Click here for a special holiday greeting from the staff at M.E. Dey

These courses can be taken without being in the Global Business Program. They can be found on our website WCTC.EDU under Areas of Study. We are also providing a review class to take the exam for Certified Global Business Professional, offered by Nasbite. This class is a non credit offered Jan 8,9,10 and 11, 2007, from 6pm to 9pm. Only $30.10. The classes are: Global Business Fundamentals, Course Registration Number(CRN) 20579, Monday, 01/15/07 to 05/14/07, from 1.30pm to 4.25pm. 3crs, tuition $280.60

International Marketing, CRN 20581, Monday, 01/15/07 to 05/14/07, from 5.30pm to 8.25pm. 3crs, tuition $280.60

Global Supply Chain Procurement (Acclerated), CRN 20582, Thursday, 01/11/07 to 2/15/07, from 5.30pm to 9.25pm. 3 crs, tuition $280.60

Global Supply Chain Logistics (Acclerated), CRN 20590, Thursday, 03/01/07 to 04/05/07, from 5.30pm to 9.25pm. 3crs, tuition $280.60

Global Financial Transactions, CRN 21187,Wednesday, 01/17/07 to 05/09/07, from 5.30pm to 8.25pm. 3crs, tuition $280.60

International Business Transactions, CRN 20588, Tuesday, 01/16/07 to 05/08/07, from 5.30pm to 8.25pm. 3crs, tuition $280.60

For course descriptions go to the college website or call 262 691 5551

For information about the Global business specialist program go to:

http://www.wctc.edu/web/areas/business/gen/global/global.php

T r a n s p o r t a t i o n / S h i p p i n g

Shippers moving cargo from air to ocean transport

By Ian Putzger  Air Freight Correspondent

Shippers and consignees are cutting back on the use of air freight and other premium services in favour of less costly transportation options. Increasingly this is spreading to commodities that have traditionally moved exclusively by air, such as cellular phones.

Members of the Supply Chain Consortium, an industry grouping representing some 110 companies with a combined revenue in excess of US$1 trillion, are trimming their air freight traffic. This year 27 percent of SCC members have signalled a decline in air freight, and 26 percent are seeing a reduction in parcel traffic.

"The role of air freight is small and decreasing," commented James Tompkins, president and chief executive officer of supply chain consulting firm Tompkins Associates, which manages the SCC programme. The SCC was established as a platform for supply chain benchmarks and best practices, allowing members to share data and benchmark their own supply chains. Members include Coca Cola, Target, JC Penney and Rite Aid.

Bob Imbriani, vice-president of international operations of forwarder Team Worldwide, confirmed that air freight users are increasingly testing the viability of marine transportation instead. "A shift of commodities to ocean is a true factor," he commented.

Unable to absorb the high cost of air freight with the various surcharges, salmon exporters from Chile began to send some of their cargo frozen by ocean vessel already last year. initially, airline executives shrugged this off, arguing that typical air freight commodities would remain in the air, given the differential in transit times. However, that argument is losing ground.

Korean Air is attributing a decline in exports from its home market to the decision of producers of cellular phones and plasma TVs to ship part of their output by ocean vessel.

"In the past phones went 99 percent by air; now it's only 70 percent," said Ken Choi, president of KAL Cargo.

Imbriani pointed to a combination of factors that have made shipping lines a viable alternative to air freight. Sailing schedules have become more reliable, capacity is up, and the use of special equipment and containers, such as temperature and humidity control devices, have made it possible to move electronics in ocean containers, he said.

Dirk Steiger, managing director of German logistics research and consulting firm Aviainform, observed that some importers have shifted from air to ocean, while others are trying to find a mix between the two. One German retailer is looking at shipping goods from Asia by ocean vessel to the Suez Canal and distribute them by air from Cairo, he said.

One of the challenges for importers that have opted for ocean freight is the variance in transit times. On average, SCC members reported 22 days from Hong Kong and China to the US, but the spread ranges from as little as 11 days to as many as 45. Likewise, average transit times from other Pacific Rim countries are 27 days, but this can mean anything between 12 and 45 days.

Importers are increasingly taking control of their inbound traffic, according to Tompkins. With air freight on the wane, they need tighter management of the process.

One reflection of this is the make-up of distribution centres. With imports from Asia, particularly China, projected to increase, SCC members are looking to boost truck doors and cross docking capabilities at their warehouses. Expanded use of cross docking and flow-through operations is the ultimate key to improved performance, Tompkins commented.

