EU Proposes Regional Strategic Investment Fund

euflagsLos Angeles, CA – Responding to an increasingly sluggish regional economy, the European Union will create a strategic investment fund that could generate up to $386 billion in private- and public-sector money to upgrade infrastructure, jumpstart the EU’s sluggish economies and ignite job growth.

“The EU must stimulate and modernize its economy, or risk falling farther behind global competitors like the U.S. and China,” said European Parliament President Martin Schulz.

The plan, approved by leaders of the 28-nation EU at their one-day summit meeting in Brussels earlier this week, calls for use of EU seed money to leverage up to 15 times more in private funds for the new European Fund for Strategic Investments with plans to have  it in operation and approving new investment projects by mid-2015.

German Chancellor Angela Merkel said investments fostered by the strategic fund “must go into projects for the future, particularly, for example, in the digital economy or where we aren’t so good on the world market as we should be.”

Investment in areas like schools, universities, green energy and infrastructure is key “if we want Europe to be an economic champion in the future,” she said.

The plan is not without its critics, however, with some EU leaders warning that despite its multi-billion dollar price tag, the proposed investment fund “may not be big enough” to win over wary investors.

“This package looks like creative accounting for the moment,” said Lithuanian President Dalia Grybauskaite, who helped draft a summit communiqué  noting that the strategic fund will accept contributions from EU member states. For the fund to launch, it would also require approval by European legislators.

12/19/2014

Another Appeal for White House Action on Port Talks

toddler-white-house-alert.siLos Angeles, CA – The American Association of Port Authorities (AAPA) has joined the chorus of national organizations with a letter to the White House urging to appoint a federal mediator to administer the ongoing contract negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA).

“America’s seaports are absolutely vital to our economy, jobs and international competitiveness,” said Kurt Nagle, AAPA president and CEO.  “At this tender stage of the economic recovery, our nation simply cannot afford disruptions, let alone a shutdown, of any part of the ports system.”

Contract negotiations between the ILWU and the PMA have dragged on since the end of May with work slowdowns at the 29 U.S. West Coast ports affected by the talks significantly cutting into cargo volumes. Particularly impacted are the major ‘load center’ ports of Los Angeles, Long Beach, Oakland, Seattle and Tacoma.

After seven months of labor negotiations without an agreement being reached, he said, “we believe that federal mediation is now necessary to prevent the significant economic repercussions that can occur whenever there is uncertainty and unpredictability in the movement of international commerce through our ports.”

According to the port group, international trade accounts for nearly one-third of the U.S. economy with the country’s seaports handling more than 99 percent of the nation’s overseas imports and exports, amounting to more than 2 billion tons of goods annually.

“This mammoth flow of trade supports more than 13 million American jobs and generates over $200 billion a year in tax revenues. Disruptions to this trade flow hurt American businesses and farmers, cost American consumers and impede America’s ability to compete in international markets,” wrote Nagle.

Over the last several weeks, a coalition of businesses and trade organizations, led by the National Association of Manufacturers and the National Retail Federation, have communicated with the White House urging the President to take action, while Congressional delegations from California, Oregon and Washington have also communicated with the White House calling for executive action.

In mid-November, the White House issued a statement from the President saying that he was “confident” the negotiations would come to a successful conclusion.

12/18/2014

Japan Partners in Major US ‘Energy Center’ Project

lightSilver Spring, MD – Energy provider Competitive Power Ventures of Maryland (CPV) is partnering with Japan’s Marubeni and Toyota Tsusho on a new $775 million “energy center” in Waldorf, Maryland, about 25 miles southeast of Washington, D.C.

A combined-cycle natural gas-fired electric power generating facility, the plant will generate 725-megawatt (MW) of electricity and sell its capacity, energy and ancillary services to power as many as 700,000 homes.

The project is Marubeni’s first in the region overseen by PJM Interconnection, the regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia – an area that includes more than 51 million people.

The new project “is a valuable addition to our portfolio. We remain committed to further expanding our footprint and capabilities in the North American electric power sector,” said Toshi Fukumura, President and CEO of New York-based Marubeni Power International Inc.

No stranger to the North American energy sector, in 2010, Toyota Tsusho acquired a 45 percent interest in the Oyster Creek natural gas fired cogeneration plant in Freeport, Texas. Since then, has increased its stakeholdings in two major natural gas-generated power plants in Canada.

