International Trade
Jade Sims, Outreach Specialist
International Business Center
Michigan State University
International Trade
• “Global” view
• Trade balance
• Components of trade
–
–
–
Services/Goods
Region
Country
• Free Trade Agreements (FTAs)
• National Export Initiative (NEI)
–
Background, specific programs
• MSU resources
• Online resources
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Benefits of Trade:
• interchange of new ideas, technologies, shared
platforms, emergence of “best of the best”
• lower costs, market efficiencies, development of core
competencies (95% potential customers abroad)
• main source of economic growth (esp.
manufacturing)
–
–
–
exports make up 12.5% of gdp (11.2% in 2009)
exports make up ½ of the 2.9% gdp increase between 2009
and 2011
International trade represents _______% of most economies
• evidence suggests export-related jobs pay more
–
For every $1b in US exports, 6,000 jobs are created
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Differing Views on Globalization
& Trade
For
Friedman,
cheap,
ubiquitous
telecommunications have finally obliterated all
impediments to international competition, and the
dawning 'flat world' is a jungle pitting 'lions' and
'gazelles,' where 'economic stability is not going to
be a feature' and 'the weak will fall farther behind.'
Rugged, adaptable entrepreneurs, by contrast, will
be empowered.
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The World Is Not Flat
Prior to NAFTA 1988: Canadian province 20x as likely to trade
with each other than states
NAFTA 2010 : Canadian province still 5-10x as likely to trade
with each other than states
-2% of phone calls transverse national boarders
-3% of population born in country other than that of current
residence
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U.S. Trade Balance 2001-2011
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Average Domestic Crude Oil
Prices
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U.S. Trade deficit vs. Average
Domestic Crude Oil Prices
$/bbl
0
0
0
0
0
0
0
0
0
0
0
2001
2002
2003
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2004
2005
2006
2007
2008
2009
2010
2011
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Trade Balance
Source: census.gov
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Trade Balance
Source: census.gov
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What are we “trading”? (2010)
Exports
Imports
TOTAL
Goods
1,287,139
1,935,740
-647,077
Services
545,502
394,153
+151,349
Total
1,834,166
2,329,894
-495,728
(in millions USD)
Source: census.gov
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Service Exports (2010)
1.
2.
3.
4.
5.
6.
7.
Other private services
Travel
Royalties & license fees
Other transportation
Passenger fares
Transfers US military cont.
US gov’t misc.
47%
19%
18%
7%
6%
3%
0%
Total: 545,502 million USD
Source: census.gov
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Other private services (?)
Source: census.gov
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Travel and Tourism Industries
• 2.8% GDP
• $31.7 b surplus (surpluses since 1989)
–
Canada, Japan, UK
• 11.6% of market (dominant, ahead of France &
Spain)
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Source: Office of
Travel and Tourism
Industries
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Service Imports (2010)
1.
2.
3.
4.
5.
6.
7.
Other private services
Travel
Other transportation
Direct Defense Expenditures
Royalties & license fees
Passenger fares
US gov’t misc.
44%
19%
12%
8%
7%
7%
1%
Total: 394,153 million USD
Source: census.gov
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Goods Exports (2010)
1.
2.
3.
4.
5.
6.
Capital goods
Industrial supplies
Consumer gods
Automotive vehicles etc
Foods, feeds, & beverage
Other goods
TOTAL:
35%
31%
13%
9%
8%
4%
1,278,139 million USD
Source: census.gov
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Goods Imports (2010)
1.
2.
3.
4.
5.
6.
