OUR WEBLOG: EXCERPTS OF EXPORTS

Tuesday, September 04, 2007

A new canal in Panama … but a new trade agreement?

A few interesting events in Panama. First ground was broken for the expansion of the Panama Canal yesterday. The expansion, to be completed by the 100th anniversary of the Canal in 2014, will allow larger ships to pass through the locks.

These ships have more than twice the container capacity of ships that currently pass through the Canal. The shorter route will result in lower shipping costs thus lowering the cost of consumer goods for East Coast residents of the US.

The second event was the appointment of Pedro Miguel Gonzalez Pinzon as leader of the Panamanian legislature. While acquitted in Panama of murdering a US serviceman in 1992, Gonzalez still faces charges in the US.

A trade agreement between the US and Panama has been moving forward with the promise of a deal between the two countries.

Gonzalez’ election does not further that effort. Gonzalez has said that a trade agreement between the US and Panama is “a powerful tool for our (Panamanian) development.”

As such, he implied that he would step down from his position as leader rather than threaten negotiations of a trade agreement with the US.

So, I guess we will see what happens. Will trade talks go forward, what if Gonzalez steps down, what if he doesn’t. And in the end will Congress ratify a trade agreement with Panama. Time and events will tell.

Thursday, August 09, 2007

Freer Trade

As you would expect I am a fan of free trade, more aptly termed, freer trade. No matter what the trade agreement, NAFTA, CAFTA or the like, trade is not totally free. There are still provisions, protected industries and nontariff barriers. However that does not mean that export is an unlikely revenue stream. Most of the U.S growth of the last quarter is attributed to exporting. U.S. companies are looking to other countries to increase sales.

According to today’s Wall Street Journal, the economies in “China, Latin America and Europe have grown faster than the U.S. over the last 18 months.” This is good for two reasons:

1. while the US is a huge market in itself, domestic companies do not have to depend solely on domestic sales

2. with a growing economy comes a larger middle class interested in the quality and variety of U.S. goods

Not long ago, selling your product domestically was a very good business. But then something happened; freer trade. Domestic businesses are learning that they are competing globally right here in the U.S. Your competition includes products from other countries. No longer do you know your competitors firsthand.

With the rise of emerging markets like China and India comes a growth in the middle class. Producers of hair care products are selling travel size versions of shampoo and conditioner...great plan. Provide affordable sizes of the product and then as the middle class becomes more affluent, sell larger sizes of the product for which you have built demand.

The weak dollar also makes U.S. products very attractive.

There is help out there both in the public and private sectors. You can use the public sector for export services at little or not cost. You can also use the help of consultants for more comprehensive services. Or you can do both. Whatever you decide to do, investigating export markets is a good idea whose time has come. After all, foreign competition isn’t just in other countries anymore.

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