Copyrights, Patents, and Trademarks, Oh My! How Intellectual Property Rights Vary Globally 

Copyrights, Patents, and Trademarks, Oh My! How Intellectual Property Rights Vary Globally 

Posted on June 30, 2021

Navigating through the process of registering your trademarks and confirming copyrights and patents can be a challenge, but taking those items internationally brings about a whole new set of rules, regulations, and decisions for the future of your business.

Intellectual Property (IP) rights exist to protect innovation. One of the driving forces for change in this world is the innovation of new ideas, processes, materials, and goods. Being able to protect the ideas and innovations, if only for a short period of time, allows the creator to benefit from their ideas financially. The laws give the creator ownership and control over how their creation is used, ultimately allowing them to benefit and recoup the time and investment on their creations.

As far back as 1886, in the Paris Convention for the Protection of Industrial Property, businesses were thinking about protecting intellectual property.  Today, there are more than 25 international treaties on IP, and the world is constantly changing to keep up.

Let's dive into the different types of IPs and how to protect them.

Intellectual Property

Intellection Property (IP) is defined by the World Intellectual Property Organization (WIPO) as "creations of the mind – everything from works of art to inventions, computer programs to trademarks and other commercial signs." It refers to a variety of rights by those who create works that are protected under copyright laws, patent laws, and trademark laws. Each item has different laws and regulations based on the type of item/work. We can think of IP as the umbrella over copyrighted, trademarked, and patented materials.

Typically, there are two categories when discussing IP, copyrights, and industrial property rights, including patents, industrial design, and trademarks. Below are some details about each and things to consider before taking your products or services international.

Copyright

Copyrights encompass a large body of work - from individual writings, music, movies, and one-of-a-kind works of art to databases, computer code/programming, maps, and architecture. The copyright allows control over how the distribution of work and the creator's right to be acknowledged. Transfer of copyright is quite common and happens when the original owner gives the rights to someone else to benefit or utilize while also collecting a fee for use (also known as royalties).

Internationally, many copyright laws have both criminal and civil penalties that the copyright owner regulates. Rights are often defined in two categories - economic and moral rights. Economic rights include the right to profit from one's creative project. Moral rights, including the right to be acknowledged and alterations to their work, are limited as not to cause damage to the creator.  Economic rights typically have international time limits, which after the period expires, the work enters the public domain for use. Time limits for moral rights are indefinite in some countries, both others have specific time limits.  While full international copyright does not exist, many international protections and policies are in place through government treaties and agreements.

Industrial Property Rights

Patent

Patents are typically reserved for inventions and provide the patent owner with exclusive rights to the product for a set period of time and legally allow control over who uses, sells, or makes the invention. After the exclusivity time has passed, others can utilize the design.  The key to a patent is that the protection granted is for something completely new, a new product, a new process, or a new solution. Some inventions that may not be eligible for patients include scientific or mathematical theories, flora and fauna species, and medical treatments. These non-patentable items intend to benefit humankind without formal control or restriction.

Domestically and internationally, there is an application process for patents, which varies by region and often involves a fee. It is recommended to seek local legal representation for each international patent application in each country you intend to file.  Some regional patent systems exist where one patent can cover multiple regions, such as the African Regional Intellectual Property Organization (ARIPO) or the Patent Cooperation Treaty (PCT System).

Industrial Design

A little more abstract than a patent, industrial design encompasses a product's look and feel, and is prevalent on the consumer level with a product's design or aesthetic elements and details considered "ornamental." For example, the industrial design could be a new ergonomic chair that is exclusively designed to be unique, the chair itself is just a chair, but the ornaments adorning the chair could be a discerning factor for consumer preferences. Other aspects of industrial design include two-dimensional features like lines, patterns, and colors.

Internationally, for the industrial design protection to apply, the products should show originality and be produced on a larger scale (not a one-of-a-kind piece). Laws vary widely for industrial design and should be carefully considered before beginning the process of registration.

Trademarks

Since ancient times, trademarks have been in practice when Roman brick makers would each have their own mark to signify the maker, gaining a reputation for quality, craftsmanship, or lack thereof. Today, trademarks work in much the same way - to indicate the origin of the goods or maker. There are legal protections to control the use of a specific mark to deter counterfeiters.

The trademark itself can be represented by letters, words, numbers, symbols, colors, or pictures, as well as 3-dimensional designs, packaging, and even sounds. As long as the mark is distinct and not already registered similarly, it can qualify as a trademark. Registration will often be granted for a set period of time and needs renewal. Additionally, trademark registration requires a fee and disclosure of the types of goods and services provided by the mark. Once granted, if the trademark is used fraudulently, the trademark owner has legal ground to defend their product.

Counterfeited goods are harmful to legitimate businesses, and they often support not-so-savory endeavors. They also undermine the IP of the legitimate business, which can damage their reputation and reduce their success.