Industrial supplies
Consumer goods
Capital goods
Automotive vehicles etc
Foods, feeds & beverages
Other goods
31%
25%
23%
12%
5%
3%
TOTAL: 1,912,041 million USD
Source: census.gov
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Manufactured Goods
In 2008, U.S. Factories Produced
$5.18 TRILLION of These Products
Source: US Census Bureau
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Manufactured Goods
The U.S. is the world’s largest manufacturer (20%)
Source: census.gov
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Trade by Region 2010 (mills USD)
U.S. Imports for
Consumption for Selected
World Areas
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U.S. Domestic exports
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Total Trade in goods by Country 2010 (mil
USD)
1
2
3
4
5
6
7
Canada
China
Mexico
Japan
Federal Republic
of Germany
United Kingdom
Korea, South
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EXPORTS
IMPORTS
TOTAL
TRADE
% TOTAL
TRADE
248.8
276.5
525.3
16.5%
91.9
364.9
456.8
14.3%
163.3
229.7
393.0
12.3%
60.5
120.3
180.9
5.7%
48.2
82.7
130.9
4.1%
48.5
49.8
98.3
3.1%
38.8
48.9
87.7
2.7%
Source: census.gov
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Total Trade in goods by Country 2010 (mil USD)
con’t
8
9
10
11
12
13
14
15
France
Taiwan
Brazil
Netherlands
India
Singapore
Venezuela
Saudi Arabia
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EXPORTS
IMPORTS
TOTAL
TRADE
% TOTAL
TRADE
27.0
38.6
65.6
2.1%
26.0
35.9
61.9
1.9%
35.4
23.9
59.3
1.9%
35.0
19.0
54.0
1.7%
19.2
29.5
48.8
1.5%
29.1
17.5
46.6
1.5%
10.7
32.8
43.4
1.4%
11.6
31.4
Source: census.gov
43.0
1.3%
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Free Trade Agreements (FTAs)
• Agreements currently exist with 17 trading partners
–
–
–
$521,700m in US merchandise exports
$591,900m in US imports of merchandise
(+21,100m surplus in manufactured goods)
• Pending agreements (expected to increase exports
by $13 billion
–
–
–
Korea (June?)
• 7th largest trade partner (imports + exports = $87.7m)
• Korea-EU agreement to start July 1 (-8%)
Columbia
• 20th largest partner exports, 25th for imports
Panama
• Canal expansion
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Free Trade Agreements (FTAs)
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Choosing Trade Partners
• Gravity Theory of Trade Flows (1962) (<2/3 of
variations)
–
–
+ relationship trade & economic size
- relationship trade & geographic distance
• Country Portfolio Analysis/CPA (1980s)
–
–
Comparison of 2 countries GDP, population, geography,
political stability
-ignores costs and risks
• CAGE Distance Framework (2000)
–
–
–
–
Cultural*
Administrative*
Geographic
Economic
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Choosing Trade Partners
How do we choose our trading partners?
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Trade by NAICS Code (mills USD)
U.S. Imports
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U.S. Exports
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National Export Initiative (NEI)
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NEI: Attainable?
Positive trends:
1. Between 2002 and 2008, exports increased by 80%
2. Exports grew 17% in 2010 over 2009 (average over 5
years needs to be 14.5%)*
3. Export growth has outpaced domestic trade since 2005
4. From 2005 to 2008, >50% of manufacturing growth came
from exports
5. From 2005 to 2008, the only increase in manufacturing
employment came from exports (11%)
6. 95% of potential customers overseas*
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NEI: Attainable?
Challenges:
• 1% of American businesses export (12% in
Germany)
• 18.4% decrease in value of exports 2008-2009
• Almost 5% decrease in number of exporters 20082009 (esp. medium—100 to 499 employees)
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NEI: Attainable?
Current areas of emphasis:
• Free Trade Agreements
–
Pending agreements: S. Korea, Columbia, Panama
(negotiated in 2007)
• Current administration expects passage soon
• May increase exports by $13 B
• State Trade & Export Promotion (STEP) Grant
–
$30 million from SBA
• Expansion of SBA programs
–
Increase from 1.7 M to 5 M
• Focus on expansion of exporters to 1 market*
• Revision of structure of Commerce & other entities
• Market Development Cooperator Program
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NEI: Worthwhile?
• For every $1 billion in exports, an estimated 6,000
jobs are created (US Int’l Trade Commission)
• In 2010, exports supported nearly 10 million jobs,
including 4 million for small businesses
• Jobs supported by exports pay as much as 18%
higher than the national average (US Chamber of
Commerce)
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MSU-CIBER INITIATIVES
• Global Business Club of Mid-Michigan
• Michigan Export Growth Program
• Affiliate agreement with Department of Commerce
(Grand Rapids USEAC)
• globalEDGE
–
–
Country- and Industry-specific information
Online modules
• A Basic Guide to Exporting
–
Diagnostic tools—CORE*
• International Trade Center of Mid-Michigan
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RESOURCES
• http://ita.doc.gov/
• http://export.gov/
• www.census.gov
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•
•
•
•
•
•
•
www.census.gov/foreign-trade/PressRelease/current_press_release/ft900.pdf
http://www.exim.gov/index.cfm
http://www.sba.gov/
http://www.districtexportcouncil.com/
1-800-USA-TRADE
http://ghemawat.com/
http://www.thomaslfriedman.com/
http://globaledge.msu.edu/
Jade Sims, Michigan State University
Thank you!
Questions?