Author Article List

Trade Legislation Will Benefit the North Country

Published on Thursday, November 29, 2001

Decisions that shape the North Country are made every day in Washington, D.C., but few will have as much impact on the economic well-being of local companies, employees and their families as Trade Promotion Authority (TPA) legislation.

TPA is the legislative mechanism that gives our trade negotiators credibility at the international negotiating table by requiring Congress to vote “up or down” on a trade agreement within a given period of time. This authority, which has been used by each President since Richard Nixon, expired in 1994.

Without it, foreign governments are reluctant to make agreements and concessions that could be changed later by Congress. As a result, the United States is not able to negotiate new trade agreements that eliminate foreign trade barriers.

Today, a growing number of North Country businesses export their goods and services worldwide. Combined with the rest of the country, exports now account for approximately one-quarter of our nation’s entire economic growth.

And companies dependent on exports are not just the multinationals. Local firms and other small to medium sized companies that employ fewer than 100 or 500 workers, respectively, make up 97 percent of U.S. exporters.

Exports create higher-paying jobs, strengthen our local companies and farms, and improve our tax base — while sending export revenue to local restaurants, retail stores, etc. But America's inability to effectively negotiate new trade agreements, as a result of not having TPA, has put our country at risk. And since the September 11th terrorist attacks, our need to generate new economic growth is even more important.

Since TPA expired, the results—or rather lack of them—speak for themselves. Over 130 regional trade agreements are in force today across the globe, however, the United States is party to just three. We are the most competitive nation in the world, yet we rank 26th in the world in bilateral investment treaties.

And our global competitors are not waiting for us to wake up. Our inaction over the last seven years has allowed them to take advantage of our absence from the negotiating table. For example, the European Union (EU) has free trade agreements with 27 countries and is actively negotiating another 15. Approximately 33 percent of world exports in 1999 were covered by EU free trade and customs agreements. That’s three times the amount covered by U.S. agreements.

Farmers, businesses, employees and their families in our region and across the nation feel the impact of U.S. non-participation. U.S. exports currently support an estimated 12 million jobs that typically pay 13 to 18 percent more than the average U.S. wage. In the absence of TPA, combined with slower national economic growth, local companies and workers are at risk.

We urgently need to take action and catch up before it is too late. To preserve our future economic vitality, I urge Congressman John McHugh to allow us to participate in new trade opportunities through the reauthorization of TPA.

Government Should Promote Foreign Trade to Aid Economy

Published on Thursday, November 08, 2001

The U.S. economy has slumped to its lowest levels in years. And as we are well aware, when the national economy slows, our region usually feels the consequences earlier, more severely, and for a longer period of time.

In challenging economic times like this, it’s important to promote policies that work — and exports work. In the 1990s, as much as one-third of U.S. economic growth was derived from our ability to sell our goods and services abroad.

And today, one in 10 jobs relies on trade, and these jobs pay 13 to 18 percent more than the average wage. What’s more, twelve million American workers and their families rely on trade-related jobs for their incomes.

But the ability of local companies to export is growing weak. Trade barriers erected by other nations are freezing our goods and services out.

The problem: our trade negotiators lack Trade Promotion Authority (TPA). TPA guarantees to our trading partners that Congress will vote “up or down” on a trade agreement within a given period of time. This authority, which has been used by each President since Richard Nixon, expired in 1994.

Without TPA, foreign governments are reluctant to make agreements and concessions that could be changed later by Congress. As a result, the United States is not able to negotiate new trade agreements that eliminate foreign trade barriers.

Consequently, we have fallen dangerously behind other trading nations. Our competitors are negotiating an ever-growing web of preferential trade and investment arrangements that exclude American products and services.

Consider this:

• Of the more than 130 regional trade agreements in force today, only two include the United States.
• Mexico has trade deals with at least 28 countries, and is working on agreements with South America and Japan.
• The European Union has trade agreements with 27 countries, and is actively negotiating another 15.