The best way to protect the IP from counterfeiters is to register the copyright, trademark, industrial design, or patent in each market, country, or territory you intend to use it in. Some countries have a higher amount of counterfeit goods, so it is a good idea to seek out protecting your companies' goods in higher-risk markets first. Other best practices to consider when selling your IP globally are using vetted or reputable dealers or partners in foreign countries and building relationships to understand how your IP will be respected if exported.

Because IP laws and regulations vary widely globally, it is best to engage with international legal advisors to navigate the process. There are several agreements, systems, and treaties that companies can use to maximize their efforts in registering their products for multiple countries all at once.

The WIPO administers 26 treaties regarding IP rights. The list, along with more specific information on treaties, can be found in the references below. The World Trade Organization and its members also utilize the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement.

The information presented above is intended to familiarize you with some of the issues regarding IP and variations worldwide. Legal advice is highly recommended for IP questions and legal matters. For more information on legal providers who specialize in international law, please reach out to info@ndto.com

References

Basic Facts About Trademarks: What Every Small Business Should Know. (2021, June). Retrieved from United States Patent and Trademark Office: https://www.uspto.gov/learning-and-resources/uspto-videos/basic-facts-about-trademarks-what-every-small-business-should

International Copyright Law. (2021, June ). Retrieved from International Trade Administration: https://legacy.export.gov/article?id=International-Copyright-Law

Trademark Information Network. (2021, June). Retrieved from United States Patent and Trademark Office: https://www.uspto.gov/trademarks/basics/trademark-information-network

TRIPS — Trade-Related Aspects of Intellectual Property Rights. (2021, June ). Retrieved from World Trade Organization: https://www.wto.org/english/tratop_e/trips_e/trips_e.htm

WIPO-Administered Treaties. (2021, June ). Retrieved from World Intellectual Property Organization: https://www.wipo.int/treaties/en/

World Intellectual Property Organization. (2021, June). Retrieved from https://www.wipo.int/portal/en/

NDTO Creates New Connections to Foster Growth in ND

NDTO Creates New Connections to Foster Growth in ND

Posted on June 17, 2021

The North Dakota Trade Office (NDTO), in collaboration with the North Dakota Department of Commerce, engaged in eleven meetings with key consulates, country-specific partners, and a handful of associations last week. The primary focus was international trade and investment.

It was wonderful to visit and reestablish relationships with partners and create new connections after living with the pandemic restrictions for the past several months. In most cases, the North Dakota team was the first state delegation to visit their offices in person since the beginning of the pandemic and our new and old friends were thrilled to hear that North Dakota was open for business.

During the meetings, we showcased many of the exciting things happening in our state in the agriculture, energy, manufacturing, and other key industries. One area of focus was a briefing on carbon capture and storage initiatives happening in North Dakota.  Throughout all the meetings, one common tread was that our partners are excited to explore future synergies and connect with North Dakota producers and service providers with their constituents in a variety of industries.

North Dakota continues to take the lead in several industries, and potential customers and partners are lining up to take advantage of the numerous trade and investment opportunities our state has to offer. Small but mighty, our state will be one to watch as the world emerges through the challenges of the pandemic.

-Drew Combs, North Dakota Trade Office Executive Director

Member Profile: Bremer Bank

Member Profile: Bremer Bank

Posted on June 2, 2021

Some people have a knack for banking, foreign exchange, and international business. Combine that with a talent for teaching and passion for people, and you have the team at Bremer Bank. We sat down with Julie Whitney, Fargo/Moorhead Market President, and Christopher Davis, Foreign Exchange (FX) and International Service Manager at Bremer Bank to better understand how ND exporters can benefit from their services.

“Cultivating thriving communities is what we strive to do with all of our customers at Bremer,” says Whitney. With the onslaught of online banking, Whitney explains, larger banks have thrived with digital technologies, but this has disrupted essential values along the way. Bremer is rooted in community values from their founder Otto Bremer, serving across North Dakota, Minnesota, and Western Wisconsin.  In recent years, Bremer has further focused business efforts on commercial and agricultural industries. “We are sharpening our focus on the banking areas where we have the most expertise serving commercial and ag businesses. This is where we can really make a difference,” says Whitney.

Davis has more than 20 years of experience in international banking. He is strengthening the team at Bremer with his extensive foreign exchange and global trade background. With more than 20 years in the global banking industry, he has experience with global payments, currency risk management, and facilitating trade transactions.

When it comes to export businesses, the best advice Davis had is to “engage with the banks early.” Exporters typically engage with banks as the deals are ready for execution, but there is so much more Bremer can do to assist before finalization. Critical considerations regarding foreign currency, payment processing, and timing of payments can save a company time and money, as well as make them more competitive on a global stage. With early engagement, more options can be explored before an export deal takes place. Davis goes on to say that “by having a connection with us sooner, we can really offer more of a trade advisory role to enhance your business dealings.”

When your sales objectives include growth through expanded global trade, Davis also suggests considering a foreign currency pricing strategy. Pricing solely in US dollars could place you at a competitive disadvantage and directly impact your ability to grow your global business. When offering pricing in local currency, you make your product more attractive or competitive in other markets, but this will leave you to manage resulting currency conversion. That’s precisely when engaging Bremer Bank could add value. They can help identify trade and currency risk, assist with developing a foreign pricing program, and create simple solutions to manage currency cash flows while protecting profit margins in the process.

