1. Global Trade and Economic Outlook
Plenary Panel

2. Maureen Smith Jeff Weiss Guido Gries Daniel Krassenstein Bill Clifford
Int. Trade Admin./Dept.
of Commerce
Director of Supply Chain
Jeff Weiss
Venable LLC
Partner
Guido Gries
Dachser Americas
Managing Director
Daniel
Krassenstein
Procon Pacific LLC
Global Supply Chain Director
Bill Clifford
World Affairs Councils of America
President and CEO
John Carver
LAWA
Deputy Executive Officer

3. USC Global Supply Chain Summit
Panel: Global Trade and Economic Outlook
Jeff Weiss, Esq.
Partner, International Trade August 9, 2019
Venable LLP

4. Agenda Evolution of U.S. trade tools Status of U.S.-China trade talks
Status of NAFTA/USMCA implementation

5. Traditional Trade Tools Used to Combat Unfair Trade
Antidumping and Countervailing Duties (AD/CVD): Dept. of Commerce enforces U.S. trade laws by conducting antidumping and countervailing duty investigations in response to U.S. industry petitions alleging that imports are being dumped (sold at less than fair value) or unfairly subsidized
The independent U.S. International Trade Commission (ITC) determines whether the imports are materially injuring/threatening to materially injure the competing U.S. industry. Affirmative determinations result in an AD/CVD order instructing Customs to collect duties on imports
Section 201 of the Trade Act of 1974 (safeguards): The President can impose tariffs or other measures to protect a domestic industry for a limited period of time – with no need to prove dumping or subsidization – provided that the ITC finds that imports are injuring, or threatening to injure, the domestic industry
Both AD/CVD and safeguards are permitted and regulated by GATT/WTO rules
GATT/WTO rules also allow the U.S. to request WTO dispute settlement against a measure of another WTO member country if it believes that the measure is inconsistent with those rules
The WTO dispute settlement process typically takes years. If the case is successful, the U.S. can be authorized by the WTO to impose retaliatory duties against the other country in the amount of the breach, but those duties are prospective only

6. Traditional Trade Tools Used to Combat Unfair Trade
Antidumping and Countervailing Duties (AD/CVD): Dept. of Commerce enforces U.S. trade laws by conducting antidumping and countervailing duty investigations in response to U.S. industry petitions alleging that imports are being dumped (sold at less than fair value) or unfairly subsidized
The independent U.S. International Trade Commission (ITC) determines whether the imports are materially injuring/threatening to materially injure the competing U.S. industry. Affirmative determinations result in an AD/CVD order instructing Customs to collect duties on imports
Section 201 of the Trade Act of 1974 (safeguards): The President can impose tariffs or other measures to protect a domestic industry for a limited period of time – with no need to prove dumping or subsidization – provided that the ITC finds that imports are injuring, or threatening to injure, the domestic industry
Both AD/CVD and safeguards are permitted and regulated by GATT/WTO rules
GATT/WTO rules also allow the U.S. to request WTO dispute settlement against a measure of another WTO member country if it believes that the measure is inconsistent with those rules
The WTO dispute settlement process typically takes years. If the case is successful, the U.S. can be authorized by the WTO to impose retaliatory duties against the other country in the amount of the breach, but those duties are prospective only

7. Additional Trade Tools Used by this Administration
Rationale: we need to negotiate better, fairer trade deals and have more robust enforcement
Section 232 of the Trade Expansion Act of 1962: provides the President with the ability to impose restrictions on certain imports based on an affirmative determination by the Dept. of Commerce that the product under investigation “is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security”
Administered by Commerce/BIS; very rarely used until this Administration
Tariffs and quotas imposed on steel and aluminum; potential measures on automobiles
Arguably covered by GATT/WTO exceptions for national security, but rarely used
Section 301 of the Trade Act of 1974: tool to address unreasonable, unjustifiable, or discriminatory foreign government acts that burden U.S. commerce (whether a WTO issue or not)
USTR may self-initiate an investigation or interested persons may petition USTR
Tariffs have been imposed on China; investigation against France in process; and the Administration is considering India as a potential next target
Not allowed by GATT/WTO rules because it is self-judging, so section 301 had not been used in this way since before the WTO was established in 1995

