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WEEK OF 2021.11.02

News, Views & Items of Interest Relevant to the Carolina Region
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With congressional Democrats still bickering over the final details of Biden's signature legislative priorities, the President embarked on his second trip to Europe since being inaugurated. On this trip, President Biden visited with the Pope in Rome, apologized to President Macron of France for U.S arrangements with the U.K. and Australia, declared the U.S. to be back in the battle to slow climate change, and aimed at undoing the former President's tariffs on steel, aluminum, and reactive measures against American whiskey. His real plan is to re-engage a transatlantic alliance to engage global trade.

Here are several stories that will bring you up-to-date.

U.S., EU Eye Global Coalition

to Fix Steel, Aluminum Markets

Steel Sparks
According to the American Journal on Transportation, the U.S. and the European Union clinched a tariff-busting trade accord over the weekend that they’ll try to leverage into a broader global arrangement that would penalize countries that don’t meet low-carbon targets for steel and aluminum exports.

President Joe Biden and European Commission President Ursula von der Leyen hailed the agreement on Sunday in Rome on the sidelines of a meeting of leaders from the Group of 20 countries.

“The United States and the European Union have reached a major breakthrough,” Biden said, adding that they’re “ushering in a new era of transatlantic cooperation.”

Von der Leyen said the deal would alleviate significant elements of the irritants to the U.S.-EU trade relationship and comes amid renewed “trust and communication” since Biden took office.

“It is yet another key initiative for our renewed forward-looking, transatlantic agenda with the United States,” she said.

The U.S. agreed to remove the duties it placed on EU steel and aluminum exports up to a certain threshold, with anything beyond that still subject to the additional tariffs. The EU will also suspend its retaliatory duties, effectively ending punitive measures on as much as $10 billion of each other’s goods.

U.S. Trade Chief Tai Says

She Aims to Reduce U.S.-China Tensions

USTR TAI
According to U.S. News, U.S. Trade Representative Katherine Tai said that her engagement with China is aimed at reducing the temperature of a trading relationship between the world's two largest economies that has become dangerously heated.

Tai, speaking at a meeting of the National Chicken Council, said that the U.S.-China relationship has reached a point where "it feels kind of like a pile of dry tinder" and a misunderstanding "is likely to spark basically just a giant fire with really, really drastic implications for all of us."

Tai this month held a call with Chinese Vice Premier Liu He to discuss China's lack of compliance with a "Phase 1" trade agreement with the United States reached under former President Donald Trump.

U.S. officials viewed the call as a test of bilateral engagement with Beijing, while Chinese officials pressed Tai to eliminate tariffs on Chinese goods.

Tai on Thursday said her aim is to "bring the temperature down so that we can have a sober relationship and a sober conversation about how we can stabilize the parts of our trade that are working."

Mexico, China, and Hong Kong Origin

Issues in the Trade Spotlight

National Law Review
According to the National Law Review, the criteria for a country of origin analysis often are specified in trade preference programs and free trade agreements. As the U.S.-Mexico-Canada Agreement (“USMCA”) replaced the North American Free Trade Agreement (“NAFTA”), effective July 1, 2020, new rules of origin were introduced for many products from Mexico including changes to tariff-shift rules, regional value content, de minimis requirements, and more. Final implementing regulations were published by U.S. Customs and Border Protection (“CBP”) on July 6, 2021. As a result of this change, importers were required to transition from NAFTA to the new agreement, overhauling established processes to incorporate the revised procedural requirements, in addition to re-analyzing products under the new rules of origin.

Section 301 tariffs on goods of Chinese origin are an ever-present concern for many importers, but importers could face some relief soon through the reintegration of an exclusion process by the Office of the U.S. Trade Representative (“USTR”).

The escalating trade war between the United States and China has skyrocketed the financial risk associated with incorrectly determining that a product is not Chinese due to the potential penalties for underpayment of tariffs. In 2017, a review was initiated by USTR into China’s practices with respect to the transfer of technologies and intellectual property from U.S. entities to China pursuant to Section 301 of the Trade Act of 1974. After finding that “the acts, policies, and practices of the Government of China…are unreasonable or discriminatory and burden or restrict U.S. commerce,” USTR announced the imposition of 25% tariffs on $34 billion worth of goods from China. The actions escalated from there, with most products of China now subject to additional tariffs ranging from 7.5% to 25%.