In working with Davis, there is an added touch of assistance with his proactive approach and extensive expertise. He can help identify areas to gain traction, alleviate anxiety around trade payments, and remove the hurdles around foreign exchange. “Working with a business is more of a discovery process for me, learning about their business, their goals, and their global objectives. These conversations are ongoing.  And together, we can find many untapped opportunities,” says Davis. He explains that there is a perception of complexity around foreign exchange, and Bremer works to mitigate that perception and any risks associated with international trade. They take the time and the opportunity to walk each company through the process and cater tools needed for their success. Davis highlights that “we can engage with trade credit insurance companies, international banks, government financing programs, and they can all work in concert to create connections and opportunities.”

Building relationships is a foundation of Bremer. They focus on taking a hands-on and personal approach to a company’s banking needs. “As a community bank, there is an emphasis on a local, but also a depth of services that can be provided,” says Whitney. For international offerings, Davis and the team at Bremer can assist with:

  • Expert Export Advice
  • Foreign Exchange Products and Services
    • Risk Management Services
    • Market Updates and Alerts
  • Hedging Solutions
    • Global Payment Options
  • Pre-Export Working Capital Finance
  • Trade Credit Insurance
  • Loans through SBA and Export-Import Bank of the US
  • Letter of Credit
  • Documentary Collections

More than just a bank, Davis, Whitney, and the whole team at Bremer will bring a personalized approach to your business and exporting goals. They work to reduce risks, barriers, and confusion to harness potential opportunities for their clients.  Davis and the team are happy to open conversations with businesses interested in international sales and needing assistance in demystifying the export process for businesses throughout the region.

For more information in Bremer’s international business services, click here.

Christopher Davis’ contact information can be found below.

Christopher Davis

FX & International Services Mgr.

225 S 6th Street, Suite 200

Minneapolis, MN 55402

612-782-2853

cdavis@bremer.com

Exporting in the Time of COVID-19: The Uneven Road to Recovery

Exporting in the Time of COVID-19: The Uneven Road to Recovery

Posted on June 2, 2021

The quicker global trade can recover from the COVID-19 pandemic, the better the global economic recovery will be, say many trade experts. Although recovery and rejuvenation are top of mind for many governments, businesses, and communities, there are significant gaps in how and who is recovering and at what speed. Here, we take a look at some indicators of recovery across the globe with a trade lens.

Consumer Spending

Consumer spending is an important aspect of recovery as more spending drives more demand for goods and services across the world. According to the World Economic Forum, almost two-thirds of consumer spending accounts for all economic activity globally.  Within the US and across Western Europe, consumer spending declined between 11% and 26 %, and China had reported a 17% drop in Q1 of 2020 (World Economic Forum, 2021). Increased consumer spending will likely result in a faster recovery for each country.  The variations of how each age group, income level, and country respond with their pocketbooks are key recovery indicators. Mckinsey & Company surveyed consumer spending across China, France, Germany,  the UK, and the US using income levels and age to understand how spending habits adjusted during the pandemic and how spending will likely change as the threat of the pandemic eases. “We expect a strong recovery in the United States but an unequal one with variations among income and age segments. While many higher-income households emerge largely unscathed financially, low-income households have lost jobs or face income uncertainty, particularly from changes in the labor market caused by digitization and automation (Remes, et al., 2021).” Once they gained control of the pandemic, China’s spending returned to near pre-pandemic rates by the end of 2020. For consumers outside of these ranges, recovery is expected to take more time and be uneven. In Europe, a slower recovery than the US is anticipated, but a more even return to spending across age and income levels is expected.

Another aspect of consumer spending is saving. Consumer savings, whether by choice or necessity, are at their highest point in decades. The Wall Street Journal reports that family checking account balances were up by as much as 40% in October 2020 in the US. However, much of the increased wealth in savings is a problematic indicator of recovery. Studies show that the majority of the increases are within the accounts of higher-income consumers (Lahart, 2021). Some of these increases can be slated to the US’s stimulus payments and fewer dollars spent on travel, restaurants, and entertainment. Other studies show that households in wealthy countries have an increased focus on paying down existing debt rather than spending on consumer goods (Hannaon, 2021). The hope by many economists is that more spending will come as people across the globe find easing pandemic restrictions and reduction in cases.  Spending in many industries is expected to bouce back to pre-pandemic levels. McKinsey group found that consumer spending in eCommerce, online grocery services, and virtual healthcare are here to stay. While the extreme reduction in in-person education, travel, and entertainment spending are habits that will be remembered as a pandemic blip and remain in the past (Remes, et al., 2021).

 

Global Trade and Industry Recovery

The United Nations reported that world trade contracted by 9% in 2020. Asia has been at the forefront of recovery with strong export growth, and many pandemic-related industries saw increases by the end of 2020, including pharmaceuticals, technology, and manufacturing. The energy and transportation sectors have not been as quick to recover (Thomasson, 2021).