8. Additional Trade Tools Used by this Administration (continued)
International Emergency Economic Powers Act (IEEPA): the President can take measures if there is an “unusual and extraordinary threat … to the national security, foreign policy, or economy of the United States” that originates “in whole or substantial part outside the United States”
Even more broad than just national security or trade
Used to justify proposed immigration-related tariffs on Mexico (the tariffs would have started at 5% and been gradually increased to 25% unless Mexico took certain unspecified measures)
Anti-currency manipulation measures
Designation of China as a currency manipulator
Use of currency manipulation by the Commerce Department in calculating anti- subsidy duties
We expect this trend to continue
The President believes it’s a political winner for him
There is broad bipartisan support to go after China in particular
One caveat: keep an eye on the economy and markets

9. Trade Negotiations between the U.S. and China
The current redlines of the two sides are incompatible with reaching a comprehensive deal:
The U.S. side wants substantial Chinese purchases of U.S. agricultural products, and Chinese agreement to address long-running structural issues, such as allowing greater market access for American companies and boosting protection of intellectual property rights
China won’t make changes to its domestic law to implement an agreement on structural issues, which is a must-have for the U.S. (this is the issue that derailed the talks this spring)
The U.S. won’t drop the tariffs until it sees Chinese compliance with the agreement, given past U.S. experience in the JCCT and S&ED. The U.S. also wants to be able to impose/re-impose tariffs if it judges China to be out of compliance AND China would not be allowed to retaliate with tariffs of its own (which is unacceptable to China)
To get back to the negotiating table, both sides had to publicly reinforce their respective redlines
Both sides likely feel that waiting until after 202o to strike a deal is the best strategy
The escalations of the past week on tariffs, agriculture, and currency reflect that reality

10. “U.S.-Mexico-Canada” Agreement (USMCA)
In late August 2018, U.S. and Mexico reached a preliminary agreement to replace NAFTA
In September 2018, Canada also joined the agreement
Mexico ratified the deal in June 2019; Canada is waiting to see what happens in the U.S.
Notable provisions of the deal include:
Rules of origin tightened for autos and other products
Retention of NAFTA state-to-state dispute resolution and a weakened ISDS mechanism
Agreement to extend patent protection for certain types of pharmaceuticals from eight to ten years
Stronger labor and environmental commitments
ITC Report found that the deal would increase U.S. GDP by 0.35% and U.S. employment by 0.12% by its sixth year, assuming full compliance; C.D. Howe Institute found that the deal would slightly decrease U.S. GDP
House Democrats want to re-open the deal to address labor, environment, pharmaceuticals, and enforcement concerns, whereas the Administration does not; negotiations with USTR have just began
Timing: USMCA implementation seems possible in the fall, but more likely that the agreement remains in limbo until after November 2020

11. Questions?

12. Partner, International Trade
Jeff Weiss, Esq.

13. Krassenstein – 09-Aug-2019 – USC GSCM 2019

14. Procon Pacific - Global Supply Chain Director
30 Years Global Supply Chain
AmCham Shanghai Board (past)
OSAC Shanghai Exec Board
Mandarin & Spanish fluency
Adjunct Professor UCLAx
Daniel M. Krassenstein
USC Marshall School of Business
MS Global Supply Chain Mgt
LSS Green Belt (Black Belt soon)
Guest Lecturer
USC Marshall Center for GSCM
Advisory Committee (China Ambassador)
Krassenstein – 09-Aug-2019 – USC GSCM 2019

15. Largest FIBC (Big Bags) importer to North America from China
AIB, BRC, Kosher, HACCP, ISO & C-TPAT Certified
Shanghai WFOE with J/V factories in Jiangsu, Shandong & Chongqing.
India sharp production growth
Krassenstein – 09-Aug-2019 – USC GSCM 2019

16. 2017 PROBLEM STATEMENT
Overreliance on China
Procon is vulnerable to labor cost increases, strict EPA disruptions/costs and US-China trade conflict risks.
Krassenstein – 09-Aug-2019 – USC GSCM 2019

17. AGILE QUICK, RESOURCEFUL AND ADAPTABLE
2008 = 100% Jiangsu production
2010 = 80% Jiangsu, 20% Shandong
2015 = 50% Shandong, 40% Jiangsu, 10% Chongqing
2019 = 50% India, 40% China, 10% Vietnam
2020 = Probable: 60% India, 20% China, 20% Vietnam
Krassenstein – 09-Aug-2019 – USC GSCM 2019

18. 危(wéi)险(xiǎn) = Dangerous 机(Jī) 会(huì) = Opportunity
CRISIS = OPPORTUNITY
危(wéi)机(jī) = Crisis
危(wéi)险(xiǎn) = Dangerous +
机(Jī) 会(huì) = Opportunity
Krassenstein – 09-Aug-2019 – USC GSCM 2019