Earlier this year, CPV received the ‘green light’ from the Maryland Public Service Commission to go-ahead with the construction of a long-planned, 661-megawatt natural gas plant, also to be sited in Waldorf.

The $500 million facility is expected to be online by June 2015. Once that plant is online, more than 9 percent of the state’s energy generation will come from natural gas facilities, according to the governor’s statement.

12/17/2014

White House ‘Optimistic’ on Pacific Trade Deal

huenemeLos Angeles, CA – The White House is optimistic on the chances that negotiators can forge a strong, comprehensive Trans-Pacific Partnership (TPP) deal that would impact 11 countries and encompass nearly 40 percent of the world economy.

“I’m much more optimistic about us being able to close out an agreement with our TPP partners than I was last year,” said President Barack Obama at a recent meeting of the President’s Export Council.

Confident that the administration could make a “strong case” in Congress for a TPP, Obama added, “It doesn’t mean it’s a done deal, but I think the odds of us being able to get a strong agreement are significantly higher than 50-50.”

According to the Office of the U.S. Trade Representative, the White House has held more than 1,500 meetings with members of Congress on TPP, including sharing negotiating text, and would continue to consult closely.

U.S. Representative Sander Levin of Michigan, the senior Democrat on the House of Representatives Ways and Means Committee, which has jurisdiction over trade, has said there was still a long list of “major issues” impacting the final make-up of the proposed trade pact.

Levin is calling for Congress to have more input into the deal, asserting that workers’ rights, access to medicines in developing countries and the phase-out period for U.S. tariffs on Japanese cars top the list of of major issues still to be resolved.

With the ongoing talks wrapping-up this week in Washington, D.C., negotiators may meet again next month in either the U.S. or Australia.

The 11 countries included in the TPP are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the U.S.

12/16/2014

China Proposes Three New Foreign Trade Zones

shanghaiftzLos Angeles, CA – Beijing has announced its given the go-ahead to the construction of three new foreign trade zones in Guangdong, Fujian and Tianjin, all modeled on the zone set-up in Shanghai last year.

Officials said the new FTZ will apply “replicable” practice from Shanghai in investment, trade and financial services to the rest of the country and shorten the “negative list” – the sectors where foreign investment is banned or restricted, the cabinet said.

Announcement of the new FTZs comes on the heels of Beijing’s proposed cutting from 79 to 35 the number of sectors restricted or off limits to foreign investors.

After one month for soliciting opinions, the new guidelines will be submitted to the State Council and are expected to come into force by the end of the year.

Sectors with reduced restrictions include steel, ethylene, refining, papermaking, coal chemical equipment, automotive electronics, lifting appliances, electric transmission and transformation equipment, branch railway lines, subways, international ocean shipping, e-commerce, finance companies and chain stores, according to government sources in Beijing.

In addition, the number of sectors currently limited to joint ventures and partnerships has been cut from 43 to 11, while those requiring a majority Chinese investment have been cut from 44 to 22.

Agriculture, high technology, advanced manufacturing, energy efficiency and environmental protection, new energy and modern service industries are encouraged, the sources said.

From January to September of this year, the value of China’s foreign direct investment decreased by 1.4 per cent to $87.3 billion from the same period the year before.

12/15/2014

Pressure Builds on White House to Take Port Action

foreign_trade_zones1Los Angeles, CA – Pressure is building on the White House to appoint a federal mediator to broker a new labor contract between U.S. West Coast union dock workers and the terminal operators that employ them at 29 U.S. West Coast ports from Bellingham, Washington, to San Diego.

The latest call for action comes from the executive directors of the Port of Los Angeles and the Port Long Beach, as a work slowdown at the nation’s two top-ranking containerports has eroded dramatically since both the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) ended an unsuccessful round of talks in October.

The PMA has charged the ILWU is filling only about 50 percent of the work orders for skilled equipment operators needed for yard work, while the union insists the admittedly slowed pace is a result of a chronic list of problems that range from working the latest generation of mega-containerships to a shortage of chassis and what they call “terminal mismanagement.”

“Enough is enough. These guys have to get back to work,” said Jon Slangerup, executive director of the Port of Long Beach, at a recent maritime industry event.

Slangerup and Gene Seroka, executive director of the neighboring Port of Los Angeles, have joined a growing number of representatives from both the public and private sectors publicly urging President Obama to name a Federal Mediation & Conciliation Service representative to end the impasse and get both groups to come to an agreement and end the crippling work slowdown.

