US retains status as Japan’s largest export market

In a sea change in Asia-Pacific trade among the world’s three largest economies, the United States retained its status as Japan’s biggest export market for the second year in a row in 2014, edging out China.

Upcoming Senate and House Hearings on 2015 U.S. Trade Policy Agenda

Upcoming Senate and House Hearings on 2015 U.S. Trade Policy Agenda


Both the Senate Finance Committee and the House Ways and Means Committee announced hearings on the 2015 U.S. trade policy agenda with United States Trade Representative (USTR) Michael Froman.


Senate Finance Committee Hearing

Tuesday, January 27, 2015

10:00 AM

215 Dirksen Senate Office Building


House Ways and Means Committee Hearing

Tuesday, January 27, 2015

2:00 PM

HVC 210

U.S. Customs and Border Protection’s Centers of Excellence and Expertise Becoming Fully Operational

WASHINGTON—U.S. Customs and Border Protection (CBP) Centers of Excellence and Expertise (Centers) for Electronics; Petroleum, Natural Gas & Minerals; and Pharmaceuticals, Health & Chemicals will transition beyond the test phase and into a fully operational status beginning Jan. 28.

“The Centers for Excellence and Expertise are transforming the way CBP processes trade and works with the international trade community,” said R. Gil Kerlikowske. “All trade processing will now be performed under the authority of the respective industry center instead of at one of the hundreds of CBP ports of entry resulting in a more efficient process that will increase U.S. economic security.”

To assume all trade functions within their respective industry, the Centers will use an internal legal order to execute an incremental expansion in three phases over the next six months.  Each phase will consist of assuming trade functionality from key ports of entry while also bringing on the trade staff in a full time capacity at those locations to support the transition of work.

Expanding these Centers beyond the test program will allow CBP to fully implement the Centers by transitioning all post-release trade work within their respective industries.  These changes, beginning with the three Centers and in due course for the remaining seven, will have major positive impacts on trade and customs revenue functions by reducing costs to the trade, enhancing governmental efficiencies, and promoting uniformity of treatment.

The Center integrates management-by-account principles and allows CBP trade personnel to specialize in a key industry, building advanced knowledge in the intricacies of particular products and processes.  Transforming how CBP processes trade will provide for a more effective use of trade resources, reduction in transactional costs for the trade and CBP, increased uniformity methods at the industry level, and enhanced ability to identify high-risk commercial importations.

CBP has designated the following 10 Centers of Excellence and Expertise, each covering an entire industry spectrum and managed out of the corresponding CBP field office:

  • Agriculture & Prepared Products, Miami;
  • Apparel, Footwear & Textiles, San Francisco;
  • Automotive & Aerospace; Detroit;
  • Base Metals, Chicago;
  • Consumer Products & Mass Merchandising, Atlanta;
  • Electronics, Los Angeles;
  • Industrial & Manufacturing Materials, Buffalo;
  • Machinery, Laredo;
  • Petroleum, Natural Gas & Minerals, Houston; and
  • Pharmaceuticals, Health & Chemicals, New York.

For more information on the Centers, please visit

NFTC Welcomes U.S. Ratification of WTO Trade Facilitation Agreement

Date: 1/23/2015
Written By: Jennifer Cummings, The Fratelli Group for NFTC, (202) 822-9491
Washington DC – Today, National Foreign Trade Council (NFTC) Vice President for Global Trade Issues Jake Colvin issued the following statement welcoming the news that the United States officially accepted the World Trade Organization (WTO) Trade Facilitation Agreement (TFA).
“Today’s announcement that the United States has taken its final step toward implementing the WTO Trade Facilitation Agreement signals an important moment for U.S. trade policy and the multilateral trading system.
“We commend Ambassadors Froman and Punke for their leadership throughout the negotiations and implementation process. Their commitment to pursing trade agreements that advance the rules-based trading system, like TFA, has not gone unnoticed.
“We hope that other countries recognize the importance of this agreement as a way to modernize trade rules, and we call on them to follow suit and ratify TFA without delay.”

Oil export losses to reach $300 billion in Middle East

(Reuters) – Losses from lower oil exports should sap up to $300 billion from economies in the Middle East and Central Asia this year, as countries in the region adjust to falling crude prices, the International Monetary Fund said on Wednesday.

Economies that are particularly dependent on oil exports, including Qatar, Iraq, Libya and Saudi Arabia, will be hit hardest by the more than 50 percent decline in petroleum prices, the IMF said in an update to its outlook for the Middle East and Central Asia.

