NEMA Currents : Trade

Spreading Smart Grid Across North America

golds — Thu, 29 Oct 2009 12:53:00 GMT

As evidence of NEMA's continued influence in international markets, the Commerce Department announced this week that our organization received one of five new Market Development Cooperator Program (MDCP) awards for 2010-2013. This is NEMA's second MDCP award from Commerce -- the first, which runs from 2007-2010, was given for NEMA to promote U.S. electrical standards and products in Central America.

While MDCP's are designed to promote American competitiveness overseas, this Commerce Department award reflects the Obama administration's interest in modernizing the electrical grid. Electricity doesn't stop at our borders -- we buy and sell power to Canada and Mexico, but our electricity distribution systems are not particularly compatible. With this MDCP award, NEMA's goal is to help the United States, Canada, and Mexico coordinate their efforts in developing a North American Smart Grid, so that North America has a more secure, robust, and reliable electrical distribution system.

This news represents a twofold win for NEMA's members: First, it supports NEMA's efforts to promote advanced U.S. electrical products to our two largest trading partners; and second, it clearly shows that this association has significant respect and support in key federal agencies.

Putting Belief into Action

updykec — Mon, 26 Oct 2009 15:50:00 GMT

What does the Obama Administration think about international trade? I was pleased to hear two Administration officials over the past couple of days endorse the importance of expanding U.S. companies' access to foreign markets. But on the policy side, this belief is not yet being translated into action. The long-awaited speech from the President on trade policy is still out there in the future -- after health care legislation is done -- so the ripples of his decision to impose steep tariffs on certain tires from China and include Buy American requirements in the stimulus legislation remain defining elements of his approach. The pending free trade agreements with South Korea, Colombia and Panama continue to languish. In fact, the EU is edging ahead of us on preferential access to South Korea.

So yesterday I was pleased to hear Jane Oates, Assistant Secretary of Labor for Employment and Training, speaking on C-Span about the economy and clearly stating that exporting supports job creation and retention. In response to a question about green jobs and pulling the economy out of the recession, Asst. Sec, Oates, who is responsible for federal unemployment benefits and job training programs, noted that many sectors will be important to future economic growth. She added:

I believe our sister agencies [the Commerce Department and the Small Business Administration] are working to expand the markets of small business by treating them to lots of experiences in how to expand their market to foreign markets. I mean, very few of our small and medium size businesses do a lot of work with exports. Now clearly, if we can expand the markets for those small and medium size businesses to do business outside the geographic United States, they can build jobs. And then our [Department of Labor's] role will be to make sure that those workers have the training they need as they expand. (Emphasis added.)

Let's get moving on opening those markets!

Last week I was privileged to attend remarks by Fred Hochberg, President and Chairman of the U.S. Export-Import Bank, which makes its living (it pays for itself) by providing export financing for U.S. goods and services and just finished its biggest year ever. Hochberg, who just returned from a trip to China and Korea focused on solar energy technology, is leading an 8-city tour of U.S. agencies that are ready to assist U.S. businesses with international sales. In his remarks, he cited the growth potential of Brazil, Colombia, India, Indonesia and Vietnam and the growth industries of construction, health technology and energy transmission infrastructure. (Sounds like a lot of NEMA companies to me.) Hochberg will travel soon to Colombia and Peru to promote Ex-Im's services to potential buyers in those markets. Keep it up, Fred! And tell your friends!

Give and Take: The Rubber Meets the Road

updykec — Mon, 14 Sep 2009 17:14:00 GMT

The rhetoric was flying in Beijing on Saturday morning - over tires and trade. The Commerce Ministry certainly played to the media in citing President Obama's decision to impose hefty new tariffs on car and light truck tires from China as "grave act of trade protectionism", a violation of international trade rules and a breaking of an already-withered commitment by the Group of Twenty (G20) group of economies to refrain from new protectionist measures.

I won't get into the details and numbers of this particular case, since they have been well reported elsewhere. But, in my opinion, the facts are clear:

As part of its agreement to join the World Trade Organization (WTO) in 2001, Beijing agreed to a "special safeguard mechanism" that would allow Washington and other WTO members, based on evidence, to take this type of action to mitigate surges of Chinese goods that were causing "market disruption". Beijing agreed to let the U.S. do this. And it can do it, when the data justifies it, until 2013, when the provision expires under the WTO agreement.

