1. International Trade Jade Sims, Outreach Specialist International Business Center Michigan State University

2. Jade Sims, 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 2 of 33

3. Jade Sims, Michigan State University 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 3 of 33

4. Jade Sims, Michigan State University 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. 4 of 33

5. Jade Sims, Michigan State University 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 5 of 33

6. Jade Sims, Michigan State University U.S. Trade Balance 2001-2011 6 of 33

7. Jade Sims, Michigan State University Average Domestic Crude Oil Prices 7 of 33

8. Jade Sims, Michigan State University U.S. Trade deficit vs. Average Domestic Crude Oil Prices 8 of 33

9. Jade Sims, Michigan State University Trade Balance 9 of 33 Source: census.gov

10. Jade Sims, Michigan State University Trade Balance 10 of 33 Source: census.gov

11. Jade Sims, Michigan State University What are we “trading”? (2010) GoodsServicesTotal Exports1,287,139545,502 1,834,166 Imports1,935,740 394,153 2,329,894 TOTAL-647,077 +151,349-495,728 (in millions USD) 11 of 33 Source: census.gov

12. Jade Sims, Michigan State University Service Exports (2010) 1.Other private services47% 2.Travel19% 3.Royalties & license fees18% 4.Other transportation7% 5.Passenger fares6% 6.Transfers US military cont.3% 7.US gov’t misc.0% Total:545,502 million USD 12 of 33 Source: census.gov

13. Jade Sims, Michigan State University Other private services (?) 13 of 33 Source: census.gov

14. Jade Sims, Michigan State University 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) 14 of 33 Source: Office of Travel and Tourism Industries

15. Jade Sims, Michigan State University Service Imports (2010) 1.Other private services44% 2.Travel19% 3.Other transportation12% 4.Direct Defense Expenditures8% 5.Royalties & license fees7% 6.Passenger fares7% 7.US gov’t misc.1% Total:394,153 million USD 15 of 33 Source: census.gov

16. Jade Sims, Michigan State University Goods Exports (2010) 1.Capital goods35% 2.Industrial supplies31% 3.Consumer gods13% 4.Automotive vehicles etc9% 5.Foods, feeds, & beverage8% 6.Other goods4% TOTAL:1,278,139 million USD 16 of 33 Source: census.gov

17. Jade Sims, Michigan State University Goods Imports (2010) 1.Industrial supplies31% 2.Consumer goods25% 3.Capital goods23% 4.Automotive vehicles etc12% 5.Foods, feeds & beverages5% 6.Other goods3% TOTAL: 1,912,041 million USD 17 of 33 Source: census.gov

18. Jade Sims, Michigan State University 18 of 33 Manufactured Goods In 2008, U.S. Factories Produced $5.18 TRILLION of These Products Source: US Census Bureau

19. Jade Sims, Michigan State University 19 of 33 Manufactured Goods The U.S. is the world’s largest manufacturer (20%) Source: census.gov

20. Jade Sims, Michigan State University Trade by Region 2010 (mills USD) U.S. Imports for Consumption for Selected World Areas 20 of 33 U.S. Domestic exports

21. Jade Sims, Michigan State University Total Trade in goods by Country 2010 (mil USD) EXPORTSIMPORTS TOTAL TRADE % TOTAL TRADE 1 Canada 248.8276.5525.316.5% 2 China 91.9364.9456.814.3% 3 Mexico 163.3229.7393.012.3% 4 Japan 60.5120.3180.95.7% 5 Federal Republic of Germany 48.282.7130.94.1% 6 United Kingdom 48.549.898.33.1% 7 Korea, South 38.848.987.72.7% 21 of 33 Source: census.gov

22. Jade Sims, Michigan State University Total Trade in goods by Country 2010 (mil USD) con’t 22 of 33 EXPORTSIMPORTS TOTAL TRADE % TOTAL TRADE 8 France 27.038.665.62.1% 9 Taiwan 26.035.961.91.9% 10 Brazil 35.423.959.31.9% 11 Netherlands 35.019.054.01.7% 12 India 19.229.548.81.5% 13 Singapore 29.117.546.61.5% 14 Venezuela 10.732.843.41.4% 15 Saudi Arabia 11.631.443.01.3% Source: census.gov

23. Jade Sims, Michigan State University 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?) 7 th largest trade partner (imports + exports = $87.7m) Korea-EU agreement to start July 1 (-8%) – Columbia 20 th largest partner exports, 25 th for imports – Panama Canal expansion 23 of 33

24. Jade Sims, Michigan State University Free Trade Agreements (FTAs) 24 of 33

25. Jade Sims, Michigan State University 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 25 of 33

26. Jade Sims, Michigan State University Choosing Trade Partners How do we choose our trading partners? 26 of 33

27. Jade Sims, Michigan State University Trade by NAICS Code (mills USD) U.S. Imports 27 of 33 U.S. Exports

28. Jade Sims, Michigan State University National Export Initiative (NEI) 28 of 33

29. Jade Sims, Michigan State University 29 of 33 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*

30. Jade Sims, Michigan State University 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 2008- 2009 (esp. medium—100 to 499 employees) 30 of 33

31. Jade Sims, Michigan State University 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 31 of 33

32. Jade Sims, Michigan State University 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) 32 of 33

33. Jade Sims, Michigan State University 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 33 of 33

34. Jade Sims, Michigan State University RESOURCES http://ita.doc.gov/ http://export.gov/ www.census.gov – www.census.gov/foreign-trade/Press- Release/current_press_release/ft900.pdf www.census.gov/foreign-trade/Press- Release/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/

35. Thank you! Questions?