U.S. companies, workers, and farmers pay a high price for our inaction on TPA. Compared to other nations, U.S. exporters often face higher foreign duties, greater barriers to services and investment, and higher roadblocks in obtaining regulatory and standards approvals.

We can’t compete under this kind of financial handicap, while other countries negotiate trade deals for the benefit of their own farmers and workers.

This is no time to isolate America from new opportunities, slamming the door on markets that could renew our growth. Today, 96 percent of the world’s consumers live outside our borders. Since our domestic markets are mature, we must sell more goods and services to foreign markets.

Fortunately, the answer is clear: growth requires trade, and trade requires TPA. Our farmers and workers can compete and win in world markets, but only if Congress gets us back on a level playing field.

I urge our Upstate New York Members of Congress to pass TPA.

Terrorism May Affect Your Business, Requiring You To Develop New Global Strategies

Published on Thursday, November 01, 2001

The terrorist attacks of September 11th and the possibility of additional acts here and abroad have exposed U.S. economic vulnerability. To regain economic strength and protect against future danger, U.S. companies must determine:

• If their existing global sources of supply are vulnerable to political and economic instability, and
• The pace at which their buyers are likely to continue ordering.

Since no one can predict if or where additional terrorist actions may occur, the implications of civil unrest abroad, and the level of world economic growth, obtaining answers to these questions is difficult at best. Consequently, it’s important for companies to prepare for possible disruptions in their supply chains.

Are Your Sources of Supply at Risk?

In 2000, the United States imported $38.9 billion in goods from the Middle East. This represented only 3.2% of all U.S. imports. Although this may appear to be minimal, the Middle East is a major supplier of oil-related products to the United States, Europe and Japan. In fact, Saudi Arabia alone possesses over one-fourth of the world’s proven crude oil reserves. Disruptions in this oil supply could have a significant impact on industry, especially in Japan.

U.S. imports from the entire Asian continent reached $484.7 billion last year. This represented 40% of all U.S. imports. Terrorist actions in Asia could affect your sources of raw materials, components, and finished products.

Certain Shipping Lanes at Greater Risk

Highly traveled Asian and Middle Eastern shipping lanes are especially vulnerable to terrorist attacks. Proximity to terrorist groups alleged to be associated with Osama Bin Laden in Indonesia, Malaysia, the Philippines, and throughout the Middle East present dangers to regional ports as well.

Indonesia, which has a population of over 200 million people and the world’s largest Muslim concentration, is currently on the U.S. State Department’s travel warning list. Radical groups have threatened to attack U.S. interests and expel American citizens. The Strait of Malacca, a narrow and highly trafficked shipping lane between Malaysia and Indonesia, presents a particularly vulnerable point.

U.S.-Southeast Asian Trade Vulnerable

In 2000, Singapore and Malaysia were ranked as the United States’ 10th and 12th largest suppliers. These two, combined with Indonesia, India, and the Philippines, the United States’ 5th largest production sharing partner, accounted for U.S. merchandise imports of $80 billion.

Importers that receive their goods by ship should prepare for possible disruptions in the supply chain. As a result, a larger “just in case” inventory may be wiser than a smaller “just in time” one. And the situation may also call for importers to place orders sooner, accounting for additional security measures. However, since much of the goods imported by the United States from these countries include computers and electronics which are primarily shipped via air, sea lane disruptions will have less impact.

Will Buyers Keep on Buying and Paying?

According to the World Trade Organization, growth in world merchandise trade is anticipated to slow from 12% in 2000 to 2% in 2001. A steep decline in information technology expenditures is believed to be a major factor. This drop in economic activity is likely to negatively impact companies’ global export projections. Importantly, more businesses will find greater difficulty in paying their bills. Consequently, open accounts may need to be reassessed in favor of letters of credit or other more secure methods of payment.

