it can make smaller and more sophisticated transistors than other foundries. Achronix, which makes a variety of programmable chips that use lots of transistors, says its bet on Intel has paid off as advertised.

The chips, which include models with a whopping six billion transistors, consume half the power of competing chips and cost about half as much, Achronix says. It is shipping sample quantities to customers now and, when extended testing is completed, will be shipping them in volume in the third quarter, says Robert Blake, the company’s president and chief executive officer.

Most foundry factories are in Taiwan or other parts of Asia. Achronix is quick to point out that the entire process of making its chips is handled in the United States.

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Barron’s Made in America: The Next Boom

Barrons's Logo

By: KOPIN TAN Barron’s JANUARY 2013

Barron's Made in America

Photo: Barron’s John Kuczala

Cheap natural gas and increasingly competitive labor costs are bringing factories and jobs back to the U.S. Eight ways to win.

 As the only industrialized superpower not decimated by World War II, the United States once made nearly 40% of the planet’s goods. These days, that number has shrunk to 18%. We make American Girl dolls in China, Levi’s jeans in Mexico, and enough movies in Vancouver to nickname it Hollywood North.

After decades of outsourcing, however, the U.S. is quietly enjoying a manufacturing revival, and companies like Apple (ticker: AAPL), Caterpillar (CAT), Ford Motor (F),General Electric (GE), and Whirlpool (WHR) are making more of their goods on American soil again. It isn’t just U.S. companies that are drawn to our cheap energy, weak dollar, and stagnant wages. Samsung Electronics (005930.Korea) plans a $4 billion semiconductor plant in Texas, Airbus SAS is building a factory in Alabama, and Toyota (TM) wants to export minivans made in Indiana to Asia.
The Rust Belt owes its new shine to many factors, including rising wages and industrial-land costs in Asia. But none is bigger than the U.S. energy boom. Thanks to a head start in extracting oil and gas from shales, North America now produces far more natural gas than any other continent. Unlike oil, gas isn’t easily transported across oceans, and a result is some of the world’s cheapest energy within our reach: Natural gas here costs $3.55 per million British thermal units, versus roughly $12 in Europe and $16 in Japan. Cheap energy not only reduces our trade deficit and our addiction to Middle East oil, it also makes our factories more competitive globally — a boon for a country that had gone from exporting American goods to exporting American jobs.The biggest beneficiaries are energy-guzzling companies like chemical producers and steelmakers, and Barron’s has identified eight stocks that should prosper in our gas-fueled manufacturing upswing. They are Southwestern Energy, LyondellBasell Industries, Nucor, Dover, Calpine, CF Industries, Williams, and Union Pacific. But any glow will also rub off on regional lenders, home builders, and local small businesses. “The U.S. is the Saudi Arabia of natural gas,” declares Nancy Lazar, co-head of the New York research firm International Strategy & Investment. “And Middle America is my favorite emerging market.”

Our energy boom got cracking with fracking, a controversial process in which pressurized fluids are pumped through rock formations, often a mile or more under the ground, to extract oil and gas. Critics condemn fracking, which they contend causes environmental harm, but even they agree that it’s led to an abundance of cheap gas. Over the past six years, U.S. production of petroleum and natural gas has jumped from 15 million barrels of oil-equivalent a day to 20.1 million, a 20-year high. Over the same period, imports have fallen from 14 million barrels a day to below eight million, a 25-year low.

It’s a sign of the times: Graduates from the South Dakota School of Mines & Technology — acceptance rate: 88%; mascot: Grubby the Miner — now command a median starting salary 16% higher than that of Yalies.

By 2020, the U.S. will become the world’s biggest oil producer, says the International Energy Agency. By 2025, North America will be a net energy exporter, predicts ExxonMobil (XOM).

That edge should remain ours for decades. “It isn’t just the huge reserves we have underground,” says Tim Parker, who manages T. Rowe Price’s natural-resource stock portfolios. “No one else has our predictable cocktail of infrastructure already in place, know-how, a relative abundance of water, and a favorable royalty regime that give landowners a stake in the exploration game.” Europe, for instance, is averse to fracking and has little infrastructure; Japan has hardly any shales; and while China has vast reserves, only shales nudging the Yangtze River have enough water for fracking.

Of course, an especially frigid winter could send gas prices soaring, but any such spike should be temporary. Given our expanding reserves and record inventory, commodity strategists expect U.S. natural gas to stay between $3 and $5 per million BTUs for years — well below prices abroad.

CHEAP GAS ISN’T THE ONLY booster in our tank. In the decade since China joined the World Trade Organization in 2001, that nation has become Earth’s low-cost factory. But wages and benefits there are rising 15% to 20% a year, while they’re stagnant here. Despite Beijing’s efforts to hold it down, the yuan has gained 33% against the dollar since 2005. Industrial land averages $10.22 a square foot across China, but rises to $11.15 in the coastal city of Ningbo and $21 in Shenzhen — compared with $1.30 to $4.65 in Tennessee and North Carolina. “Within five years, the total cost of producing many products will be only about 10% to 15% less in Chinese coastal cities than in parts of the U.S. where factories are likely to be built,” says Hal Sirkin, a senior partner at Boston Consulting Group. Add duties and shipping, and the cost gap shrinks further.

