Shippers Steam as Port Negotiators Take a Thanksgiving Break

turkey1Los Angeles, CA – The International Longshore and Warehouse Union (ILWU) is being slammed for refusing to hold “big table” West Coast labor contract talks during a 12-day break that extends through the Thanksgiving weekend.

“Three weeks after initiating a coordinated series of slowdowns that have plagued the major West Coast ports of Tacoma, Seattle, Oakland, Los Angeles and Long Beach, the International Longshore and Warehouse Union has now taken its slowdown tactics to the bargaining table,” the Pacific Maritime Association (PMA), the other party in the negotiations, said in an angry statement.

As a result of the ILWU’s decision, the PMA said, “the only bargaining through December 1 will be limited to subcommittees discussing “limited” issues.

No Contract Extension

“Making matters worse, the ILWU is refusing to agree to a temporary contract extension – similar to one it signed over the summer – despite multiple requests,” the PMA said.

A contract extension, the PMA said, “would give both parties access to the well-established waterfront grievance process, and most notably would give employers recourse for the ILWU slowdowns that are continuing.”

The Thanksgiving break “and the Union’s refusal to extend the contract are taking place amid continuing worker slowdowns, which began on Halloween in Tacoma and soon spread to Seattle, Oakland, Los Angeles and Long Beach.”

In some ports, the PMA charged, “productivity remains 30 percent or more below normal, as a result of orchestrated ILWU maneuvers.”

This productivity loss, it said, “is distinct” from the congestion that has caused severe congestion at the ports of Los Angeles and Long Beach.

“In fact, those two ports were the only major West Coast ports that experienced congestion prior to ILWU slowdowns, and the ILWU has knowingly made the situation in Southern California worse by failing to dispatch qualified crane operators per longstanding practice – the same skilled workers who can help to alleviate yard congestion,” the PMA said.

National Retail Federation Responds

In reaction to the break in contract talks, the National Retail Federation (NRF) is repeating its call on the White House “to immediately engage the parties to get them back to the negotiating table.”

According to a statement from NRF President and CEO Matthew Shay, “After six months of negotiations we have seen very little progress. It’s time the parties accept a federal mediator to help them bridge the gaps and arrive at a new contract.

Without a contract, he said, “stakeholders cannot work on addressing the ongoing congestion issues at the ports.

The nation’s retailers and our vendors, suppliers and customers are counting on the two parties to act responsibly.”

Earlier this year, NRF and the National Association of Manufacturers released a report that found a shutdown at 29 U.S. West Coast ports from Seattle to San Diego would cost the economy about $2 billion a day.


10 Questions With Luis German: ProColombia’s Exec. Dir. of the U.S.

ProColombia’s Executive Director of the United States


GLOBAL TRADE: Why should a US company consider Colombia over Panama as their gateway to South America?

GERMAN: I am glad you asked that. In the past 10 years the economy has grown to the third largest in the region and it is now able to reach 1.3 billion consumers. Colombia has had a stable economy throughout the years and has recently made a concerted effort to grow their middle class dramatically. So much so, that the middle class is almost 5x in size as it used to be.

GLOBAL TRADE: When US executives think of Colombia, they may still think of the drug warlord problem and the danger of doing business is Colombia. Has this been cleaned up? Is it no longer an issue?

GERMAN: The stories of the drug warlord problems are stories that we grew up with…but it’s the story of the 80s. And while that issue certainly still exists in the region, there are bigger trends spanning Colombia, like the country’s growing business appeal.

GLOBAL TRADE: In the US there’s a shortage of technically trained factory workers who are able to handle the sophistication of factories today. Are Colombian factory workers able to handle high tech manufacturing?

GERMAN: Yes…there has been growth in multiple sectors in the past few years. One of the largest growth sectors has been the IT industry where Colombia has a value added product to show. Additionally, the manufacturing industry has grown…more specifically, the auto part industry. The amount of cars in Colombia has grown and the manufacturers and products have also grown in unison. They are now competing in Colombia as well as abroad.

Also I might add, the free trade agreement has brought more U.S. production technology into Colombia. Sixty percent of Colombia’s raw technology materials come from the a result of the free trade agreement, and Colombia is using those imports for further production, which we then export.

GLOBAL TRADE: How are the roads and rail systems for facilitating exports?