IHS Markits Global Trade Outlook for 2021 describes the pandemic’s impact on trade moving forward, “We already understand that the impact of a pandemic won’t be limited to the short-run. It is likely to have long-term consequences as well. We are likely to observe more pronounced adjustments to GVC (Global Value Chains)/trade patterns (trade diversion effects) the larger, the longer the pandemic lasts” (Brodzicki, 2021). These comments are not surprising, but what has been a cause for hope is the 2021 first-quarter trade data shows a rebound of many industries to pre-pandemic levels.

In May 2021, the United Nations Conference on Trade Development (UNCTD) released quarter one findings, sharing that many of the major economies have, by the numbers, recovered from the pandemic. The US and China are expected to be drivers of the economic rebound, and their key trading partners will likely benefit (Canada, Mexico, and East Asian countries). However, services, energy, and transportation sectors are still lagging. Uneven recovery is apparent among developing countries as the pandemic is not yet under control. The report also points to uncertainty in value chains, government policies, increasing government debt,  and trade tensions, all as factors in recovery (UNCTAD, 2021).

Merchandise trade saw sharp declines in the first quarter of 2020, but by June 2020, the numbers started to look up. By the end of 2020, merchandise trade saw a growth of exports of 7.8% year over year from December 2019 (Trade for Development News, 2021). In the first quarter of 2021, goods and merchandise trade is moving, as we can see from global container shipping statistics. “Global container shipping, a real-time measure of international trade, recovered strongly over the summer, and as of 15 February, global trade carrying capacity stands 5.3% higher than at the same time last year (Trade for Development News, 2021).” Some industries are going to be slower to recover, and consumer spending will determine the speed of the recovery.   

The pandemic overall impacted agricultural trade less than other industries but for different reasons. Barchiello surveyed agricultural trade exports and honed in on Canada’s market, which grew 11% more than anticipated through 2020. The prosperity was not linked to the pandemic but other global weather patterns causing crop failure, China’s increased need for feed as they rebuild hog herds, and India’s reduction on lentil tariffs.  This lack of connection to the virus reminds all of us that the global pandemic is not the only player in supply chain and agriculture commodity prices.(Barichello, 2021).

If countries continue to take advantage of the momentum through liberalization on tariffs and improved logistics, recovery will be long-lasting and benefit many growing economies. More than half of multinational businesses (surveyed by the World Bank) have increased their use of digital technologies out of necessity for doing business during the pandemic. Adopting such technologies comes with increased ease in logistics, supply chain management, and optimizing capacity for many developing businesses. Companies not engaging in these types of shifts will see a slower-paced recovery. Investment in global trade is needed to spur growth, but many investors are cautious as lockdowns and pandemic spikes continue into 2021. For low-income and developing countries, policy changes and embracing digital technologies to streamline their efforts will be key for recovery. Still, with limited resources, it will take more time for development and adoption. Several governments provided stimulus programs, which have proven in the past to be a viable effort in spurring growth, but the long-term impact for this pandemic and stimulus payments are yet to be seen.

Many unknowns are still ahead as the pandemic continues globally, and it is apparent that recovery will be a long and arduous process. Even though recovery is well underway, the  recovery process will likely be uneven across people, sectors, and governments in many cases. Overall, international trade has made people, companies, and governments more resilient to the downsides of the global pandemic, and 2021 is already bringing a quicker recovery than anticipated.

Works Cited

Barichello, R. (2021, May 6). Revisiting the effects of the COVID-19 pandemic on Canada's agricultural trade: The surprising case of an agricultural export boom. Retrieved from https://onlinelibrary.wiley.com/doi/10.1111/cjag.12285

Brodzicki, T. (2021, February 03). IHS Markit. Retrieved from Global Trade Outlook 2021: https://ihsmarkit.com/research-analysis/global-trade-outlook-for-2021.html

Hannaon, P. (2021, May 2). Covid-19 Savings Stockpile Could Accelerate Economy—if Consumers Spend It. Retrieved from The Wall Street Journal: https://www.wsj.com/articles/covid-19-savings-stockpile-could-accelerate-economyif-consumers-spend-it-11619967601

Lahart, J. (2021, February 26). Americans of All Stripes Are Flush With Cash. Retrieved from The Wall Stree Journal: https://www.wsj.com/articles/americans-of-all-stripes-are-flush-with-cash-11614359700?mod=article_inline

Remes, J., Manyika, J., Smit, S., Kohli, S., Fabius, V., Dixon-Fyle, S., & Nakaliuzhnyi, A. (2021, March 17). The Consumer Demand Recovery and Lasting Effects of COVID-19. Retrieved from McKinsey & Company: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/the-consumer-demand-recovery-and-lasting-effects-of-covid-19