Forwarders have attributed the shift away from air freight in part to better planning on the shipper side. Demand planning is the key, remarked Tompkins. "If you have poor demand planning, the only way to achieve customer satisfaction is at high cost. If you have poor demand planning, the only way to lower cost is poor customer satisfaction," he said.

Eighty-six percent of SCC members use 3PLs to move their products from Hong Kong and China, and 76 percent use 3PLs from other Pacific Rim points. However, their role is changing, shifting away from managing carriers to more value-added functions, Tompkins said.

Importers and shippers are very much interested in vendor performance optimisation. However, neither this nor the changing role of 3PLs has changed the relationship between SCC members and their logistics providers so far, as far as incentives and penalties are concerned. Penalties are used by 65 percent of SCC members, and 53 percent have voted with their feet and reduced orders if their logistics vendors' performance was not up to expectations. None of them believe in financial bonuses for their 3PLs, while 26 percent give out vendor recognition awards..

"The stick is very healthy and the carrot is very much shrivelled up," said Tompkins, commented.

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Asia moving closer to "Iron Silk Road" railway network

BUSAN, South Korea - Asian nations on Friday were moving a step closer to realising a decades-old dream -- integrating the continent into a single railway network.

At least 16 transport ministers were set to sign an inter-governmental agreement on the proposed Trans-Asia Railway (TAR) network, aimed at promoting trade and balanced development in the world's fastest-growing continent.

"Advances in transport improve productivity, reduce costs and promote trade. That in turn encourages economic growth and social development," UN Secretary General Kofi Annan said in a message to the two-day ministerial meeting on transport which started Friday.

Forty-one countries have sent representatives to the annual meeting, organised by the UN Economic and Social Commission for Asia and the Pacific (UNESCAP), although not all are involved in the rail project.

Preparatory meetings began Monday at the venue in South Korea's southern port city of Busan.

The 81,000-kilometre (50,200-mile) network, first mooted by the UN back in 1960, is also dubbed the "Iron Silk Road" after the ancient trade route. It would link capitals, ports and industrial hubs across 28 Asian countries all the way to Europe.

UNESCAP chief Kim Hak-Su said the TAR would "physically link the hinterland areas in the deep interior of the Asian continent with Asia's bustling maritime cities and European markets."

Twelve of the world's 30 landlocked countries are in Asia, he said.

"These linkages will provide seamless connectivity through transport arteries to Asian ports and European markets," Kim said in an opening speech.

UNESCAP officials said 16 of the 28 countries have confirmed they will sign the agreement later Friday and the number could rise.

They cited procedural matters rather than disagreement over the project as the reason for the delays. Those left out have another two years to sign on.

Kim told AFP Thursday he expects the accord to come into force in the second half of next year after eight countries ratify it.

The ratification would encourage international lenders like the Asian Development Bank to seriously consider loan requests from TAR signatories, some of whom are in desperate need of finance, Kim said.

Wang Zhiguo, China's deputy railways minister, said his country ardently backs the TAR project.

"The Chinese economy continues to grow through efforts to improve and maintain efficient transport and logistic systems," he told the forum.

"We're signing the agreement because we can fulfil many of our goals in transport with it."

Despite the enthusiasm among some countries, the slow progress over the past five decades indicates the challenges still ahead.

The TAR network would connect trans-Asian railway networks with Russia and Mongolia in the north, Malaysia in the south, South Korea in the east and Turkey in the west.

But one stumbling block is North Korea. South Korea would have to traverse its territory to gain access to the Russian or Chinese rail networks.

Work has been completed on laying track across the heavily fortified inter-Korean frontier. But planned test runs were cancelled in May amid tensions over other issues.

Continent-wide problems include switching between different-gauge tracks, where to stop, how to handle sometimes tricky quarantine and immigration paperwork, and how to safely ferry cargo and people across many borders.

But Asia, home to 60 per cent of the world's population and generating 26 per cent of the world's economic output, deserves better transport, UNESCAP chief Kim has said.

It boasts 13 of the world's top 20 container seaports but has fewer than 100 "dry ports" -- inland container depots. Europe, by contrast, has 200 and the United States 370.