GERMAN: Colombia’s infrastructure is growing dramatically. In the last decade, infrastructure investment has been more than $2 billion per year, and the difference is noticeable. In years past, Bogota to Cartagena used to take an entire day, but with investment efforts, Colombia will have the capability to become 33% more effective in both speed and price. Additionally, the airport infrastructure has greatly improved connectivity with more than 848 weekly directly international flights.

This marks a big difference from years past, when the war on drugs forced the government to reduce spending on roads and rail systems.

With previous efforts already making improvements, there are plans for even further expansion and improvement. In the next four years, Colombia has an investment plan of up to $25 billion for roads, airports and railroads. This plan is set to be one of Colombia’s largest and most aggressive programs.

GLOBAL TRADE: One of the issues US companies have with investing in for example, France, is that while there is a large pool of workers to hire from, if you make the wrong hire it can be next to impossible to fire somebody. What are the labor laws like in Colombia?

GERMAN: Colombia has a young and thriving population with 55% of its population being under 30 years old. And like any other country, if employees are not performing and production isn’t up to standards, then companies have the right to let an employee go. Of course there is a process and labor laws are in existence, but as an employer you have the right to fire someone in Colombia if they don’t meet your standards.

GLOBAL TRADE: Does Colombia offer any kind of site selection assistance for opening a new manufacturing facility and if so, what office should they contact?

GERMAN: ProColombia is in existence to promote tourism, exports and investments, and to provide assistance and knowledge to all manufacturers and companies alike who want to come to Colombia.

In order to provide knowledge and assistance from A-Z of the market, training, exports demands etc, ProColombia works with the local ministry to help with the requirements and acquisitions.

GLOBAL TRADE: What kinds of tax rates and fees can a US company expect to pay in Colombia?

GERMAN: There are incentives in place to promote job creation and formalization. There is a gradual application of escalation for payment of income tax, payment of levies and other contributions from payroll as well as the business registration and renewal period and process. Companies are starting to become aware of the benefits of Colombia as a new FDI record was set in 2013 at $16,354 million.

GLOBAL TRADE: Your website says that GDP per capita is expected to grow by 36% by 2018…what do you attribute this to?

GERMAN: There are a few factors in the past years, that have helped Colombia’s GDP, the most notable being, the oil industry with close to 1 million barrels per day of production. Additionally, the political factor and infrastructure investments have also help add to the additional 2.5% growth.

Colombia stands out above the rest with a GDP of 4.7% in 2013, which was higher than the Latin American average growth at 3.2%.

GLOBAL TRADE: Colombia seems to have a good handle on inflation. Will this be the case for the foreseeable future?

GERMAN: Good question. Currently with a controlled inflation at 1.94%, Colombia tries to manage inflation so that it becomes and stays a stable number.

GLOBAL TRADE: We know Colombia has great coffee…how’s the food?!

GERMAN: Incredible! The varying cities throughout Colombia offer different local dishes and cuisine. North Colombia offers Caribbean inspired dishes, the middle of the country focuses on coffees because of the mountain terrain, the south offers sweeter cuisine due to the sugar production and the major cities are able to offer everything. The different regions of Colombia offer diversified city atmospheres with different cultures and flavors to accompany it.

Australia, China Ink Major Free Trade Agreement

aussieprcflagsLos Angeles, CA – Australia and China, it largest trading partner, have inked a preliminary free-trade deal that would give Australia’s service industry unsurpassed access to the Chinese market and hand the Australian agriculture sector some significant market advantages over its U.S., Canadian and European competitors.

Under the terms of the “Declaration of Intent” deal, China will reportedly make 85 percent of Australian goods imports tariff-free from the outset, rising to 93 percent four years later, the Australian government said.

In return, Australia will lift tariffs on imports of Chinese manufactured goods and alter the threshold at which privately-owned Chinese companies can invest in non-sensitive areas without government scrutiny from 248 million Australian dollars ($218 million) to AU$1,078 million.

The pact would be signed soon after the first of the year and could take effect as early as March if it is endorsed by the Australian Parliament. No modeling has been done on the value of the free-trade deal, the government said.

The removal of tariffs on Australian farm products would give Australia an advantage over U.S., Canadian and E.U. competitors while negating advantages New Zealand and Chile have enjoyed through their free-trade deals with China, the government said.