On three separate occasions, President George W. Bush declined to use this authority, known as "Section 421" or the China special safeguard, to assist U.S. manufacturers in other industries that claimed they were being swamped by imports from China. In the tire case (and the three earlier cases), the U.S. International Trade Commission, an independent federal agency that does this type of economic analysis, had agreed with the U.S. claimaints, based on U.S. government data, and recommended that tariffs be imposed.

On the G20, President Obama's decision on tires falls under the umbrella of "trade remedy measures", which are an extremely popular area of international trade law -- and not only in the U.S. -- and which were not covered by the G20 commitment made in April.

Before Friday's announcement, several analysts were hopeful that a decision by President Obama to impose the tariffs would, in a way, spark greater trust of the Administration on trade and greater interest in moving forward in Congress to approve NEMA-supported free trade agreements that would provide advantages for U.S. companies in South Korea, Panama and Colombia. Whether that will come to pass remains to be seen. There is an ongoing chorus calling for greater enforcement of U.S. trade agreements. But President Obama has certainly taken a step that cheers the many Members of Congress who favor protection of U.S. industries and want more jobs for U.S. workers but who have never voted for a trade agreement and don't plan to anytime soon.

Buy American and "Protectionism"

updykec — Tue, 18 Aug 2009 18:32:00 GMT

You may have missed it -- and I think many were more focused on last Sunday's World Cup qualifier soccer match between the U.S. and Mexico -- but last week there was a summit meeting of President Obama with his Mexican and Canadian counterparts. Climate change and energy were major pieces of the discussions, but of course the business and trading relationship between the three was also on the table. Canadians especially have been hot-under-the-collar about the "Buy American" requirements included in the February economic stimulus legislation, the American Recovery and Reinvestment Act (ARRA). For its part, NEMA held a webinar on these requirements on June 30. But a lot of uncertainty remains in the industry about how the requirements are actually going to be applied on ARRA-funded bulding renovation projects when you get to the state and local levels.

First, let's review what President Obama said in the summit's closing press conference in response to a question from a Canadian reporter:

[W]ith respect to the "Buy American" provisions, I want to assure you that [Canadian Prime Minister Harper] raises this with me every time we see each other. So that's important to note, that he is expressing I think his country's concerns.

I think it's also important to keep it in perspective that, in fact, we have not seen some sweeping steps toward protectionism. There was a very particular provision that was in our recovery package, our stimulus package. It did not extend beyond that. It was [World Trade Organization] WTO-compliant. It was not something that I thought was necessary, but it was introduced at a time when we had a very severe economic situation and it was important for us to act quickly and not get bogged down in debates around this particular provision.

Prime Minister Harper and I have discussed this and there may be mechanisms whereby states and local jurisdictions can work with the provinces to allow for cross-border procurement practices that expand the trading relationship. But I do think it's important to keep this in perspective. This in no way has endangered the billions of dollars of trade taking place between our two countries. It's not a general provision, but it was restricted to a very particular aspect of our recovery package.

OK, now let's decode it: The President points to the state and local governments as the key players in developing solutions that will allow Canadian products to be eligible for ARRA projects. This is because Section 1605 of the ARRA, which caused Buy American requirements to be put in place for these projects, specified that the Section be implemented in accordance with U.S. international trade agreements. And when it comes to the government procurement sections of those international agreements, each U.S. state and territory decides whether to implement the agreement for its part and allow its government agencies to choose from non-U.S.-made products that originate in the agreement partner country or countries. And in these instances, Canada, for reasons I will not go into now, has been shut out across the U.S., from California to Oklahoma to Maryland and lots of places in between.

So in essence, the Canadians have been told to take their concerns to the state capitals. What are the chances our Northern neighbors will be well received there?

Warming and Trade

updykec — Mon, 03 Aug 2009 18:16:00 GMT

As Congress debates health care, its recent work on legislation to put in place new controls on energy usage and associated emission of "greenhouse gases" (GHG) has receded into the background somewhat, at least as the mainstream media is concerned. One of razor-edged issues at play in the climate change "cap-and-trade" debate is the future competiveness of U.S. manufacturing operations under such a system, especially if the governments of current and up-and-coming commercial rivals are not planning to place such burdens on their industries.