19. OPPORTUNITY LABOR COST SAVINGS
Krassenstein – 09-Aug-2019 – USC GSCM 2019

20. KEY CHALLEGES Staffing – Asia HQ in Shanghai, some shift to India
Delivery Time Integrity – LSS Black Belt Analysis
Production Lead Time
Origin/Feeder Pre-Line Haul Time
Line-Haul Sail Time
North America Port to Delivery
QC Auditing
Cultural Learning
Remain Nimble for Future Changes
Krassenstein – 09-Aug-2019 – USC GSCM 2019

21. LAX and its Role in Global Trade
John Carver
Deputy Executive Director

22. 79.4% 44/6 2.3MAT/#1 4th/2nd 737 74 87.6M It’s about the numbers!
87.6M
4th/2nd – passenger numbers ranking in world/U.S.
737: Daily nonstop domestic flights
2.3 Annual Tons of Air Cargo
87.6M – 2017 passenger numbers
74 – carriers
79.4% - Percentage of passengers at LAX that were origination or destination passengers
Meaning that we have to deal with more traffic than airports that are “hub” airports
44 countries/6 continents
79.4%
44/6

23. It’s about the numbers!
2.3MAT/#1
4th/2nd
87.6M
3,821
4th/2nd – passenger numbers ranking in world/U.S.
737: Daily nonstop domestic flights
2.3 Annual Tons of Air Cargo
87.6M – 2017 passenger numbers
74 – carriers
79.4% - Percentage of passengers at LAX that were origination or destination passengers
Meaning that we have to deal with more traffic than airports that are “hub” airports
44 countries/6 continents
79.4%
44/6

24. Los Angeles World Airports – 3,821 Acres

25. LAX Trade Activity Today Far More Globally Driven
As for most U.S. airports, calendar year 2000 had been LAX’s peak year followed by recession surrounding 9/11 and then an even worse recession in 2008/9.
LAX has experienced relatively steady growth since 2009, surpassing 2 million metric tonnes in 2016 for the first time since 2000 and establishing new annual cargo records consecutively in 2017 & 2018.
International cargo first overtook domestic cargo at LAX in That margin widened almost every year since to the point that LAX’s international freight is now almost double its domestic freight.
Source: Data from Los Angeles World Airports with analysis by L&B

26. Importance of Global Trade to US Transcontinental Carriers
While U.S. international gateways typically consider international passenger operations as their top priority, airport operators must recognize that cargo revenues are critical to many of these carriers’ business models.
Freighter-operating Asian combination airlines such as Cathay Pacific, China Airlines, EVA Air and Korean Air rely on cargo revenues for more than 20% of their total revenues.
Source: Data U.S. Census Bureau with analysis by L&B

27. LAX Role in Global Trade
Year
2018
Measures
Air Exports SWT (kg)
Air Exports Value ($US)
Exports
Chicago, IL (Port)
536,769,971
51,227,977,573
Los Angeles International Airport, CA (Port)
436,570,143
57,284,827,804
JFK International Airport, NY (Port)
407,327,704
92,486,040,427
Miami International Airport, FL (Port)
306,812,284
35,490,032,303
Cleveland, OH (Port)
204,081,455
35,533,780,627
New Orleans, LA (Port)
169,034,572
34,522,872,334
Atlanta, GA (Port)
160,448,372
20,244,508,536
Dallas-Fort Worth, TX (Port)
144,640,720
23,341,326,514
San Francisco International Airport, CA (Port)
143,120,522
29,795,910,976
Houston Intercontinental Airport, TX (Port)
118,028,196
8,375,040,018
According to data provided by the U.S. Census Bureau, the LAX Customs Port accommodated a combined a total of more than one billion kilos of exports and imports with a combined value of almost $ 120 billion.
LAX trailed only the Chicago O’Hare Customs Port in air exports (ranked by weight) and trailed only Chicago and Miami International Airport in air imports (by weight). LAX’s air exports and imports more than doubled that of Atlanta and roughly tripled that of Dallas/Ft. Worth and San Francisco.
Year
2018
Measures
Air Imports SWT (kg)
Air Imports Value ($US)
Imports
Chicago, IL (Port)
834,979,809
125,349,354,055
Miami International Airport, FL (Port)
647,435,757
25,004,623,398
Los Angeles International Airport, CA (Port)
641,145,991
62,382,501,443
JFK International Airport, NY (Port)
622,118,371
100,160,136,873
Atlanta, GA (Port)
247,850,375
35,113,595,029
New Orleans, LA (Port)
221,140,120
48,110,119,131
San Francisco International Airport, CA (Port)
207,018,883
36,413,525,427
Newark, NJ (Port)
170,808,961
25,651,375,596
Dallas-Fort Worth, TX (Port)
167,846,487
30,291,927,243
Cleveland, OH (Port)
156,631,845
26,746,610,191
Source: Data U.S. Census Bureau with analysis by L&B