Agence France-Presse

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DOT boss: Mexican trucks will get here … eventually

GRAPEVINE, Texas (Oct. 31, 2006) — The Bush administration still expects to open American highways to trucks from Mexico, but only when that country’s commercial equipment and operators meet U.S. requirements, a top official said here today at the American Trucking Associations Management Conference and Exhibition.

“We in the administration very much support opening the border, but there is nothing immediately planned to open the border or have the trucks come over,” U.S. Transportation Secretary Mary Peters told reporters after a brief tour of safety-related commercial trucking exhibits. “The real key point is we want Mexican trucks and Mexican drivers to adhere to the same standards that we do in the United States.”

That there is no timetable does not mean Peters has altered any implementation goals since she took over a month ago for longtime DOT chief Norman Mineta, she added. Peters stated that she simply wants “to get up to speed” on the issues and to “make sure that we’re right and we’re ready.”

Peters also said she agreed with the ATA’s stated aim of securing a higher priority in national transportation plans for the movement of freight.

“It’s one of the reasons that in the SAFETEA-LU legislation that passed last year, we made sure that freight is at the table when decisions are made on transportation projects. I very much want to continue that in the future,” Peters said. “We’re very keyed in on the amount of freight traffic not only that we have today, but the fact that it’s going to double within the next decade. We have to have a system that’s going to support that freight movement.”

Generally, funding highway projects is a “major concern,” Peters stated.

“We certainly don’t have enough money to be able to maintain the roads that we have, never mind even building the capacity. I think Texas along with some other states has been very innovative in how they’re bringing other resources to bear,” she said, noting the safety problems that result from even faded lane markers and road signs. “That’s why we’re focusing on the new highway safety improvement program that targets dollars right at those issues to make sure the states have a dedicated pot of money to use for safety improvements and direct that money where it’s needed most.”

Asked about a theme for the next highway bill, Peters explained that the National Surface Transportation Policy and Revenue Study Commission on which she serves is currently deliberating the matter.

“[The year] 2009 is going to come about all too soon and we need to get busy. … We’re still in the formulation stage,” Peters said. “I think there’s an opportunity to take a broader look than we ever have in the past, perhaps for the last 50 years, at what we need to do in terms of surface transportation funding and programs in the future.”

Peters said she expects the commission to make recommendations “probably toward the end of 2007.”

Of Mineta’s congestion initiative, Peters reported the DOT had received applications for the “corridors of the future” program, and the department would be reviewing them over next few months, before making decisions in April 2007 “that will allow us proceed with those pilot projects hopefully by mid-point next year.”

Referring to several of the convention center displays, the secretary stated that trucking safety improvements should come as a matter of choice rather than by regulations.

“I’ve been very impressed with the safety equipment I’ve seen here today,” she said. “I prefer that we use incentives and education to get the safety equipment out there and into the fleets as opposed to mandates.”

— The Trucker Staff

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Huge month says volumes about changes at L.A. port

The facility, under new management and intent on luring back business, moves a record amount of cargo, keeping ahead of its Long Beach rival.

By Ronald D. White, Times Staff Writer November 21, 2006

More than 800,000 cargo containers of dolls, socks and other goods flowed through Los Angeles' port in October, the most ever for any U.S. harbor, reflecting resurgent operations under new management.

The fresh wave of shipping business contrasts with last year's sluggish growth that had many suspecting that neighboring Long Beach would dethrone L.A. as the nation's busiest containership port. Such a sea change, however, won't happen this year.

"I think we were ahead of them in February, but they have really picked it up in the last few months," said Art Wong, spokesman for the Port of Long Beach.

No other U.S. port has ever moved 700,000 containers in a month, a feat Los Angeles managed one other time in 2005. But this year, Los Angeles has moved more than 700,000 containers in each of the last five months, more cargo than the 15th-ranked container port in the nation — Jacksonville, Fla. — handled in all of 2005.

In October, the L.A. port tally rose to the equivalent of 800,064 20-foot containers. Laid end to end, they would stretch 3,030 miles — about the distance from Los Angeles to Port-au-Prince, Haiti. During the same month, the Port of Long Beach handled 650,726 containers.

"What this record reinforces is the tremendous economic importance of both these ports on our local economy," said Gary Toebben, chief executive of the Los Angeles Area Chamber of Commerce. "They have just done a great job in improving their ability to handle all that cargo."

The ports, which employ 500,000 people, each year fund a $22-billion payroll and pay $7 billion in taxes.