The short answer to that, in trade-speak, is "border measures". Put simply, according to the legislation already passed by House of Representatives, after a certain point the U.S. will apply additional taxes on products imported from countries not part of an international climate change agreement -- so that U.S. manufacturers are not completely priced into oblivion. There are a couple of ways to apply such taxes: either directly, like customs tariffs, or indirectly, by requiring importers to purchase credits to account for the energy/emissions made by the foreign manufacturer. The real problems can come about if an international climate change agreement is not reached.

Many policy and legal minds have been chewing on this issue, most recently those in the Government Accountability Office (GAO). In testimony and a report last month to a key Senate committee, GAO warned against the U.S. acting unilaterally to raise barriers to energy-intensive products, not only over fears of retaliation by trading partners but also whether such measures would be consistent with international trade rules. On that score, the World Trade Organization (WTO) and the United Nations Environment Program (UNEP) produced a report recently in which the organizations underscore the need to strike a true international deal on climate that supports trade liberalization and opening markets rather than creating new barriers. Of course, the devil -- denizen of a warmish climate! -- will be in the details.

Panama Jogs to the Right

Eckhart, Eugene — Tue, 05 May 2009 18:32:00 GMT

In the midst of incoming and established left-leaning politicians in the Latin America region comes a new winner who bucks the trend. Using words such as tycoon, magnate, self-styled millionaire, etc. reporters from all the major and not-so-major news services brought out words they had long since mothballed in describing the victory of Ricardo Martinelli, a victory not as spectacular as that of Mine That Bird but no less convincing, having pulled steadily ahead of his rival Balbina Herrera during the last several weeks to win by a wide margin. Pundits throughout the region are second guessing the reasons for either his victory or her loss, citing his use of the campaign slogans promising change to the country. No doubt the sagging economy didn't help the ruling RDP party, nor the infighting that took place during their primary campaign. The election was a solid exercise in democracy, with nary a word about fraud, a far cry from the simulacrum that took place across the sea in the land of Chavez, where results are still not forthcoming.

Martinelli will have five years starting in July to institute his change policies, although it appears he will not have the majority in the 71-seat Congress to get the job done. Heading his list is the free trade agreement with the U.S., followed by changing the tax laws and national investment in housing and transportation systems. This does not include the $5+ billion upgrade of the Canal, now underway and slated to be completed by the end of his term. He certainly will be keeping tabs on the project, inasmuch as he was the former chairman of the Panama Canal Authority.

Next up in presidential election stakes is Honduras, where the primaries have long since decided the two contenders, Pepe Lobo and Mauricio Villeda, neither of whom is an incumbent. Since the general election is in late November, there is still plenty of time to jockey for position, and as we saw last weekend, before the ¾ milepost position means nothing. Already started, expect to hear plenty more speeches promising cambios.

Copper - the new Gold Standard?

Winstanley, Gerard — Wed, 29 Apr 2009 17:53:00 GMT

Copper prices are at a 6 month high, so is this an indicator of economic recovery? Analysts are not so sure. China has been buying up copper at well beyond its current needs leading to speculation that the copper is going into long term stockpiles rather than to manufacturing. This has led others to speculate that China is disenchanted with the dollar; so it is replacing the old “gold standard” with a new ”copper standard”. Instead of buying US treasuries and dollar holdings, China is stocking up, at rock bottom prices, on a commodity that is essential for infrastructure and manufacturing industries.

Whatever the reason, is China’s purchasing of copper good or bad for US manufacturers? Well, it could go either way. China will certainly have an advantage once the recovery is underway since it bought its copper at the lowest price. However the industry worldwide could benefit from the smoothing out of demand. If copper production levels are being maintained this will help stabilize prices. Once the demand returns this could help us avoid a bidding war pushing copper prices back up to last summer’s record levels.