28. LAX Air Cargo Modernization
In an effort to modernize its air cargo infrastructure, LAWA is evaluating the replacement of aging cargo facilities with a consolidated and integrated air cargo complex.
LAWA seeks to inspire innovative technologies, state of the art handling systems, and to otherwise leverage private sector expertise through a P3 model as it continues to explore transformation of its air cargo infrastructure.
LAWA expects its next-gen cargo facilities to become the first multi-level cargo buildings in the US, building upon the early multi-level pioneers in East Asia and Middle
East.
Examples shown above and to the left.

29. Palmdale
LAWA continues to hold the FAA designation for air service in Palmdale, airport code PMD, This airfield could represent a downstream opportunity to create a dynamic global trade port connecting the Southern California economy with direct access to International supply chain destinations. LAWA welcomes the creative input of USC Supply Chain Management experts to help assess and validate the potential for optimizing PMD as a logistics solution to serve the Western U.S.
17,000 Acres

30. Thank You!
#flyLAX airport

31. Statistics and trends in international trade
Guido Gries
Managing Director
DACHSER Americas Air & Sea

32. DACHSER Intelligent Logistics
Company overview

33. Global network
The intercontinental connection is provided by DACHSER Air & Sea Logistics' global network
Shipments across Europe are handled by the closely knit Food Logistics and European Logistics networks
Seamless visibility and integration via Dachser
The worldwide warehouse network (177 own warehouses) offers high levels of quality and functionality and rounds off the service portfolio
Air & Sea Logistics location
Road Logistics location

34. Corporate figures 2018
41.3m tons
83.7 m
Tonnage
Shipments
30,609
5.6bn €
Employees
Revenue (net, consolidated)*
55.4 % 44
399
2.6m m²
Equity ratio
Countries
Own locations
Warehouse space in 171 locations
234 m €
Invest. volume 2019
*As of 2019, group and business field revenue are reported as net consolidated figures.

35. Trends in international trade
Indicators & measures

36. Industry changes’ effects on trade
We see already some industries on the verge of change due to technological progress and automatization
The automotive industry is fast heading towards a new phase: the electronic era
The enforcement of tariffs are accelerating these changes

37. DACHSER trade barometer showing a mild decline
Visible deceleration of the global trade growth:
Slight negative growth of global trade
Global PMI reaching below Oct according to ISA*
Negative forecasts for air and ocean trade
Negative outlook due to the decline in China decreased by 7% => trade and tariffs are reducing imports
US-China trade conflict is creating a shift in trade routes and supply chains
*Institute for Supply Management

38. US – China trade dispute affects China exports to US
Container volumes decrease => a 6.5% reduction in Chinese exports to US ports
Overall US container imports grew by 2.9%, as most origin countries recorded volume increases
Vietnam recorded the largest increase => 30.7%
Total containerized inbound cargo in TEU Millions
Source: Alphaliner based on analysis derived from PIERS data

39. Main Trade Lanes Development (average CAGAR 2020e - 2023e in brackets)
Ocean Freight
Main Trade Lanes Development (average CAGAR 2020e e in brackets)
+ 3.9 %
Global Container Trade 2019: mil. TEU
North America
incl. Mexico
18.5
North America - Europe (+1.5%)
2.3
40.7
Europe
7.3
APAC - N. America (+3.4%)
Europe - APAC (2.2%)
4.3
14.6
Europe - N. America (+2.2%)
Intra-Asia
(+3.8%)
7.6
N. America - APAC (+3.0%)
APAC - Europe (+3.8%)
APAC
0.4
2.0
Europe - S. America (+3.4%)
S. America (+4.4%) - Europe
S. America - N. America (+3.9%)
N. America - S. America (+3.0%)
1.7
4.4
APAC - S. America (+4.9%)
S. America - APAC (+4.0%)
1.7
1.5
South
America
Volume in million TEU 2019e
Source: Seabury, June 19, 2019
Source: Seabury, June 19, 2019

40. Bill Clifford
World Affairs Councils of America
President and CEO