Oil prices are now hovering near six-year lows amid expectations of an abundance of supply tied to unexpectedly high production of U.S. shale crude.

The IMF said, however, that falling crude prices will not translate immediately into major gains for oil importers in the Middle East and Central Asia, which have been hurt by the slowing growth prospects of key trading partners in the euro zone and Russia.

The IMF this week cut its forecasts for global economic growth to 3.5 percent for 2015 compared with an October outlook of 3.8 percent, and significantly lowered projections for oil exporters Russia, Nigeria and Saudi Arabia.

The IMF said nearly every exporting country in the Middle East and Central Asia is expected to run a fiscal deficit this year because of the oil price shock, which prompted the IMF to downgrade the region’s growth prospects by as much as 1 percentage point compared with its October forecasts, to 3.4 percent for 2015.

The losses are likely to reach 21 percentage points of gross domestic product in the countries of the Gulf Cooperation Council, or about $300 billion. In non-GCC countries and in Central Asia, the expected losses are $90 billion and $35 billion this year, the IMF said.

Oil importers will see smaller gains, compared to exporters’ losses, as their economies are less dependent on the price of petroleum, the IMF said. Morocco, Lebanon and Mauritania are expected to gain most from falling crude prices, while Lebanon and Egypt are likely to see improved fiscal balances, the IMF said.

The IMF expects oil-importing countries in the Middle East to save most of the windfall, boosting their current account positions by 1 percentage point of GDP, compared with what the IMF forecast in October.

Central Asian importers should see worse external positions this year, compared with the October forecasts, because of lower demand from Russia and China, the Fund said.

(Reporting by Anna Yukhananov.Editing by Andre Grenon)

US, Europe growth buoy Asia’s shipping and trade forecasts

Rising foreign trade that drove up throughput at China’s container ports in 2014 is expected to continue this year on the back of strengthening demand from the U.S. and Europe, and despite a slowdown in the mainland economy.

The International Monetary Fund projects growth in advanced economies to strengthen in 2015, but JOC Group Economist Mario Moreno said the pace of recovery would be different across regions.

“The strongest rebound in growth is forecast in the U.S., with a still accommodative monetary policy, lessened fiscal drag and healthier household balance sheets,” he said in the latest edition of the monthly JOC Insights report. “In the eurozone, the forecast is for a soft recovery to gradually take hold, supported by accommodative monetary policy, lessened fiscal drag and improving lending conditions.”

Even with concerns about China’s slowing growth of about 7 percent this year, the recovery in major markets will keep cargo volumes growing. Moreno expects U.S. imports to increase 6.8 percent this year, and Europe container trade to grow 7.6 percent. “The HSBC China Purchasing Managers Index was down in December, but the export orders component rose for the eighth month in a row,” he said. “This is mainly attributed to the solid demand from the U.S.

“China containerized exports to the U.S. are estimated to have grown at 5.9 percent in 2014, which is faster than the 4.1 percent growth seen in 2013,” Moreno said. “China’s new orders declined in December, mostly due to softer domestic demand, but external demand appears to be holding up, particularly from the U.S.”

The good news for beneficial cargo owners is that it has seldom been cheaper to ship a container in the major east-west trades. By the end of December, the Shanghai Containerized Freight Index indicated spot freight rates on the Asia-Europe trade were hovering just above $1,000 per 20-foot-equivalent-container unit, barely breakeven for the lines. Even trans-Pacific rates tumbled as carriers struggled to cope with a glut of capacity that dragged down pricing on the main trades.

The consistent weakness in price prompted Maersk Line, the world’s largest ocean carrier, to say it will walk away from unprofitable long-term contracts when they come up for renewal this year and to do more business on the spot market, which already accounts for approximately 50 percent of its traffic. As the market leader, any sign of success on that front would spur rivals to follow suit.

But even as ship lines carried greater cargo volumes at lower rates, that didn’t translate into a complete victory for shippers. Port congestion became a rapidly emerging menace in the container shipping industry as larger vessels transported more containers to ports ill-equipped to handle the concentrated surge of boxes. Bottlenecks developed at hub ports in Asia, Europe and the U.S., especially on the West Coast where labor issues contributed to the gridlock.

As they plan for this year, shippers who lost millions of dollars bypassing the West Coast while being forced to hold excess inventory are nervously watching the negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association. Regardless of the outcome, East Coast ports are expected to benefit from the chaotic waterfront situation in the main U.S. gateway of Los Angeles-Long Beach.