Over the past several weeks, the two largest industry groups in the country – the National Retail Federation and the National Association of Manufacturers – have ramped-up their efforts to get the White House to act with U.S. Senators and House delegations from California, Washington, and Oregon and the mayors of several cities including Los Angeles and Long Beach have written President Obama urging him to appoint a mediator.

Agricultural exporters have reported the shipping delays are backing up supply lines and creating serious economic damage, hurting their reputation among overseas buyers.

Obama’s only statement on the situation was issued in mid-November, when an Administration spokesman said that the president was “confident the two sides” will reach a contract.

The situation, said Slangerup, “has gotten worse. That should send a clear signal to the White House that it is time for action. The president has to act. It is long overdue.”

12/12/2014

U.S. Export Volume Expected to Climb in 2015

rice exportsBaltimore, MD –   U.S. exports are expected to grow by $88 billion or 5 percent, in 2015, despite tepid global GDP growth, according to a research report just released by trade credit insurance provider, Euler Hermes.

According to the company’s latest Economic Insight report, the U.S.’s biggest export gains in 2015 will come from Canada, China and Mexico.

The report also projects strong export increases to smaller countries in Asia, Latin America and the Middle East, “reflecting recent rapid growth in these emerging markets, while also providing the U.S. with more diversification in its export composition.”

Export gains will primarily come from the agrifood, chemicals, energy and mechanical sectors. Textiles and ferrous metals show the smallest increases as the U.S. has become a much smaller player globally within these industries.

As U.S. energy companies are expected to start exporting natural gas globally by the end of 2015, revenues from this sector could be significant, growing from $16 billion in 2012 to $42 billion in 2040 or nearly 1 percent of GDP.

The planned 2016 expansion of the Panama Canal, which may double its capacity, “will also boost U.S. trade by allowing larger ships to carry exports from the U.S. through the canal, significantly reducing costs and making those exports more competitive.”

The U.S.’s largest trade deficit is with China, but several factors could shrink it, especially as China pivots toward a more domestically driven economy, and as the U.S. natural gas boon and favorable labor conditions have reduced China’s competitive wage advantage to the point that a growing number of companies are opting to ‘in-source’ their manufacturing.

In the coming year, the value of the U.S. dollar is expected to rise in 2015 making U.S. exports more expensive and less competitive with export financing faces several challenges, including tight lending conditions and risk-averse bankers.

Rising rates in 2015, the report says, “may make financing more costly and/or harder to obtain, especially given fragile global growth and geopolitical uncertainty.”

In addition, global business insolvencies “are expected to fall 3 percent, a much slower rate than 2014’s decrease of 12 percent.”

At the same time, insolvencies still remain 12 percent above 2007’s pre-crisis levels, meaning that exporters will need to continue stringently evaluating their partners for insolvency risk.

To further promote U.S. exports, two major trade agreements – the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership – are currently being negotiated.

Both agreements  are being structured to reduce the burden of Customs, regulations, tariffs and taxes, lower barriers to trade, and allow increased access to new markets.

“Demand for U.S. exports is, of course, dependent on the strength of the global economy,” said Dan North, senior economist for Euler Hermes Americas.

“While the global economy is set to enter its fourth straight year of lackluster growth, the U.S. economy continues to grow and many of our industrial sectors are showing strength both at home and abroad.”

12/11/2014

 

U.S. – China Trade, Investment Meeting Scheduled

the-china-us-puzzleWashington, D.C. – The US and China are scheduled to hold their annual round of discussions on commerce and trade next week in Chicago.

The 25th Session of the China-U.S. Joint Commission on Commerce and Trade (JCCT), slated for December 16-18, will include a roundtable discussion on bilateral investment; a cooperative travel and tourism program; and a discussion on “developing a shared vision of economic leadership.”

According to the Office of the U.S. Trade Representative, for the first time, the JCCT schedule includes a full day of events designed to facilitate private sector engagement with officials from the U.S. and Chinese governments with the goal of “expanding the scope of the JCCT with engagement between businesses from both countries.”

U.S. Secretary of Commerce Penny Pritzker, U.S. Trade Representative Michael Froman, and Chinese Vice Premier Wang Yang will co-chair the high-level plenary talks. U.S. Secretary of Agriculture Tom Vilsack will also participate.

Sixteen JCCT Working Groups meet throughout the year to address topics such as intellectual property rights, agriculture, pharmaceuticals and medical devices, information technology, and travel and tourism.