Through October, container cargo at the Port of Los Angeles is up 13% from the same period last year, and Long Beach is running about 9% higher. The port of Oakland is up nearly 7%, but many other ports around the nation, such as Tacoma, Wash., Charleston, S.C., and the four facilities run by the Virginia Port Authority, are experiencing only modest growth.

The increased volumes in Los Angeles and Long Beach contrast with the ports' experience in 2004, when the facilities were overwhelmed by an unexpected surge in cargo. Ships had to wait as long as a week to unload their cargo. Retailers scrambled to move some business to other ports. Shipping lines such as Hyundai Merchant Marine Co. added service to the Pacific Northwest to diversify.

By 2005, the problems had been solved. More dockworkers were hired and terminals at both Southern California ports stayed open long into the night and on Saturdays. Long Beach had a huge year as a result, nearly catching its neighbor.

But lingering doubts about its ability to handle growth haunted the Port of Los Angeles, which posted a 3% increase in container traffic for 2005 compared with Long Beach's 16% boost.

This year, Los Angeles Mayor Antonio Villaraigosa has called for environmentally responsible growth at the port, unlike his predecessor, James Hahn, who discouraged expansion at the facility.

And Geraldine Knatz, former managing director of development at the Port of Long Beach, was hired to run Los Angeles' port. She quickly learned that the Los Angeles facility's image was of a port that wasn't interested in more business.

"People would tell me they were surprised. 'Oh, you want to grow? I thought you wanted to stay static,' " Knatz said. "I hope there is a new feeling of optimism. Maybe we are finally getting the message out."

Some shipping lines and customers are getting the word.

Hyundai Merchant Marine, for instance, added a sixth route this year to move goods from Asia to Los Angeles.

Phillip T. Wright, West Coast vice president of Haifa, Israel-based Zim Container Line, said that Los Angeles benefited from the changes that helped Long Beach in 2005: plenty of dockworkers and extended terminal hours.

In addition, some of those shipping lines and retailers that diverted cargo from Southern California faced other challenges this year that resulted in a shift back to Los Angeles and Long Beach, analysts said.

"Puget Sound was less attractive for cargo this year because those rail lines had to compete with huge volumes of coal shipped from the Powder River Basin in Wyoming," said Paul Bingham of Global Insight, a consulting firm hired by the nation's largest retailers to keep monthly tabs on port traffic.

Even the port's smaller customers, such as Torrance-based Lantech Systems, are cheering the L.A. port's performance. Lantech, which makes custom servers and workstations used for animation and visual effects, has 10 employees and about $3 million in annual sales.

In the past, it took an average of two weeks for a shipment of parts to clear the Port of Los Angeles and arrive at the warehouse, said Altaf Lalani, vice president of sales and marketing for Lantech. This year, it took just five days.

"It was amazing," Lalani said. "We just have to assume they are getting better at it."

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Maersk seeks to raise shipping rates to U.S.

 Maersk says it will pursue a general rate increase of at least $300 per 40-foot equivalent unit (FEU) to US West Coast ports and a hike of $500 to US East Coast ports. Earlier in November Maersk said it was raising Europe to US rates up by $300 per container effective 1 January. Maersk said increases will be even greater for cargo continuing to inland destinations, in order to offset the dramatic cost increases of providing inland service.

HAPAG-LLOYD hiking Trans-Atlantic rates

Hapag-Lloyd is joining Maersk and MSC in raising rates in the North Europe-to-North America trade. From 1 February rates will rise $200 per TEU and $250 per FEU.

W T O / T r a d e   P a c t s

United States and Colombia Sign Trade Promotion Agreement

WASHINGTON – Deputy U.S. Trade Representative John Veroneau and Colombian Minister of Trade, Industry, and Tourism Jorge Humberto Botero today signed the United States-Colombia Trade Promotion Agreement (CTPA), a comprehensive agreement that will eliminate tariffs and other barriers to trade in goods and services between the United States and Colombia.

“The signing of this agreement today marks an important milestone in our partnership with Colombia,” said Ambassador Veroneau.  “The agreement will deepen and strengthen our trade ties by providing new opportunities for U.S. businesses, manufacturers, farmers and ranchers to export their goods and services to one of Latin America’s most robust economies.  These opportunities will translate into more jobs for U.S. workers and greater choices for U.S. consumers.  For Colombia, this agreement will provide permanent access to the U.S. market, which will aid in sustaining real growth, creating more jobs, and attracting new investment.”