The Busiest Port in America: Los Angeles

congestion-americas-busiest-port-los-angeles
According to Visual Capitalist, U.S. e-commerce grew by 32.4% in 2020—the highest annual growth rate in over two decades. Such rapid growth has resulted in many more goods being imported, leaving America’s western ports completely overwhelmed.

To help you understand the scale of this issue, the above image visualizes the number of containers waiting at sea in relation to the Port of Los Angeles’ daily processing capacity.

As of November 2, 2021, the Port of Los Angeles reported that it had 93 vessels waiting in queue. Altogether, these ships have a maximum carrying capacity of roughly 540,000 containers (commonly measured in twenty-foot equivalent units or TEUs).
On the other side of the equation, the port processed 468,059 import containers in September (the most recent data at the time of writing). Because the port does not operate on Sundays, we can conclude that the port can load roughly 18,000 containers each day.

That capacity seems unlikely to reduce the congestion. Over a two-week timeframe in September, 407,695 containers arrived at the Port of Los Angeles, which averages to around 29,000 containers arriving each day.

Solutions are needed to prevent the backlog from causing massive economic harm. In fact, analysts believe that up to $90 billion in trade could be delayed this holiday season.

In October, the Biden administration announced a deal to expand operations at the Port of Los Angeles, enabling it to run 24/7. The port also announced it will begin charging carriers for every container that sits idle over a grace period. While only temporary, this plan has drawn criticism for its unclear objective.

Regardless of the outcome, more permanent solutions will be required as online shopping continues to gain popularity.

IBT Online Receives President's "E" Award

for Export Service

IBT Online-logo
IBT Online has been awarded the President’s “E” Award for Export Service. The President’s “E” Award is the highest recognition any U.S. company can receive for making a significant contribution to the expansion of U.S. exports. You may recognize IBT Online because of their partnership with the EDPNC in utilizing STEP funds to help NC companies globalize their websites.
Wilbert Ross Award Letter
In his congratulatory letter to IBT Online, U.S. Secretary of Commerce Wilbur Ross noted that “IBT Online has demonstrated a sustained commitment to export expansion. The “E” Awards Committee was very impressed with IBT Online’s services to help U.S. companies better communicate and market their products to international distributors, buyers, and consumers. The company’s client assistance in more than 20 languages and in more than 40 countries was also particularly notable. IBT Online’s achievements have undoubtedly contributed to national export expansion efforts that support the U.S. economy and create American jobs.”
Presidents_e-award_
In total, Secretary Ross honored 39 U.S. companies and organizations from across the country with the President’s “E” Award for their role in strengthening the U.S. economy by sharing American ingenuity outside of our borders. IBT Online is a provider of export services for small and medium-sized U.S. businesses, providing services from website localization and international ecommerce to international digital marketing, and more.
“The IBT Online team mission is to help U.S. companies exponentially, sustainably and successfully grow their exports, sales, brands and business online and globally,” says John Worthington, CEO of IBT Online, emphasizing, “Our innovative Online Global programs - that is website localization, international online marketing and ecommerce - leverage todays cutting edge digital technologies, so our U.S. exporter clients succeed internationally, adding jobs and supporting their local communities.”
- ALL 2021 Sponsor Logos trimmed
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Carolina World Trade Association

Founded in 1964, CWTA is a chapter of the North Carolina World Trade Association (NCWTA), which promotes the growth of trade between North Carolina and the world by providing education and networking opportunities for our global ecosystem.

As a business-driven non-profit organization, CWTA’s mission is to promote, foster, and encourage international commerce success and expand economic growth in the Carolinas region. We do this by:
  • Advocating the interests of businesses engaged in international trade on local, regional, state, and federal levels;
  • Educating businesses and their employees to the resources, issues, policies, and practices within international trade;
  • Promoting regional assets and opportunities for expanding inbound and outbound international commerce; and
  • Celebrating the successes of international trade in the region.
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