According to press reports, stumbling blocks in the negotiations, which began in 2005, were Chinese protection of its rice, cotton, wheat, sugar and oil seed industries and demands for less Australian government restrictions on Australian companies and assets being sold to Chinese state-owned businesses.

Those specific areas were excluded from the agreement, which will be renegotiated in three years, reports said.

Two-way trade between Australia and China grew from $86 million in the early 1970s to $136 billion in 2013.


WTO: Global Customs Agreement Deal In a Fortnight

indiagrainLos Angeles, CA – There is a “high probability” that a major deal on streamlining global customs rules will be implemented within two weeks now that the U.S., the European Union and India have reached a compromise agreement on agricultural subsidies.

India said it will sign the Trade Facilitation Agreement (TFA) as the U.S. and the EU have said they will accept India’s demand that it be allowed to stockpile food without observing the usual World Trade Organization rules on government subsidies and that developing countries be provided flexibility in fixing minimum support price for farm products.

India’s stand plunged the WTO into a crisis that effectively paralyzed the global trade group and risked derailing the customs reforms that are seen affecting an estimated $1 trillion to global trade.

“I would say that we have a high probability that the Bali package will be implemented very shortly,” said WTO Director-General Roberto Azevedo. “I’m hopeful that we can do it in a very short period of time, certainly within the next two weeks.”

Implementation of all aspects of the Trade Facilitation Agreement package, he added, “would be a major boost to the WTO, enhancing our ability to deliver beneficial outcomes to all our members.”

Azevedo made his comments ahead of the recent Group of 20 Leaders Summit in Brisbane, Australia.

The compromise U.S./EU/India agricultural subsidy deal included no major revision of the original WTO deal struck last December, which provided for India’s food stockpiling to be shielded from legal challenge by a “peace clause.”

A food security law passed by India’s last government expanded the number of people entitled to receive cheap food grains to 850 million.

India recently disclosed that its state food procurement cost $13.8 billion in 2010-11, part of the total of $56.1 billion it spends on farm support. Wheat stocks, at 30 million tons, are more than double official target levels.

The deal, which needs to be backed by all 160 WTO members, has resurrected hopes that the trade body can now push through those reforms, opening the way up for further negotiations.


U.S., China Have Diverging ‘Vision’ for Pacific Trade

containership bow onWashington, D.C. – The U.S. will continue to focus on its own blueprint for a comprehensive Free Trade Area of the Asia-Pacific (FTAAP), according to U.S. Trade Representative Michael Froman.

Speaking at the APEC Summit in Beijing, Froman told reporters that a China-backed “vision” for Asia-Pacific free trade is only a “long-term aspiration, not the launch of a new FTA (free trade area).”

“It’s a reaffirmation of a long-term aspiration for the region that’s to be achieved through other ongoing negotiations,” he said.

Froman remarks define an on-going divergence in the approach to a Pacific regional trade accord by the two largest trade players in the region, the U.S. and China.

Beijing has thrown its support behind the FTAAP idea, while the U.S. is working towards crafting the long-sought 12-nation Trans-Pacific Partnership (TPP), which excludes China.

According to media reports, a draft final communique of the Beijing-hosted summit prominently mentions the importance of FTAAP calling for steps to be taken to “translate the FTAAP from a vision to reality” and craft a “strategic study.”

In response, Froman said, the TPP remains “a priority” and that it would serve as a “building block” for the FTAAP, which has a 2025 target date.

“TPP of course is the major focus of our economic pillar of the rebalance to this region,” he said, referring to the White House’s publically-stated goal of giving greater attention to the Asia-Pacific area.

“We certainly view TPP as our contribution to expanding trade and integrating the region,” he said, adding that, despite sluggish negotiations and frustrating snags, the TPP discussions have made “very significant progress”, but he refused to be drawn on a timetable for completing the process.


Long Beach Tackles Chronic Port Congestion

polbLong Beach, CA – Responding to the chronic congestion snarling the movement of cargo containers through one of the country’s busiest ports, the Long Beach Board of Harbor Commissioners has approved the use of port property as a temporary site for the storage of empty containers.