“The U.S.-Colombia Trade Promotion Agreement will contribute to our collaborative efforts to promote peace and enhance stability and security across the Andean region.  The Agreement will also provide a strong framework to address labor issues, with targeted remedies for labor violations.  We look forward to working with members of Congress to ensure bipartisan support for the agreement,” said Ambassador Veroneau.

Upon implementation of this agreement, over eighty percent of U.S. exports of consumer and industrial products to Colombia will become duty-free immediately.  Additionally, U.S. farm exports to Colombia such as high quality beef, cotton, wheat, soybeans and soybean products, fruits and vegetables will receive immediate duty-free treatment.  The agreement will remove barriers to U.S. service providers doing business in Colombia; provide a secure, predictable legal framework for U.S. investors; protect intellectual property rights; and provide for effective enforcement of labor and environmental laws.

In 2005, U.S. goods exports to Colombia totaled nearly $5.5 billion.  Two-way goods trade between the United States and Colombia during 2005 amounted to $14.3 billion.  As a result of the agreement, the United States will have greater access to the Colombian market for products such as machinery, information technology equipment, auto parts, and fertilizers and agro-chemicals, along with meat, poultry, dairy products, grains, soybeans and soybean products, cotton, fruits and vegetables, and processed foods.

Many products from Colombia already enter the U.S. market duty-free under the Andean Trade Preference Act (ATPA), which expires on December 31, 2006.  This new agreement helps Colombia to expand its current access and lock in duty-free treatment for Colombian products.  Building on ATPA, the agreement will ensure that U.S. products exported to Colombia likewise benefit from duty-free treatment.

BACKGROUND

In May 2004, the United States initiated negotiations with three Andean nations – Colombia, Peru, and Ecuador – with Bolivia as an observer.  Negotiations with Peru concluded on December 7, 2005, and the U.S.-Peru Trade Promotion Agreement was signed on April 12, 2006.  Negotiations with Colombia concluded on February 27, 2006.

The United States has significant economic ties with Colombia.  Colombia is currently our 31st largest goods trading partner with $14.3 billion in total (two-way) goods trade during 2005.  Goods exports totaled $5.5 billion; goods imports totaled $8.8 billion. Top export categories in 2005 were: machinery, organic chemicals, electrical machinery, cereals, and plastic.  U.S. exports of agricultural products to Colombia totaled $677 million in 2005.  Leading categories included: coarse grains, wheat, cotton, and soybeans.  The stock of U.S. foreign direct investment in Colombia was $3.4 billion in 2005, a 20.7 percent increase from 2004.

Colombian President Uribe has made strengthening the rule of law and protecting human rights focuses of his administration.  Investigative and prosecutorial functions of the criminal justice system have been strengthened to address the violence against trade unionists.  Colombia also signed a historic tripartite agreement with the International Labor Organization (ILO) for a presence in Colombia through the establishment of a permanent ILO office.

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United States and Lebanon Sign Trade and Investment Framework Agreement

BEIRUT - Assistant U.S. Trade Representative for Europe and the Middle East Shaun Donnelly and Lebanese Minister of Economy and Trade Sami Haddad today signed in Beirut a Trade and Investment Framework Agreement (TIFA), which will provide a forum for expanding and strengthening bilateral trade and investment relations between the United States and Lebanon.

"Today's signing of the TIFA is a part of a comprehensive U.S. effort to support the Lebanese Government" Donnelly said.  "The United States’ mission is to help Lebanon meet the needs of its people and build a peaceful, prosperous and democratic future.  Expanded trade and investment between our two countries can play a vital role in achieving these objectives."

Donnelly added, "The TIFA signals the commitment of our two governments to work in a concrete and comprehensive manner to expand bilateral economic ties.  It will be an important means through which the United States can further its efforts to help promote Lebanese economic development, create jobs, and further integrate Lebanon into the global economy.  Today's signing also demonstrates the continued progress being made under the President’s Middle East Free Trade Area Initiative."

BACKGROUND

The President’s MEFTA initiative seeks to promote free trade throughout the region and between the region and the United States. The United States will take a graduated step-by-step approach to creating a free trade area with countries interested and willing to open their economies and liberalize their trade regimes.

