Moran Shipping Agencies Inc.

I was so delight to get a chance to visit Moran Shipping Agencies and get to know from Mr. Jason Kelly, the Executive Vice President. The main purpose of this company is to make sure about the cargo entering gets in and out safety and security with efficient manner. He also tell us saying time is literally money which is very true for me. Mr. Jason also explains how the company runs and what are their daily job is to do. Moran Shipping Agencies serve as a temporary owners of any particular vessels like cars, jet fuel, heating oil, gasoline etc and has a competitive advantage on no tax because Harbor maintenance is kept by the government which is the most beneficial for the company to earn profit. He also talks about the piracy since it is very big problem around the globe. He mention that there were 700,000 ships held in hostage and insurance companies take care of the ship but still there is big burden for the owners.
Also I came to know on that day, there is a foreign trade zone in Providence, RI.

The Impact of trade in China

China has become the world’s fastest growing major economy. It has become the world’s second largest economy after USA by both nominal GDP and purchasing power parity. China is also the world’s largest exporter and second largest importer of goods.

Trading with other country around the globe plays a vital role and the following are the effects of trade.

Currency Valuation:

China Yuan has undervalued by anywhere from 15 to 38.5%. China has been slowly increasing its value and they have been doing carefully because it benefits by keeping lower. It is costing the U.S. economy from a half-million to 2.25 million jobs. Although the Obama administration has been urging China to let its currency rise faster, China has been slow to respond, and the administration has avoided a full-fledged confrontation spiked with retaliatory tariffs.

Foreign Direct Investment (FDI):

FDI is defines as a company from one country making a physical investment into building a factory in another country. Here is China Foreign investment fell for the 10th time in 11 months, as companies reined in spending amid a slowdown in the world’s second-biggest economy. Investment declined 8.7 percent from a year earlier to $7.58 billion, the eighth drop in nine months and the smallest inflow since July 2010. The decline underscores foreign investors’ concerns that moderating expansion in China, the world’s most populous nation, will weigh on sales and profitability.

In comparison with last year’s data, foreign direct investment of $9.05 billion in September 2011 was the most for that month on record. The highest for a single month was $14 billion in December 2010, and investment of $116 billion in 2011 was the biggest annual figure.Therefore, government needs to reduce the tax burden for companies and cut the reserve ratio and interest rates to support growth.

Migration of labor:

China have a large number of the world’s migrants, a new trend of immigration is emerging due to economic and demographic changes within the country. Recently China is taking an action for its economic development by undertaking slow population growth and low fertility. In 2010 census, the population growth has been lowed by allowing one child in per family. In between 2005 to 2010, the growth of the working-age population (age 15 to 64) is projected to decline from 0.95 percent per annum. This decline shows that the surplus labor in China is coming to an end. Two million job vacancies were reported in the southeast region of China in 2004, and labor shortages spread north in 2005. Therefore, the pressure to import cheap labor from neighboring counties is rising and 10,000 irregular workers are smuggled each year from Vietnam and other Southeast Asian countries.

Multinational Companies (MNC):

The multinational companies in China plays a big role in the creation of wealth of the country by creating employment, by sharing technology, and also taking advantage of abundance labor. MNCs have made significant contributions to China’s development. In 2004, 28% of China’s industrial output and 19% of its tax revenue was accounted for by MNCs.

China plays an increasing role in calling for free trade areas and security pacts amongst its Asia- Pacific neighbors. It has strong political and economic links with numerous nations in the developing world.

References: 

http://www.migrationinformation.org/feature/display.cfm?ID=838

http://www.bloomberg.com/news/2012-08-16/china-s-july-fdi-falls-8-7-from-year-earlier-to-7-58-billion.html

http://www.businessinsider.com/foreign-direct-investment-in-china-continues-to-dive-2012-10#ixzz2ApNcHiQR

http://www.washingtonpost.com/business/economy/congress-taking-aim-at-china-over-currency-valuation/2011/10/03/gIQAhsvKJL_story.html

Regional Trade Agreements: Trans-Pacific Partnership

Regional Trade Agreement has become increasingly prevalent since the early 1990s. And till January 2012, the GATT had received 511 notifications of regional trade agreement where 319 were in force. The main purpose is to increase exports even though it can have positive or negative effects on trade depending on their design and implementation. For Regional Trade Agreement, the most important ingredient for success is a low trade barrier with all global partners.

The Trans- Pacific Partnership (TPP) is a multi-national trade agreement that threatens to extend restrictive intellectual property laws across the globe and rewrite international rules on its enforcement. The Trans- Pacific partnership started in 2005 with four countries that are New Zealand, Singapore, Chile and Brunei. In 2007, there was a expanded version of the agreement with a larger group of countries.  It is a comprehensive trade agreement, affecting trade in goods, trade remedies, technical barriers to trade, intellectual property and trade in service. It is called for reduction by 90 percent of all tariffs between member countries by January 1, 2006 and reduction of all trade tariffs to zero by the year 2015. This regional trade agreement is very valuable for the developing countries as it aims to free trade deal with increase flow of goods and services across the world.

The TPP will encompass far more than trade, rewriting many domestic laws, intellectual property rights, and investment and environment protection throughout the region. It also permits private foreign companies to sue sovereign countries on grounds of restriction of trade by supporting greater investor to state litigation.