The “Temporary Empty Container Depot” will be operated on 30 acres of a vacant, undeveloped area on Pier S on Terminal Island in a move to “help to free up needed equipment to move cargo out of shipping terminals faster” and “put back into circulation more chassis,” the wheeled trailer-frames that trucks use to haul containers.

Truckers using the new will be able to deliver empty containers and remove them from a chassis, and then use the chassis to pick up and haul loaded containers to nearby intermodal rail facilities or their regional destinations.

The depot will be operated by a private company, Pasha Stevedoring and Terminals, under a permit that will expire at the end of March 2015.

Designation of the new depot is reportedly one of several measures the port is pursuing to relieve the congestion issues that have come with a surge of cargo in the last two months caused by the busy peak shipping season, the advent of larger ships and a change in the ownership system for chassis fleets.

In addition to the depot, the port has reportedly crafting a plan to operate its own chassis fleet for peak cargo shipping seasons and facilitate the introduction by private chassis fleets of an additional 3,000 chassis into the local equipment pool.

“We hear our customers loud and clear,” said Doug Drummond, president of the Long Beach Board of Harbor Commissioners. “This congestion is not acceptable, and the Long Beach Board of Harbor Commissioners is ensuring that the Port of Long Beach is doing everything it can to see that we clear up these issues now and forever.”



Kuwait Under Scrutiny for IP Rights Violations

intelpiracy2Washington, DC – The U.S. moved Kuwait a notch higher on its Watch List of countries to monitor for potential breaches of U.S. patents, copyrights and other intellectual property (IP) rights.

U.S. Trade Representative Michael Froman said Kuwait had failed to introduce a copyright law in line with international standards and to properly protect copyright and trademarks.

According to the USTR, the status of copyright legislation in that country “hampers the market environment for intellectual-property-intensive industries.”

Kuwait’s “lack of sustained enforcement action” against trademark infringement is another reason for the priority-watch designation, he said.

The U.S., Froman added,  is “encouraged” by reported recent progress on enforcement against copyright infringement, by the country’s recent accessions to several intellectual-property-related treaties and seeks to “engage Kuwaiti authorities on these issues in the contest of the long-standing cooperation” between the two countries, according to the statement.

“The U.S. remains concerned about the lack of sustained enforcement action against trademark infringement and the lack of progress in passage of updates to Kuwait’s copyright legislation, which hamper the overall market environment for intellectual property-intensive industries,” he said.

Kuwait will join 10 countries, including India and China, on the “Priority Watch List,” one rung higher than its current status.

More often than not, say observers, a place on the list signals a higher level of scrutiny and diplomatic pressure to bring policies into line.



Senators Urge ILWU, PMA to Reach Contract Agreement

bulk cargoLos Angeles, CA – Pressure is mounting on the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) to successfully conclude their negotiations to craft a labor contract covering major ports on the U.S. West Coast from Seattle to San Diego.

In a letter sent yesterday, the U.S. senators from California, Oregon, and Washington urged leaders from both the PMA and the ILWU “to continue working together toward a fair and amicable settlement on a proposed collective bargaining agreement.”

The letter, which was sent to ILWU President Robert McEllrath and PMA President and CEO James C. McKenna, was signed by Senators Dianne Feinstein and Barbara Boxer of California, Ron Wyden and Jeff Merkley of Oregon, and Patty Murray and Maria Cantwell of Washington.

“This collective bargaining agreement is important for the health, safety and economic well-being of the 13,600 longshore, clerk, and foreman workers at 29 ports from California to Washington, as well as for companies large and small, agriculture producers, ports, and international buyers around the world,” the senators wrote.

“We strongly urge both the PMA and the ILWU to continue negotiating in good faith to resolve the remaining issues and to swiftly move toward a final contract agreeable to both parties.”

Last week, a diverse coalition including retailers, manufacturers and farmers and other supply chain stakeholders led by the National Retail Federation (NRF) addressed a letter to the White House urging the government’s “immediate involvement” in the contract negotiations.

The coalition called on the Obama Administration “to become engaged in the contract negotiations before a disruption can occur,” and recommended the use of a federal mediator to forestall any threat of a management-directed lockout or labor-initiated strike.

“We believe immediate action is necessary and the federal government’s use of all of its available options would be helpful in heading off a shutdown and keeping the parties at the negotiating table,” the coalition letter said.