The United States uses TIFAs to strengthen bilateral trade and support economic reform through regular senior-level discussions on commercial and economic issues.  The U.S.-Lebanon TIFA creates a Joint Council that will consider a wide range of commercial issues and sets out basic principles underlying the two nations’ trade and investment relationship. The council will establish a permanent dialogue with the expectation of expanding trade and investment between the United States and Lebanon and resolving trade issues and deepening the bilateral trade relationship. 

The TIFA complements other U.S. Government efforts in Lebanon that focus on economic development, including the Overseas Private Investment Corporation’s join project with Citibank to provide loans to families and businesses and the U.S.-Lebanon Partnership Fund led by four American CEOs which will assist with economic growth, job creation, and education.

U.S. goods exports to Lebanon in 2005 were valued at $466 million, and included machinery, vehicles, and electrical machinery.  U.S. exports of agricultural products to Lebanon were valued at $63 million, including course grains and tree nuts.  U.S. goods imports from Lebanon in 2005 were valued at $92 million, including precious stones, furniture and bedding, and inorganic chemicals.  U.S. imports of agricultural products from Lebanon in 2005 were valued at $17 million.

The United States also has TIFAs with Algeria, Egypt, Kuwait, Qatar, Saudi Arabia, Tunisia, United Arab Emirates, and Yemen.

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Vietnam becomes 150 WTO member

GENEVA (Reuters) - Communist Vietnam, one of the world's fastest growing economies, won formal approval from the World Trade Organization on Tuesday to become its 150th member by the end of the year.

The Southeast Asian country of 82 million people will officially join the WTO, which sets the rules for global trade, 30 days after its National Assembly ratifies the accords.

"Today is a memorable day in the process of the international economic integration of Vietnam," Deputy Prime Minister Pham Gia Khiem told reporters after the WTO's General Council approved a deal struck last month by a working party.

Vietnam, an exporter of textiles, seafood, coffee and furniture, negotiated to join the WTO for 12 years while its once state-controlled economy underwent deep reform.

Although its economy is relatively small, with gross domestic product of $61 billion this year, it is the latest of Asia's economic success stories and has become a big favorite of the foreign aid and investment communities.

Average economic growth of 7.4 percent over the past five years is higher than that of any other Asian country except China, its Communist neighbor whose output has soared since it joined the WTO in late 2001.

WTO Director-General Pascal Lamy called the deal "fairly balanced" and said it would benefit Vietnam. "Those who are members compete on a more level playing field," he said when asked what advantages membership would bring Hanoi.

WORLD WILL BENEFIT

But joining the WTO will not protect it from anti-dumping actions by rich nations, such as the extra duties imposed by the European Union on its shoes and by the United States on its shrimp exports.

The United States, which waged war against communist North Vietnam and its guerrilla supporters in the south in the 1960s and early 1970s before they took over the whole country, praised Hanoi's economic reforms.

"The world will benefit from the inclusion of this rapidly-growing, dynamic economy in the rules-based trading system," U.S. Trade Representative Susan Schwab said in a statement.

The deal includes the tariffs and quotas Vietnam will apply to foreign imports. It also specifies services such as banking, insurance and telecommunications that Vietnam will open to outside providers and spells out limits to the restrictions it can impose on foreign ownership of firms inside the country.

When Vietnam's neighbor Cambodia joined the WTO in 2004 it did so in the face of warnings from regional economists that it had conceded too much.

Lamy acknowledged that those joining the WTO now were being forced to pay a higher price. "That is the reality," he told journalists.

Vietnam's accession will leave only a handful of important economies outside the WTO, including Russia and Ukraine, which are both negotiating entry, and Iran.

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United States, Russia Sign Bilateral WTO Market Access Agreement: Negotiations on WTO Membership Now Move to the Multilateral Phase

Hanoi - U.S. Trade Representative Susan C. Schwab and Russian Minister of Trade and Economic Development German Gref today signed a bilateral market access agreement that is an important element in Russia’s accession to the World Trade Organization (WTO).  Completion of this bilateral agreement marks a significant milestone in Russia’s bid to join the WTO. 

"I am pleased that we have concluded this important agreement in connection with Russia’s WTO accession negotiations.  This is a strong and far-reaching commercial agreement that meets the high standards of President Bush’s market-opening trade agenda and moves Russia closer to full integration into the global, rules-based trading system.  Russia has become an increasingly important destination for American agricultural goods, a range of services, and manufactured products – and as Russia’s market opens further as a result of its WTO membership, its importance will only grow,” Ambassador Schwab stated. 