Established in 1983, the JCCT is the primary forum for addressing bilateral trade and investment issues and promoting commercial opportunities between the United States and China.

Private sector groups involved in the event include the U.S. Chamber of Commerce; The Paulson Institute; World Business Chicago; the U.S. Travel Association; and the Chicago Council on Global Affairs.

12/10/2014

Holiday Imports Decline as Port Issues Linger

port congestionLos Angeles – Import cargo volume at the nation’s major retail container ports is expected to continue to slow down this month as cargo congestion and other issues continue to impact port operations on the U.S. West Coast.

The volume slide is a result of “far-sighted retailers instituting costly contingency plans early on to ensure that holiday merchandise would be on the shelves or sitting in a warehouse ready to go,” according to National Retail Federation Vice President for Supply Chain and Customs Policy Jonathan Gold.

“However, we are still hearing from retailers experiencing delays at West Coast ports, and retailers are also looking ahead to the spring season,” he said, commenting on the most recent Global Port Tracker report released today by the NRF.

“We believe it’s imperative for President Obama to encourage the parties to seek the help of a federal mediator to resolve the ongoing contract negotiations so serious solutions to address the ongoing issues can be discussed and the uncertainty that has plagued our nation’s busiest ports for months can finally be brought to an end.”

A major transpacific shipping alliance – the G6 – has reacted to the congestion problem by suspending eastbound calls at the Port of Los Angeles for the next four sailings of its Asia-U.S. West Coast service, due to “ongoing congestion.”

The G6 is comprised of APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK Line and OOCL.
It’s also been reported that G6 will skip other calls at APL’s Global Gateway South terminal in Los Angeles in order to “remain fluid,” according to an APL customer advisory.

Carriers calling Los Angeles and other U.S. West Coast ports have been significantly impacted by chronic backlogs that have plagued the Los Angeles/Long Beach port complex over the past few months.

The congestion in Southern California is due to a combination of chronic issues plaguing both Los Angeles and the neighboring Port of Long Beach that include a shortage of the chassis need to move containers in and out of the ports; unrest amongst truckers required to meet what they feel are increasingly burdensome environmental regulations; and labor negotiations between the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) that have dragged on for months with, some feel, no end in sight.

The contract between the PMA and the ILWU expired on July 1, prompting ongoing concerns about the potential shift of cargo to ports on the U.S. East Coast.

The NRF report was researched by business consultancy Hackett Associates.

According to Hackett Associates President Ben Hackett, “The question is whether cargo currently being diverted to the East Coast will shift back to the West Coast once congestion in Los Angeles/Long Beach ends or are we experiencing a longer-term shift?” Hackett said. “Time will tell.”

12/09/2014

South Carolina Rolls In Two Major Tire Manufacturing Deals

tiresLos Angeles, CA – South Carolina has scored big with two major foreign tire makers saying they will invest millions to expand their manufacturing operations in the state.

Japan-based Bridgestone Tire Co. Ltd. has said it will open a plant to make giant, off-road radial tires for earthmoving and mining equipment at a new facility in Aiken County, while France’s Michelin Tire Co. has begun operations at a new facility in Piedmont producing the company’s newly-developed TWEEL airless radial tire.

The Bridgestone plant will cover 1.5 million-square-feet and is the second tire manufacturing plant the company has built in Aiken County. The company has operated a passenger tire facility in Graniteville since 1998.

In 2011, Bridgestone announced a planned $970 million investment to build the company’s first U.S.-based off road radial tire plant, as well as expand production capacity at Bridgestone’s steel cord manufacturing facilities in Clarksville, Tennessee, and Saga, Japan.

The opening of the new Aiken County plant “completes the largest portion of the planned investment,” the company said. Both the Clarksville and the Saga facilities will supply the steel cord used in making the tires that will be produced there.

Michelin’s new manufacturing plant in Piedmont is the first the company has built anywhere in the world to produce its new TWEEL airless radial tire – touted by the French company as a tire with commercial applications “that never goes flat.”

The new tire concept was developed at the company’s research center in Greenville, one of Michelin’s three global technology centers.

The TWEEL is a non-pneumatic tire that changes the configuration of a conventional tire by combining the tire and the wheel assembly into a single, solid unit comprised of a rigid hub connected to a shear beam by means of flexible, deformable polyurethane spokes.

The new 135,000 square-foot facility represents Michelin’s 10th manufacturing facility in South Carolina and the 16th in the U.S. The company said it will invest about $50 million in the new plant.

12/08/2014