Thomasson, E. (2021, February 10). Recovery in Global Trade to Stall Again in First Quarter: U.N. Report. Retrieved from Reuters: reuters.com/article/us-trade-un/recovery-in-global-trade-to-stall-again-in-first-quarter-u-n-report-idUSKBN2AA0HC

Trade for Development News. (2021, March 18). Recovery Taking a Different Shape than Expected. Retrieved from https://trade4devnews.enhancedif.org/en/op-ed/global-trade-rebound-suggests-some-lessons-covid-19-are-being-learned

UNCTAD. (2021, May 19). Global Trade Update May 2021. Retrieved from United Nations Conference on Trade and Development: https://unctad.org/system/files/official-document/ditcinf2021d2_en.pdf

United Nations Conference on Trade Development. (2021, May 19). Global Trade’s Recovery from COVID-19 Crisis Hits Record High. Retrieved from UNCTAD: https://unctad.org/news/global-trades-recovery-covid-19-crisis-hits-record-high

World Economic Forum. (2021, May 7). 3 reasons why consumer demand matters for the post-COVID-19 recovery. Retrieved from World Economic Forum: https://www.weforum.org/agenda/2021/05/consumer-demand-covid-19-recovery/

 

Using Freight Forwarders for Exports

Using Freight Forwarders for Exports

Posted on June 2, 2021

Transportation of goods is essential for many companies, but even more so when those goods travel internationally. There is a whole slew of logistics, paperwork, methods of transport, and procedures to be carried out when getting goods ready for import or export. This is where a freight forwarding or a freight management company can play a pivotal role. There are variations between the two types of forwarders, and depending on your business needs, both can be a reliable asset to have when shipping via ocean, air, or railway.

Freight forwarders specialize in arranging the movement and storage of goods from one business to another. They are middle-man experts who take on the challenges of arranging goods for transport (especially internationally). Using their vast networks of contacts, they can often negotiate lower rates for shipping and have ample experience for when things go awry. To be clear, freight forwarders do not actually move goods. They are the logistical support to facilitate the movement of goods. Companies that offer freight forwarding will typically set up shipment, book cargo space, track cargo, warehousing, and prepare shipping documents and required paperwork. They may also assist with customs clearance, insurance, and storage.  Freight forwarders can often ship under their own bills of lading, and they may even have agents in the destination to handle additional logistics on the ground, such as parcel or document delivery. There is a wide variety of services offered across these companies, so be sure to ask what exactly they can provide.

Freight management companies have a more robust approach.  They are often referred to as third-party logistics (3PL) service providers and are basically a way for a company to outsource the shipping and logistics arm of their business when they prefer to focus on other priorities in-house. Along with all of the benefits of a freight forwarding firm, the  3PL can take on all of the company's supply chain management, packaging, storage, national and international regulatory details, distribution services, parcel deliveries, and shipping insurance. The freight management company handles all aspects of a company's shipping and logistics from start to finish.

When selecting a forwarding or managing company, be sure to identify your needs and clarify exactly who is taking care of what. There are many regulatory hurdles when it comes to transporting unique goods. It can be beneficial to hire a forwarding company that works specifically with that type of cargo or strictly regulated goods like alcohol, batteries, or perishables. Also, confirm who will be in charge if things do not go as planned. Many forwarding companies do not take responsibility for shipping delays as these are often due to uncontrollable factors such as weather or port delays. But, keep in mind the expertise of the forwarding companies is invaluable, as they deal with the hurdles of shipping internationally on a regular basis. The forwarder may be able to identify a resolution quickly to keep the goods moving. It is good practice to maintain a positive relationship with the forwarders.

Both freight forwarders and 3PL's have a vast network of contacts and are experts at negotiation rates, booking cargo space, and logistical strategies to simplify the process. Freight forwarders can be hired for special projects or unique shipping needs such as cold supply chains or hazardous materials. They are often used in tandem with a company that is familiar with shipping and logistics but has some special needs. They are also a great resource for a company not yet comfortable with international shipping. Freight management companies are often engaged for a holistic approach to shipping overseas.

Whichever route you choose to take with a freight forwarder or 3PL, make sure you are providing as much detail as possible, and be sure to ask what other services are available. For assistance with finding a freight forwarder to fit your needs, reach out to the North Dakota Trade Office team for more information at info@ndto.com

Member Profile: Dakota AgSynergy LLC

Member Profile: Dakota AgSynergy LLC

Posted on May 5, 2021

Synergy is not a word used often in day-to-day
vernacular, but with Dakota AgSynergy, it is a lifestyle. The company, founded
in 2016, seeks to simplify the process of selling grain. Leading the company is
two sets of brothers, Justin and Jon Purintun, and Brandon and Cody Sehn. All
of whom grew up on farms southeast of Bismarck, in Hazelton and Linton, ND.
With experience working on their family farms, the team envisioned a way to
harness everyone’s strengths and support their ND community.

Dakota AgSynergy (DAS) primarily works with pulse
crops (peas, lentils, chickpeas, and edible beans), along with other ND
powerhouses like sunflowers, flax, and barley. DAS essentially serves as the
market between farmers and ending supply chains; they take the place of grain
elevators, brokers, packers (at times), and freight forwarders.  This
makes the team a one-stop-shop for farmers to take the guesswork out of the
logistical hurdles often faced to get their products into deeper markets.