In Europe, the hubs of Rotterdam and Hamburg faced bottlenecks over the peak season, but appear to have been able to reduce ship delays.

The gridlock at ports in major export destinations created difficulties in repatriating empty containers to Asia, leaving shippers in the region struggling to find enough boxes to stuff. Paul Melkebeke, vice president of supply for Samsonite Asia, said the problem wouldn’t ease anytime soon. “The challenge for me remains shortage of equipment, causing delays and uncertainty for our shipments going out,” he said.

The trend toward carriers deploying larger vessels will continue to challenge ports this year, and there is no short-term solution to the congestion it will exacerbate. According to research firm Clarksons, container capacity in the orderbook amounts to 3.4 million TEUs, of which 1.9 million will be delivered in 2015. Nearly 85 percent of the new orders are for vessels with capacity greater than 8,000 TEUs. An estimated 1.5 million TEUs was delivered in 2014.

Larger cranes are being installed or already commissioned in many ports, but terminals built years ago weren’t designed to handle the 19,000-TEU giants floating into service today. Singapore’s PSA is building a new port that will be able to accommodate the latest generation of mega-vessels, but few cities are in such a fortunate position.

Another trend expected to accelerate is the shift of manufacturing from China to Southeast Asia as rising labor costs and serious labor shortages in China’s coastal areas force factories to look for cheaper locations. “A lot of the low-end, labor-intensive industries, such as toys, garments and shoes, have already moved to Bangladesh, Vietnam or Cambodia,” said Geoffrey Crothall, a spokesman for Hong Kong-based labor rights organization China Labor Bulletin. “You will not see the wholesale China manufacturing industry vanish overnight, but it is transforming.”

An example of this trend can be seen in shoes. Although China remains the dominant source of U.S. containerized imports of footwear, its market share has eroded in recent years because of not-so-stellar economic conditions in the U.S., according to Moreno. “Demand for low- to medium-priced goods manufactured in China, Vietnam and Indonesia has continued to increase as consumers chose low-value imported footwear instead of more expensive, locally produced brands,” he said.

“Vietnam’s share of U.S. footwear imports rose to 14.3 percent year-to-date (October 2014) from 9.1 percent in 2011, while Indonesia’s share rose to 5.0 percent year-to-date from 3.4 percent in 2011,” he said. “Furthermore, footwear imports from Cambodia are jumping from a very low base, up 119 percent year-to-date, accounting for a sourcing share of a still small 0.5 percent.”

As measured by dollar value, China was still the largest supplier for U.S. footwear imports, accounting for 70.1 percent of the market year-to-date through October, although this was down from 74.1 percent in 2011, according to Moreno.

India, China’s traditional Asia rival, is struggling to realize its potential, with infrastructure shortcomings and inefficient inland transportation frustrating efforts to expand its manufacturing base. Hundreds of millions of dollars are pouring into port projects to improve congestion at the country’s main gateway of Jawaharlal Nehru, also known as Nhava Sheva, as an increase in volumes and construction work have slowed cargo movements and created lengthy delays since June.

“The shipping industry is in very bad shape,” Transport Minister Nitin Gadkari told reporters last year. “We are making every possible effort to revive it.”

Japan, the world’s third-largest economy after the U.S. and China, unexpectedly slipped into recession in the third quarter of 2014, and weak exports saddled companies with high inventories. With little sign of domestic consumption increasing, it will be difficult for the country to boost exports. As a net oil importer, however, the cheaper crude prices will help reduce production costs.

As shippers settle into 2015, falling oil prices will be registering brightly on their radar. The price for a barrel of crude fell by almost 50 percent in the last half of 2014, and apart from making factory production and raw materials cheaper, that’s leading to rapid drops in bunker and jet fuel costs. Fuel surcharges have fallen and shippers are waiting to see if they will continue to enjoy the benefits of cheaper fuel.

Samsonite’s Melkebeke, for one, is watching the situation closely, especially as it relates to pricing, asking, “How will we see the evolution of the freight rates as oil prices are dropping?”

USITC Makes Determinations in Five-Year (Sunset) Reviews Concerning Ferrovanadium from China and South Africa

The U.S. International Trade Commission (USITC) today determined that revoking the existing antidumping duty orders on ferrovanadium from China and South Africa would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

As a result of the Commission’s affirmative determinations, the existing orders on imports of this product from China and South Africa will remain in place.

All six Commissioners voted in the affirmative.