It’s also important to consider currency volatility, an important factor affecting international receivables. Currency volatility can have a negative impact on country risk which, in turn, can affect a company’s ability to collect payments. In addition, potential terrorist actions in Southeast Asia may further depress U.S. exports there. Singapore, a major importer, ranked as the 10th largest U.S. market in 2000, following France. Top exports to Singapore include electronic components, aircraft and parts, laboratory, scientific and testing equipment, industrial process controls, electric power systems, telecommunications, pollution control and construction equipment. U.S. exporters of these and other goods to the region may consider pursuing additional markets to compensate for a potential downshift in buying patterns.

Furthermore, don’t underestimate the need to reassess the short and long-term stability factors of countries in which you have foreign subsidiaries or investments.

Costs of Doing Business Are Rising

Transportation and insurance costs are anticipated to increase because of security surcharges on cargo in a riskier business environment. In fact, some reports indicate an increase in property and casualty premiums of 12% to 30%, or higher in various cases.

Some insurance companies have even increased the number of countries subject to “war risk” surcharges. This means shipping lines must notify marine underwriters before their vessels move into designated waters, as these vessels may be subject to significant additional insurance premiums. Customers will most likely assume the additional cost.

And with the added time needed to satisfy new airline security requirements, coupled with many travelers’ fear of flying, business people are seeking alternative forms of travel. To reduce overseas travel, more companies are considering the use of videoconferencing.

U.S.-Jordan FTA: A Good Start

The U.S. Congress recently passed the U.S.-Jordan free trade agreement that was initiated during the Clinton administration. This makes Jordan the fourth country after Canada, Mexico, and Israel to enter a free trade accord with the United States. U.S.-Jordan trade is small. In 2000, the United States exported $313 million and imported $73 million for total two-way trade of $386 million. However, it sends an important message that opportunities exist for other Middle Eastern countries interested in such an accord.

A Message to the Less Frequent Flyer: Pay Attention to Travel Advisories

Published on Monday, October 01, 2001

Due to the potential for strong anti-American sentiment because of U.S. retaliatory actions taken in Afghanistan, U.S. citizens and interests throughout the world are at risk. As a result, the U.S. State Department has issued numerous travel warnings.

The State Department urges Americans to “review their circumstances carefully and to take all appropriate measures to ensure their personal safety.” When traveling abroad, Americans are urged to monitor local news and maintain contact with the nearest American embassy or consulate.

Consult the State Dept.’s Website

U.S. citizens planning to travel abroad should go to http://travel.state.gov/ to consult the State Department ‘s Public Announcements, Travel Warnings, Consular Information Sheets, Fact Sheets, and regional travel brochures.

American citizens overseas may contact the American Citizens Services unit of the nearest U.S. embassy or consulate by telephone or fax for up-to-date information on security conditions. Additionally, U.S. travelers may hear recorded information by calling the State Department at 202-647-5225 or receive information by automated telefax by dialing 202-647-3000 from their fax machine.

Review the New FAA Rules

On October 8, 2001 the Federal Aviation Administration (FAA) issued new guidelines to help air travelers meet heightened security measures implemented since the September 11th attacks.

For starters, air travelers are now limited to one carry-on bag and one personal item (i.e., briefcase, purse). And nail clippers, safety razors (including disposable razors), and tweezers are now permitted in your carry-on bag. For more information, go to http://www.faa.gov/.

Business Travel Will Recover — Slowly

Due to the additional one to three hours needed to satisfy new airline security requirements, coupled with many travelers’ fear of flying, business people are traveling less often. According to a September 18th survey cited by the Conference Board, a global research organization, 58% of corporate travel managers said their companies would reduce travel. Some of the travel reductions are a side effect of slower economic growth.

Foreign travel is down as well. Reported on November 11th, British Airways profits were down 85% from the previous year, KLM profits were down by 77%, and SAS profits were down by 250%. As a substitute to overseas travel, more companies are becoming more familiar with videoconferencing.

New Security Proposals May Increase Travel Confidence

A proposal to make air travel safer while reducing waiting time incorporates technology designed to scan a passenger’s iris, hand or face. This information is compared to the data on the passenger’s ID “smart” card and sent through an FBI watch list. According to the Financial Times, Boston’s Logan Airport has announced plans to introduce facial recognition technology.