Jon and Cody explained that “We saw a gap between
ending markets and their constant need for origination.”  Working with DAS
simplifies the buying needs within the industry. They eliminate the stress involved
in origination, such as purchasing, quality control, packaging requirements,
and transportation. That’s where DAS comes in. The company brings together both
sides of the equation, finding the right consumers and connecting the farmers,
and vice versa. They make meaningful contacts locally and across the globe to
add value and savings to both sides of the process.

The economy in ND has a foundation in agriculture,
“it revolves around ag, we know this, and we [DAS] provide value to our local
economy through the work we do. We could not do this work without trust and
word of mouth from our clients” says Jon. Building trust is their goal, not
only with the farmers that they work for, but also with their supply chain
customers. Trust is a process, but “growing up on farms, we know this business
well. We see everything that is going on up here, weather issues, planting
intentions, along with quality control,” says Jon. Cody adds, “origination is
vital! We are the boots on the ground, and that knowledge is huge for us. Some
buyers only take a crop tour once a year or so, but now they can rely on us to
help with supply needs and information on what’s happening up here in North
Dakota.”

Outreach is also a large part of what DAS does,
which has been difficult with the pandemic. “The biggest struggle with the
pandemic is that the international buyers are not able to meet face to face
with us and come over here. It has been holding us back a little” says Jon. The
team is looking forward to traveling in the future and being able to build upon
their past successes. The business is expanding rapidly through word of mouth,
and the team at DAS couldn’t be happier to support ND farmers, along with
surrounding states.

Exporting advice from the DAS team was to “Be
open-minded,” says Jon, “the world is big and full of opportunities. You should
step outside of your comfort zone to find new people and easier
solutions.”  Stepping outside their comfort zone has proven successful for
this team as they continue to meet new people and expand their reach beyond state
and international borders. 

Click here for more information
on Dakota AgSynergy.

Exporting in the Time of COVID-19: Food Insecurity

Exporting in the Time of COVID-19: Food Insecurity

Posted on May 5, 2021

To continue our series Exporting in the Time of COVID-19, we investigate the pandemics' impact on food supplies on a domestic and international scale.

Our world has become increasingly interconnected through trade, and this includes the global food supply. Many countries worldwide utilize food from other countries consistently, which can be complementary to both sides of the trade deal. It is essential to keep in mind that not every country has all the resources needed to be self-sustaining, and importing food, among other goods, is quite necessary - consider island nations with high populations or countries with infertile land. With the pandemic, the food supply has been a global issue affected by shipping and the availability of goods globally. As we previously explored in our Supply Chain article, one disruption along the value chain can impact every step that follows.

Both in the US and overseas, food supply chains can take numerous steps from producer to consumer. In its most simple form, let's take milk as an example of how it goes from farmer to the fridge. Once the cow is milked, the product is bottled, pasteurized, cooled, and then transported (while maintaining a cold temperature) to a grocery store and sold for purchase. While the example is simple, it shows the multiple steps, timing, and temperature controls, all of which impact how the product makes it to the consumer. If any of those steps are interrupted, delayed, or halted altogether, it could impact supplies and the overall demand.

According to Lisa Held with Eater, nearly half of the food produced in the US is exported, with Canada, Mexico, and China being the primary receivers (Held, 2020). The US also imports a great deal of products that cannot be grown here (think of all the bananas eaten for breakfast). Many of us in the modern world are fortunate enough to have items available year-round. They are available when we want them without consideration of growing seasons across the globe. This mentality brought shocks to many people as the food system was disrupted due to the pandemic. Not only were more items missing from grocery store shelves, but some items were completely unavailable. The demand for shelf-stable products like canned beans increased beyond what was anticipated for the suppliers, packers, or growers from the months prior. And the reduction in products being purchased from wholesalers - like restaurants - was drastically reduced in a brief period of time.

Domestically, it has been a struggle for many struggling Americans to access some necessities, including food. NPR reports that 25% of American households experienced some form of food insecurity in 2020. Prior to the pandemic in 2019, this number was just over 10%. Food insecurity is a global problem, and the UN World Food Program noted that food insecurity has doubled from 135 million to 265 million people globally in 2020 (Silva, 2020).

Global trade is one aspect of food insecurity that the pandemic has impacted. The pandemic brought on a shift in consumer eating habits both domestically and internationally as lockdowns persisted. This shift focused on at-home consumption rather than institutional or restaurant consumption, which has caused shocks across the food production and distribution chains, as bulk supplies are not as user-friendly or packaged for at-home or retail use. How many of us would know what to do with gallon-sized can of crushed tomatoes?