More Leftward Leaning…and Now for Panama

Eckhart, Eugene — Wed, 29 Apr 2009 14:53:00 GMT

Further to this trend I was pointing out a few weeks ago, now we see that el presidente Rafael Correa won reelection in Ecuador, the first such repeat in three decades. So the people must like him. A close associate of president-for-life hopeful Hugo Chávez, Correa is seeking a constitutional amendment that will set him up to be president until 2017. Meanwhile he continues to refuse to pay his country's bills to outside suppliers whom he deems illegitimate, threatens to give foreign firms the boot, tightens his grip on the oil and mining industries, the central bank, and the media. A sure recipe for continued volatility. The next few years should be anything but dull. For his part, Correa hopes for high oil prices to keep his bank account sufficiently robust to permit him to pursue his strategy of chasing away every investor that otherwise may just help the country develop a viable economy.

Now on to Panama, where national elections are due to take place this coming Sunday (May 3). The opinion polls say whatever the candidates want them to say, so this one will have to wait for the only poll that counts. The ruling party PRD seems to be waning in overall popularity, but it has the opportunity to hold on to either the legislature or the presidency. During a recent visit I was told by a cabbie that there is equal dislike for both of the leading candidates, so the winner may represent the lesser of two evils. That said, the opposition candidate Ricardo Martinelli represents a change from business as usual, and certainly, as the former chairman of the board of the Panama Canal Authority, he understands the importance of that single biggest money machine in the isthmus.

Coming as it does during the initial talks about ratification of the US-Panama Free Trade Agreement, the election results will provide teams on either side of the debate with sufficient supporting material to feed the merits of their arguments for months.

Five minutes of fame ...

Eckhart, Eugene — Wed, 22 Apr 2009 20:32:00 GMT

Is about the only thing the assembled leaders of the Americas could walk away with from President Obama at the recently concluded Summit of the Americas. Except for Hugo Chavez, who turned three minutes of face time into endless new press coverage, to say nothing of the new life he breathed into Eduardo Galeano's book Open Veins of Latin America (the second time Mr. Chavez has boosted the fortunes of an otherwise dormant book).

But what of the Summit itself? Was anything of value accomplished? Mostly thoughts and ideas were shared, seeds that will require time and attention just to germinate, to say nothing of the trade potential. But the spotlight of attention is once again shining on the US, not that it ever left, brighter than ever. Hopes for a turnaround of the US economy, possible future trade deals, ratification of completed deals, possible relaxation of the Cuba impasse, revision of immigration laws, on and on. Each requires positive follow up by the US government, with plenty of input required from the business community if the outcomes are to contribute to our collective economy. Most of the participants focused on future possibilities rather than complain about lost opportunities. No question that the US election results reset all the clocks.

Our own examination of the market potential suggests that future business prospects are there if the necessary investment in time and attention is made, sooner rather than later. Every measurement of electricity consumption is trending upward, and none of it is possible without NEMA members' products. With our strong Latin American outreach in full swing, and many of the free trade agreements implemented, things are moving. Let's go.

To the Left, To the Left ...

Eckhart, Eugene — Tue, 14 Apr 2009 20:05:00 GMT

We are witnessing a slow but steady shift in the elected leadership in Central and South America from the solid right-leaning sedulous figures of the oligarchy to more populous-leaning representatives who may show the world a different way to advance democracy. With the recent election of Mauricio Funes, representing the once revolutionary but increasingly mainstream and now majority party FMLN in El Salvador, we now have a continuum of elected leaders in the hemisphere who have the opportunity to showcase their skills in advancing their countries’ interests, made all the more difficult in the current global recession. From the powerhouse Brazil, ever independent in attitude and increasingly successful across many economic measures, to the lagging Venezuela, blessed with natural resources but unable to jump-start any sort of value added businesses, we have enough extremes in South America alone to compare leaders’ success or lack thereof through good times and bad. The results have not been entirely predictable, but they do dispel the notion that populist leaders spell disaster for emerging economies.

Now we have the opportunity to observe Central America, with an interesting mix of leaders, all facing economic hurdles as they grapple with the global recession front and center. All having negotiated free trade agreements with their largest trading partner, we will be able to compare and contrast their diverse approaches to developing their economies on a reasonably level playing field, made even more so by our own new leadership. Look closely for the overt and subtle interactions this weekend at the Summit of the Americans for the first signs of their respective opening plays. They will provide insights to what we can expect to play out in our own outreach to the hemisphere. Stay tuned.