The TPP misrepresents the potential of free trade as it encourages through greater international regulations.

Retrieved from:

http://www.coha.org/the-trans-pacific-partnership-free-trade-at-what-costs/
http://www.youtube.com/watch?v=kNQffQ7Npi0

The Organization of the Petroleum Exporting Countries (OPEC) And Why is it important for developing nations

The Organization of the Petroleum Exporting Counties (OPEC) is an intergovernmental organization of 12 oil producing countries which are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, The United Arab Emirates and Venezuela. The principal goal of OPEC is to safeguard the organization interest individually and collectively. It ensures the stabilization of prices in international oil markets by eliminating harmful and unnecessary fluctuation. OPEC decided to keep unchanged the group’s production ceiling of 30 million barrels a day for its 12 members. As of November 2010, OPEC members collectively hold 79% of world crude oil reserves and 44% of the world’s crude oil production capacity affording them some control over the global market. OPEC’s objective is to co-ordinate and unifies petroleum policies among member countries in order to secure fair economic and regular supply of petroleum to consuming nations and a fair return on capital to those investing in the industry. OPEC became prominent in supporting the oil sector as part of global efforts to address the economic crisis.

OPEC helped developing countries to come together to solve the problems facing poor countries and helps them to establish a better economic system by allowing increased trade and exchange of knowledge. The concept OPEC established the OPEC fund for International Development (OFID) in January 1976. Their purpose is to promote the cooperation between OPEC member countries and other developing nations by helping poorer low-income non- OPEC countries in their social and economic advancement. This is active in Africa, Asia, Europe and Latin America by providing a wide range of projects like providing clean water and energy to remote communities, to build schools, hospitals, roads, farming and trade opportunities. In between 1973 and 2010, OPEC provided over $347 billion in development assistance to other developing countries and as of today 130 countries from developing world have benefited from OFID assistance.

OPEC has enough power to dictate a price level and maintain it through production policy. OPEC spokesmen mention that “ the world’s largest donors of financial assistance to developing counties and contribute the majority of funds for the World Bank and IMF borrowings. It is also believed that OPEC countries can and will provide the means for non- oil developing countries to realize their target for economic development.

Retrieved from 

http://www.foreignaffairs.com/articles/25079/maurice-j-williams/the-aid-programs-of-the-opec-     countries

USA and China “Trade War”

President Obama imposes additional 35 percent on Chinese made tires to support the U.S. tires industry. American market for Chinese tires between 2004 and 2008, the Chinese market share went up 16.7 percent from 4.7 percent. The Chinese tires were severely impacting the domestic tire market and this dispute aims to slow China’s rapid export growth and protect American jobs in the tire sector. By increasing the tariff rates, the American administration used safeguarding provision where government do not have to worry about country is competing unfairly however, only need to demonstrate that American producers have suffered.

In the U.S. Chicken feet usually end up being ground into parts for feed. However for China, they are delicacy and the Chinese consumer prefer the taste of meat in the bone. Due to Chinese poultry are not producing enough chicken to meet the market demand, the U.S. has been the source of about half of China’s import of feet. Since China is not happy with U.S. decision of imposing 35 percent tariff, Chinese minister announced imposing anti dumping tariff ranging from 43.1 percent to 105.4 percent on Chicken feet where Chinese administration claims that the American’s are dumping their products at cheaper rate than domestically. The U.S. exported $677 million worth of chicken to China where half of those exports were chicken feet, which worth $0.60 to $0.80 per pound on the Chinese market but just pennies in the U.S.

In my view, the trade war between U.S. and China, they both are protecting their domestic market. U.S. imposed tariff on Chinese tires to protect tire industry in their home country but what about the consumer? The most affected are the consumers, who will be forced to buy expensive tires, which will again create demand for cheap tires. Same goes to China, as Chinese administrators attacked the chicken industry of the U.S. which will not only affects U.S. poultry but also affects the Chinese food service industry. Where they have to import from other country and this will again lead to be more expensive as they wont be able to meet demand of the product.

Video Link
http://live.wsj.com/public/page/video-popup.html?currentPlayingLocation=44&currentlyPlayingCollection=Business&currentlyPlayingVideoId={4CCD0C1F-278D-4519-BCF1-0BC40C28AD9C}

Sources

http://www.nytimes.com/2010/01/12/business/global/12trade.html

http://www.time.com/time/world/article/0,8599,1960825,00.html

                                                                                                                     

How open to Openness are you?

Openness in trade refers to the countries that permit or have trade with other countries or economies. The trading activities can be export and import, foreign direct investment, borrowing and lending etc. A country must be open to trade because it will have more greater market opportunities, which will lead to greater competition in the business with other countries. There are no such goods and services that a single country can produce therefore specific country have to trade with others and have comparative advantage by selling or trading with other countries. Each country has to trade with other country and this will create globalization.

Openness can create economic development by improving quality of goods in cheaper price also it helps to spread innovation and technological advancement around the globe. If a specific country is lacking technology advancement then they can distinguish by participating in trade with other countries, which is advanced in technology. Being open in trade will also lead to more employment opportunities for the people and increase their standard of living, which automatically increase economic growth of the country.