Today’s action comes under the five-year (sunset) review process required by the Uruguay Round Agreements Act.  See the attached page for background on these five-year (sunset) reviews.

The Commission’s public report Ferrovanadium from China and South Africa (Inv. Nos. 731-TA-986-987 (Second Review), USITC Publication 4517, January 2015) will contain the views of the Commission and information developed during the reviews.

The report will be available after February 18, 2015.  After that date, it may be accessed on the USITC website at:

Asia’s emerging markets top Agility logistics index

ONG KONG — Asian countries dominated the 2015 Agility Emerging Markets Logistics Index released today with four nations ranked in the top 10 emerging markets – China, Indonesia, India and Malaysia.

Out of the seven Asian countries among the top 20, five are Southeast Asian nations – Indonesia, Malaysia, Thailand, Philippines and Vietnam.

The annual data-driven ranking of 45 emerging economies is accompanied by a separate survey of nearly 1,000 global logistics and supply chain executives. Now in its sixth year, the index ranks emerging markets based on their size, business conditions, infrastructure and other factors that make them attractive for investment by logistics companies, air cargo carriers, shipping lines, freight forwarders and distribution companies.

In the survey, logistics executives were most upbeat about 2015 trade flows between Asia’s emerging markets and other emerging markets. Survey respondents also identified risks to growth by region and provided views on near-sourcing, e-commerce and other trends affecting emerging markets.

“Southeast Asia continues to be one of the world’s most vibrant, fast-growing areas. Growing domestic demand in Indonesia and Malaysia, a strong manufacturing base in Thailand, strong economic growth in Philippines, and a rapidly growing manufacturing base in Vietnam, all position the region well for continued growth,” said Morten Damgaard, CEO of Southeast Asia for Agility Global Integrated Logistics.

Improving business conditions raised the “market compatibility” scores of Malaysia and Philippines. Malaysia and China ranked among the countries with the best “market connectivity,” a reflection of their transport infrastructure and links. Indonesia is among the “next-tier” non-BRICS economies with populations topping 100 million.

Data from the index showed that the world’s busiest air trade lanes, as measured by cargo tonnage, were those linking China with the U.S. and European Union. E.U.-China air freight was up 9.1 percent while U.S.-China air freight rose 7.1 percent. Outbound traffic also posted big gains as China-U.S. volume grew 14.3 percent and China-E.U. air freight increased 9.6 percent, the sharpest gains among top trade lanes that link the U.S. and E.U. to emerging markets.

U.S.-Vietnam was the fastest growing trade lane linking emerging markets to the developed economy, growing at 42.7 percent compared to 2013.

ASEAN’s 10 member states have been taking steps toward becoming a single economic market in 2015. The International Monetary Fund forecasts a rebound for one of ASEAN’s largest economies, Thailand, which has been dogged by political instability and remains under martial law.

The steady shift in manufacturing as companies moved away from having all their production in China to a “China plus one” strategy was continuing. The index identified this trend, as well as near sourcing, where companies set up manufacturing closer to their destination markets, such as in Mexico or Eastern Europe. Almost 68 percent of logistics professionals surveyed said they were seeing manufacturing shift locations closer to end markets.

Research firm Transport Intelligence (Ti) compiled the Index, and chief executive John Manners-Bell said global manufacturing retailers had become more sophisticated in their supply chain sourcing strategies.

“Their decisions are obviously based on international transport costs, and on supply chain risk, but the retailers also have to take into account the prevalence of a large and adequately skilled workforce,” he said.

“Apple may never build their products back in the U.S. because the large supply of labor required and the skill set doesn’t exist there, but the manufacturing environment is shifting and manufacturers are relocating elsewhere in Asia.”

For 2015, the International Monetary Fund forecasts average growth for the 45 countries featured in the Index at 4.57 percent.

“The factors driving growth are increases in population, size of the middle class, spending power and urbanization rates, along with steady progress in health, education and poverty reduction,” said Essa Al-Saleh, president and CEO of Agility Global Integrated Logistics.

“That’s why we remain optimistic about emerging markets and continue to see them on an upward trajectory.”

Manners-Bell said five years after the global recession, prospects for all economies, developed and emerging, were still unclear.

“Economic fragility, a falling oil price and increasing security concerns in Africa and the Middle East have created uncertainty,” he said.

“Despite the challenges, interest remains high in these volatile markets as indicated by increased infrastructure investment, expanding international trade and increased domestic demand. Global manufacturers, retailers and their logistics service providers need to remain cognisant of the shifting dynamics if they are to exploit the significant opportunities which exist.”