The NRF and the National Association of Manufacturers (NAM) issued an economic analysis in June that found a port shutdown would cost the U.S. economy approximately $2 billion a day.

The NRF-NAM analysis estimated that a 5-day stoppage at ports on the U.S. West Coast would reduce U.S. GDP by $1.9 billion a day. This would increase exponentially with a 20-day stoppage resulting in a loss of $2.5 billion a day.


U.S., China Planning New Hi-Tech Tariff Cut Agreement

medtechLos Angeles, CA – The U.S. and China have reached an “understanding” on a deal that would eliminate more than 200 tariffs on certain high-tech goods.

Speaking with the media at the current Asia Pacific Economic Cooperation (APEC) conference in Beijing, U.S. officials said that the quasi-agreement is yet to be finalized in detail.

They did say, however, that an agreement would include the phased-out removal of tariffs on such goods as medical devices, global positioning systems, computer software, and video game consoles.

No specific timeline was given on finalizing a broader agreement, which would have to be vetted by the World Trade Organization.

Talks on a proposed hi-tech trade deal collapsed last summer due to disagreements over what products would be covered by an expanded agreement. A finalized deal would mark the first major tariff reduction agreement by the WTO in 17 years.

According to the Office of the U.S. Trade Representative (USTR), a new agreement would affect $4 trillion in annual trade and dismantle a tariff system that adds as much as 25 percent to the cost of imported high-tech products sold in the U.S.

“We already export over $2 billion of high-tech, high-end semiconductors, even with 25 percent tariffs,” said USTR Michael Froman. “Eliminating those tariffs will obviously expand that trade significantly. It’s an area where we have a comparative advantage, and where we can support a lot of good, well-paying American jobs.”


Report: Confidence in Asia-Pacific Economy Growing

APEC_members_180ELos Angeles, CA – Confidence in the economic potential of the Asia-Pacific region continues to get stronger amongst CEOs there, says a new report issued by PricewaterhouseCoopers (PwC).

According to the New Vision for Asia Pacific report, forty-six percent of executives in the region now say they are “very confident” of growth in the next 12 months, up 10 points from 2012 and four points from last year, despite slowing growth in China.

The survey found that 67 percent of the 600 senior business executives surveyed plan to increase investment in the APEC region over the next 12 months. Their plans are spread over each of the 21 APEC member economies, with China, the U.S., Indonesia, Hong Kong, and Singapore the most popular destinations for investment.

More than half of respondents said they are either building or expanding facilities in APEC economies and increase their organizations’ global headcount by at least 5 percent annually over the next 3-5 years.

A healthy, skilled workforce remains a priority, the report says, as 75 percent of respondents already have employee training/retraining programs and 17 percent stated they will implement one.

Supporting this confidence is a vision of an Asia Pacific region that is more connected, both physically and virtually, and an outlook for more balanced regional growth, the report says.

For example, nearly 60 percent of executives say they are now more willing to share insights and resources with business partners in order to speed product development and gain market access. In addition, more than 40 percent say their company will likely enter a business combination outside of their core industry.

“Asia Pacific today stands at a turning point as advancing technologies move beyond national boundaries and create new demands and even new industries,” said Dennis Nally, chairman of PricewaterhouseCoopers International Ltd.

Chief executives, he says, “see the need to be bold in breaking down the barriers to growth. They want to finalize the Trans-Pacific Partnership, address intellectual property issues and encourage regulatory harmony in the region.”

Domestic competition, the survey found, is intensifying, while compliance and tax uncertainties continue. Twenty percent of respondents say they are less confident in their ability to increase profit margins on their domestic operations than they were a year ago. Fifteen percent said their confidence in forecasting compliance and tax liabilities declined over the year.

The survey found that data-driven changes are having an impact in the region; 57 percent of executives say they are more confident of their ability to respond to changes in the marketplace, and half say they are more skilful at forecasting demand. These executives are more likely to be “very confident” of growth than their peers.

PwC released the new report at a meeting of the Asia Pacific Economic Cooperation (APEC) in Beijing.

The New Vision for Asia Pacific report also found that many APEC businesses are not ready to fully participate in the digital economy.

Less than half of Asia Pacific executives are confident they are profiting from their investments in social networks with only between 12 percent and 22 percent of APEC businesses “very confident” across a range of social network capabilities.