Packaging and processing may not seem like a large problem. However, it can take wholesale and packaging companies months to shift production lines, packing materials, and systems to adjust for a different method. If new equipment is required, it can take three to five years for a packaging facility to recover the costs in changing their process. Some may not see the value in shifting their entire processing facility for what may be a shorter-lived problem. Even if packaging needs to shift, companies still run into issues with workers being in close quarters not aligning with current regulations. There is also a decrease in brand recognition, with larger wholesalers selling directly to consumers. Brands that a consumer does not recognize may be slower to pick up sales (Ignacio, Martin, Mehta, & Mueller, 2020).

The producers, farmers and ranchers had fluctuating market prices and labor issues due to the pandemic. In some cases, there was extreme excess where producers could not find a way to sell their products. While migrant workers make up one in three jobs harvesting jobs across the US, the pandemic restricted travel for many workers who were unable or unwilling to make it for harvest seasons. Reports spread widely of US farmers breaking eggs and dumping spoiled milk as prices were falling and limited options to get their products to market (Yaffe-Bellany & Corkery, 2020). Often, the traditional supply chain methods were no longer available.
The Bureau of Labor Statistics (BLS) provides a sizable amount of data on the US import and export prices of food and the impact of the pandemic on consumer/producer pricing from dairy, eggs, soy, nuts, corn, beef, oil/gas, and much more. Overall, many of the items mentioned above fluctuated wildly from January through August 2020. For instance, meat production decreased by 22% from March to June 2020, and then facility shutdowns caused a shortage of meat initially. The demand then decreased as outbreaks in processing facilities occurred. Now, the price of meat is currently surging. According to the BLS reports, consumer price indexes for food consumed at home increased by 4.3% as many families utilized grocery stores rather than restaurant spending. Soybeans and other similar grains remained relatively level due to their use in animal feed rather than a focus on human consumption.

The wide fluctuations in food prices have eased in 2021, but the problem is nowhere near a solution. The pandemic highlighted the weaknesses for many countries and companies to get them thinking towards a better future. Single-sourced goods for food supplies have been the norm and were created with efficiency and low-cost intentions. However, this single-sourcing practice proved to be more disruptive across the globe when a widespread disaster hits. Diversifying supply chains, including those for food, may just be the answer to ease future shocks, be they acts of god or human-made (Holmes, 2021).

We see attempts to prioritize supply chain resilience in the Biden Administration's 2021 Agenda and other countries' trade policies. Think tanks, including the International Food Policy Research Institute (IFPRI), states that governments have a significant role in the food system, food workers, and food security. Key issues revolve around how the industries responded and how individual people responded to the food-stressed environment, and how to mitigate those vulnerabilities.

The intermediate steps in the supply chain are also of significance to increase resilience. Infrastructure improvements do play a role in the food supply chains. By increasing mobility, goods move quicker and more cost-effectively, traveling from producer to consumer while decreasing the cost and scarcity and increasing freshness. The IFPRI says that with healthier foods available, people can eat healthier and be healthier in many aspects of their lives. (Hodur, 2021)

Companies along the value chains for food made great strides in flexibility and resiliency in the past year with the pandemic. Many of the issues were sorted out relatively quickly. While there still remains some intricacies of the process to be addressed, we will see improvements in the coming months as the aftermath of the pandemic is more apparent.

References

Held, L. (2020, April). Food Distribution 101: What Happens When the Food Supply Is Disrupted by a Pandemic. Retrieved from Eater: https://www.eater.com/2020/4/16/21222176/america-food-supply-coronavirus-impact-shortage-distribution-covid-19

Hodur, J. (2021, March 29). Policy Seminar: Food Systems Lessons from COVID-19. Retrieved from International Food Policy Research Institute: https://www.ifpri.org/blog/policy-seminar-food-systems-lessons-covid-19
Holmes, B. (2021, March 25). How Has the Pandemic Strengthened the Global Food Supply Chain? Retrieved from The Counter: https://thecounter.org/pandemic-global-food-supply-chain-covid-19/

Ignacio, F., Martin, A., Mehta, V., & Mueller, C. (2020). US food supply chain: Disruptions and implications from COVID-19. Retrieved from McKinsey & Company: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/us-food-supply-chain-disruptions-and-implications-from-covid-19

Mead, D., Ransom, K., Reed, S., & Sager, S. (2020, August). The Impact of the COVID-19 Pandemic on Food Price Indexes and Data Collection. Retrieved from US Bureau of Labor Statistics: https://www.bls.gov/opub/mlr/2020/article/the-impact-of-the-covid-19-pandemic-on-food-price-indexes-and-data-collection.htm

Silva, C. (2020, September ). Food Insecurity In the US by the Numbers. Retrieved from NPR: https://www.npr.org/2020/09/27/912486921/food-insecurity-in-the-u-s-by-the-numbers

Yaffe-Bellany, D., & Corkery, M. (2020, April). Dumped Milk, Smashed Eggs, Plowed Vegetables: Food Waste of the Pandemic. Retrieved from New York Times: https://www.nytimes.com/2020/04/11/business/coronavirus-destroying-food.html

Harmonized System Codes for Harmonized Global Trade

Harmonized System Codes for Harmonized Global Trade

Posted on May 5, 2021

Harmonized System Code, or HS Code for short, is a standardized system of goods classification recognized internationally for traded products. Created and maintained by the World Customs Organization (WCO) in 1988, the organization based in Belgium is a non-governmental entity with more than 200 member countries.