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China’s “wild east” drug store

reuters

Philippe Andre, a detective in the murky world of Chinese pharmaceuticals, has some alarming tales to tell.

In May last year, he visited a factory an hour outside Shanghai that supposedly produced a pharmaceutical ingredient. While shown around by men wearing protective clothing and spotless hard hats, Andre noticed oddities: the floor was immaculately clean and some workers sat around idle.

The factory had an inspection log that spanned eight years with perfect record-keeping, but the handwriting was the same for all those years and not a single page was dog-eared. What’s more, while the factory had equipment to dry its product, there were no connecting pipes to funnel steam or waste gases out of the plant.

“Obviously the product was not made there,” said Andre, a Belgian who runs a pharmaceutical auditing firm in the eastern Chinese city of Tianjin that advises foreign drug companies buying ingredients in China. The building, he says, was just one of the “showroom” factories intended to disguise China’s thriving industry in substandard and counterfeit drugs.

Four years ago, Beijing promised to clean up its act following the deaths of at least 149 Americans who received contaminated Chinese supplies of the blood-thinner heparin. But an examination by Reuters has found that unregulated Chinese chemical companies making active pharmaceutical ingredients (API) are still selling their products on the open market with few or no checks.

Interviews with more than a dozen API producers and brokers indicate drug ingredients are entering the global supply chain after being made with no oversight from China’s State Food and Drug Administration (SFDA), and with no Good Manufacturing Practice (GMP) certification, an internationally recognized standard of quality assurance.

“There is falsification of APIs going on, we know it,” said Lembit Rago, coordinator for Quality Assurance and Safety in Medicines with the World Health Organisation (WHO). “The regulated markets like Europe and the United States are relatively safe because they have well-resourced regulatory authorities. But the situation is different in places like Africa, where there are a lot of local medicine manufacturers who all use APIs from China.”

The export of unregulated drug ingredients may be putting lives at risk, particularly in poor countries where local pharmaceutical controls are minimal. Medicines containing faulty active ingredients or the wrong dose do not work properly and can contribute to the emergence of drug-resistant strains of dangerous diseases, such as malaria.

DOMINANT PRODUCER

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Made in the USA Foundation, Ranchers-Cattlemen Action Legal Fund and Mile High Organics Sues WTO to Keep Country of Origin Labeling Act in Force

DENVER, Colo., Sept. 5, 2012 — /PRNewswire-USNewswire/ — The Made in the USA Foundation led a coalition of groups filing suit against the World Trade Organization, the U.S. Trade Representative and the Secretary of Agriculture to keep the U.S. Country of Origin Labeling Act (COOL) in force.  The WTO ruled this summer that COOL, which required meat from Mexico, Canada and other nations to be labeled as such, discriminated against imported beef.

The lawsuit was filed in the United States District Court in Denver, Colorado.  The case seeks a court order declaring that the World Trade Organization does not have the authority to override U.S. law.  The Country of Origin Labeling Act requires all meat, fish, chicken and produce to be labeled at the grocery store with an accurate country of origin.

Canada and Mexico challenged the U.S. law at the World Trade Organization, arguing that the law unfairly discriminates against imports from these two nations.  The WTO does not have permanent judges.  The WTO appointed an appellate panel of three judges that included a Mexican lawyer who has represented Mexico in trade cases.

Joel D. Joseph, general counsel of the Made in the USA Foundation, said, “the WTO does not have the right to interfere with domestic laws of the United States.  When the U.S. joined the WTO, it agreed to do so only if the WTO could not overrule U.S. law.  More than 90% of U.S. consumers favor the Country of Origin Labeling Act.  This law does not discriminate against any country, it merely requires labeling.  Consumers have a right to decide whether to buy U.S. or imported meat, and accurate labeling is a consumer right.”  Joseph added, “the WTO’s appellate panel was unfairly biased against the United States and should not have allowed a Mexican lawyer, with an obvious conflict of interest, to sit on the panel.”

This is the third major decision of a WTO court that attempts to overturn U.S. law.  The prior two cases involved “dolphin safe” labels on tuna and a U.S. ban on flavored cigarettes.  Congress allows tuna to be labeled “dolphin safe” if it meets specific requirements.  Mexico complained that this discriminates against Mexican tuna because Mexican tuna is not fished in a manner that protects dolphins.

Indonesia filed a complaint with the WTO charging that the Family Smoking Prevention and Tobacco Control Act, that prohibits flavored cigarettes from being sold in the United States discriminates against Indonesia cigarettes.  Indonesia produces clove-flavored cigarettes and wants to sell them in the U.S.  The WTO ruled that the U.S. ban on flavored cigarettes discriminated against Indonesia.

The Made in the USA Foundation is a non-profit organization formed in 1989 to promote American-made products.  The Ranchers-Cattlemen Action Legal Fund (R-CALF) represents 5,400 ranchers and cattlemen in 45 states.  Made in the USA Foundation and R-CALF were the primary supporters of the Country of Origin Labeling Act.  Mile High Organics is a food distributor in Denver, Colorado that delivers food to homes throughout the state.  Mile High Organics seeks to distribute local, Made in the USA food and supports country of origin labeling.

SOURCE Made in the USA Foundation

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