The bilateral agreement will create significant new opportunities for U.S. producers and exporters of industrial and agricultural goods, as well as U.S. services providers, when it enters into effect.  The agreement also provides for the immediate implementation of some market opening actions for industrial and agricultural goods.  The agreement resolves long-standing bilateral issues related to trade in agricultural goods, and also puts in place a strong and enforceable bilateral blueprint for protection and enforcement of intellectual property rights (IPR).  Implementation of the commitments on IPR, agriculture, and industrial goods will be essential to completing the final multilateral negotiations on the overall accession package.

“We worked through many difficult issues and the agreement sets the stage for closer cooperation in many commercial areas, as well as moving Russia closer to joining the WTO’s rules-based trading system and reinforcing Russia’s economic reforms, which is so essential to Russia’s own growth and development,” said Ambassador Schwab.

"It is significant that our signing takes place on the margins of the meeting of the Asia-Pacific Leaders.  APEC represents the most dynamic trading region of the world.  Russia is an important Pacific partner and WTO Membership ultimately will strengthen our cooperation in economic matters.  We will work diligently with other APEC Members, our trading partners, and Russia on the multilateral aspects of the accession negotiation.  We still have work to do, but today’s agreement puts new energy and momentum into the negotiating process.  We will continue to work closely with domestic stakeholders and the U.S. Congress in the next phase of the negotiations," added Schwab.

BACKGROUND

The WTO bilateral market access agreement signed today will generate significant benefits and resolves many issues in agriculture.  Effective immediately, Russia will apply international norms and science-based measures that address impediments to U.S. agricultural exports of beef and beef by-products and pork and pork by-products and products of biotechnology.  Russia’s government has confirmed its commitment to compliance with existing bilateral agreements (e.g., the bilateral Meat Agreement) and application of internationally recognized SPS measures with regard to agricultural trade.

U.S. farmers, ranchers, and food processors of wheat, corn, barley, apples, pears, grapes, raisins, almonds, walnuts, pistachio nuts, dairy, soybeans, soybean meal, soybean oil, pet food, wine, poultry, pork, and beef, among others, will benefit from the market access provisions of the bilateral agreement.

Russia’s tariff commitments include participation in the Information Technology Agreement (ITA), which will result in the duty-free entry of IT products, such as computers and semiconductors.  Russia has also agreed to substantially reduce its tariffs on both wide body and narrow body civil aircraft and parts. Tariffs on chemical products are harmonized at 5.5 and 6.5 percent, in accordance with the Chemical Tariff Harmonization Agreement, and Russia will reduce tariffs on construction and agricultural equipment, scientific equipment, and medical devices.  Russia’s tariffs, when fully implemented, will average 5 percent in these sectors.  And Russia’s overall bound tariff rate on industrial and consumer products will average around 8 percent. 

With respect to other non-tariff barriers, the agreement sets out an understanding on procedures for importing technology products with encryption (such as mobile phones, operating systems, and other products).  In addition, Russia will reduce export duties on ferrous (steel) scrap and eliminate its export duty on copper cathode.

Russia has undertaken market access and national treatment commitments in a wide array of commercially significant services sectors.  U.S service suppliers will benefit, in particular, from more open access in infrastructure services sectors such as telecommunications (including satellite services), computer and related services, express delivery, distribution, financial services and audio visual services. 

The bilateral market access agreement also includes important provisions that will strengthen IPR protection in Russia.  Under the terms of the agreement, Russia will take action, starting immediately, to address piracy and counterfeiting and further improve its laws on IPR protection and enforcement, both stated priorities of the Russian Government, which has confirmed its commitment to implementing this agreement.  The agreement also sets the stage for further progress on IPR issues in the ongoing multilateral negotiations. 

Russia and other WTO members must complete the multilateral part of these negotiations before Russia becomes a WTO member and its WTO commitments go into effect.  In addition, for U.S. farmers, ranchers, businesses and investors to enjoy the benefits of many of Russia’s commitments, Congress will need to enact legislation terminating application of the Jackson-Vanik amendment to Russia and authorizing the grant of permanent normal trade relations (PNTR) to Russia. 

Russia has been negotiating its terms of accession to the WTO, and previously the General Agreement on Tariffs and Trade 1947 (GATT), since 1993.  The next step in Russia’s accession process is completion of multilateral negotiations on a Working Party Report and Protocol of Accession that details the changes Russia will make to bring its trade regime into conformity with WTO rules

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