January 16, 2015


On Friday, January 16, 2015, the Department of Commerce, Bureau of Industry and Security published a final rule that will become effective immediately. As a result of this rule, the following changes will be made to the Automated Export System (AES) in order for exporters and authorized agents to successfully report electronic export information in the AES.

The Addition of a New License Type (C62) for Support for the Cuban People (SCP) has been added to the Automated Export System.

A new license type (C62) SCP was created in AES for the reporting of certain items exported and re-exported to Cuba that are intended to improve the living conditions of the Cuban people; support independent economic activity and strengthen civil society in Cuba; and improve the free flow of information to, from, and among the Cuban people.

United States Principal Parties in Interest (USPPIs) and their authorized filing agents (AES filers) must follow the following new reporting requirements regardless of value when using C62 to prevent the return

of fatal errors from AES.

Report SCP in the license number field.

Report Export Control Classification Numbers (ECCNs) having a reason for control of Anti-Terrorism only or EAR99 (see appendix F (link provided below) of the AES Trade Interface Requirements (AESTIR) for acceptable ECCNs).

The country of destination and ultimate consignee country must show Cuba (CU).

Report Export Information Codes: All except UG, FS, FI.

Report any mode of transportation.

A complete list of all of the AES License Type codes and reporting instructions for these types can be found here.

For questions regarding these AES changes, please contact the Bureau of Industry and Security by email at or at (202) 482-4933.

Footwear industry warns of ‘catastrophe’ if US West Coast ports shut down

HONG KONG — A U.S. West Coast port lock out would be “a catastrophe beyond belief” for the footwear industry that imports the vast majority of its products through the terminals at Los Angeles-Long Beach, said Matt Priest, president of the Footwear Distributors and Retailers of America.

Priest is alarmed at the escalating tensions between the Pacific Maritime Association and International Longshore Warehouse Union, as concerns mount that the acrimonious negotiations are heading towards waterfront employers locking out the longshoremen.

“We have sent letters to the President, to the PMA, the ILWU, and one went out today to 200 organisations, imploring them to come to some kind of agreement because of the importance imports play in our economy,” he said.

“Both from a consumer point of view, and also an employment perspective it would be a catastrophe beyond belief. A huge disaster for us. My hope is that cooler heads will prevail and an agreement will be reached.”

The import numbers for footwear are incredible. From January through November, the latest figures available, 2.166 billion pairs of shoes were imported into the U.S., almost 95 percent of which were made in China. In the 11-month period, 866 million pairs of shoes entered the U.S. through the ports of Los Angeles-Long Beach. The port complex handles 68 percent of international footwear imports, according to PIERS data.

“This is a critical period for the U.S. footwear industry that is building up inventory for the Easter period when a lot of shoes are sold,” Priest said. “In July and August is another big shipping period to catch the back-to-school sales, and then there is the end-of-year holiday season.”

Priest said he was fortunate to tour the Port of Long Beach in October and saw first hand the ships backed up and the congested yards, so he had a good idea of what was coming and could inform members.

“The spring and early summer footwear is being imported now, but a lot of our members have been prepared for what is happening and started bringing in footwear early, putting it in warehouses, or air freighting things in if they needed to get to retail stores quicker.”

A lock out of longshoremen would force shippers to divert their cargo and try to enter the U.S. via alternative gateways, but Priest said the options were not ideal.

“The alternatives are to divert to other ports in Canada and truck cargo down to the U.S., or to ship via Houston or the East Coast. The East Coast ports are great and provide good services to the Eastern Seaboard, but do not nearly have the capacity of the Southern California ports,” he said.

Stephen Ng, OOCL director of trades, said he was not aware of any breakdown in talks between the PMA and the ILWU and the likelihood of a lock out, but he said if it happened, the alternatives were limited.

“As the situation is affecting the whole of the U.S. West Coast, carriers would have little option in switching or omitting port calls,” he said.

The senior Asia executive of one of the world’s top 10 carriers, who declined to be named, said if port operations on the West Coast came to a halt, demand via the East Coast would go up and customers would pay the price.

“There is simply not enough port and ship capacity to replace the U.S. West Coast flows. Capacity can’t just be made up,” he told

“Lines will also suffer as a large part of their ship and container fleet will be occupied with waiting, which will have a negative impact on the bottom line.”

Contact Greg Knowler at and follow him on Twitter: @greg_knowler.