HS codes established a world standard for describing goods. It makes the electronic classification and messaging more accessible, and the universality creates a standard across custom and border agencies, helping them move more efficiently.  According to the WCO, the coding system identifies goods for tax purposes, rules of origins, specific policies, quota controls, and statistical data analysis.

The system is arranged by the complexity of the goods. There is a series of 21 sections with 99 chapters that lead into more than1200 headings divided into 5200+ subheadings. Simple one-material type products are found in the early chapters, while the more complex the goods, the higher the chapter number. For example, basic commodities like potatoes can be found in an earlier chapter,  while machinery with many components and complexity is in a much later chapter.

The length of the HS Codes can vary from country to country. However, the standardized 6-digit code is most common. Each part of the code identifies the classification of the good. The HS Chapter is identified in the first two digits. The second two digits are the HS heading numbers, and the final two digits indicate the HS subheading.

The HS codes outline some legal aspects for recognized product definitions, and countries are allowed to add additional numbers to classify goods further. These additional numbers are called national subheadings, which classify items further for the receiving country. The US uses an eight and ten-digit code to classify goods for export called a Harmonized Tariff Schedule (HTS) or Schedule B of coding based on the HS codes from the WCO. Six of those digits are the internationally recognized HS codes.

The Schedule B system in the US is used to complete electronic export information, track statistical data of exports, and may be used to compare similar products in overseas markets.  The US Census Bureau has an online tool called the “Schedule B Search Engine” to help classify goods with clarifying questions about each item. When searching, it is recommended to only research one product at a time, have percentages of the item makeup available (if applicable), and to reach out to the Census Bureau for assistance with classifications. The tool is also a way for companies to see legal classifications and rulings across countries for the specified item.  Listed in the resources below are a training video and the Schedule B Search engine tool.

When it comes to applying HS and HTS codes to the exported goods, it can be pretty simple at times, but often it may take more effort. Getting the correct HS code is imperative as export and import controls are globally tracked using these digits. Understanding the rules, regulations, and interpretations of the terms is also key to applying the codes.  There are many resources for the do-it-yourself companies, such as the Section B search tool (linked below). If this seems like too much for your company, there are experts available who specialize in applying HS Codes to a more substantial amount of goods.

Typically, the WCO updates HS codes every five years, and the new code rules/interpretation will be effective in 2022. In the meantime, it is a good opportunity to ensure export goods will meet the new HS code interpretations. For more assistance on HS Codes, the North Dakota Trade Office is here to assist; please don’t hessite to reach out to us at info@ndto.com.

References

United States Census Bureau. (2011, July). Retrieved from Classify Your Export Commodity Using the Schedule B Search: https://www.youtube.com/watch?v=QR0Zo-Yem60

United States Census Bureau. (2021, April). Retrieved from Foreign Trade- Schedule B: https://www.census.gov/foreign-trade/schedules/b/index.html

Unites States International Trade Commission. (2021). Retrieved from Harmonized Tariff Information: https://usitc.gov/harmonized_tariff_information

What is an HS Code? HS Code Explained. (2021). Retrieved from Trade Finance Global: https://www.tradefinanceglobal.com/freight-forwarding/what-is-an-hs-code/

Celebrate World Trade Month this May

Celebrate World Trade Month this May

Posted on May 5, 2021

May has been the time to think about the role of international trade in the US for more than 90 years. World Trade Month was first celebrated in 1927 and was later recognized by President Roosevelt in 1935. The month brings about many events and is a collaborative effort to recognize the role of international trade in the US economy. A plethora of federal and state agencies, trade associations, and private entities provide meaningful programming, awards, and overall awareness to highlight our ever-increasing interconnected world.

It has been a challenging year as the world begins to recover from the global pandemic, supply chain disruptions, and the Suez Canal blockage, amongst other challenges. These and so many more unforeseen issues have increasingly relied on the global system, and now we see more resiliency and cooperation from the world—global trade impacts everyday life.

In 2020, the US exported over $1.4 trillion dollars in goods and services. ND accounted for $5.1 billion of that sum, according to the Global Trade Atlas. More than 600 companies in ND self-identified as exporters through the SBA Dynamic Search statistics, which means that even in the geographic middle of the US, trade still dramatically impacts the local economy here in ND.

This year’s World Trade Month theme is “Growing Exports in Uncertain Times,” which is sure to reflect on the challenges of 2020 and look ahead to success for the future.

Events throughout World Trade Month 2021 are primarily virtual this year and accessible online - many are even free. There are a variety of insights, info sessions, training, and award ceremonies available. Topics include Coffee Chats with the US Commercial Service, country and industry-specific sessions, learning opportunities in export compliance, international sales contracts, as well as regional or state-specific programs. A full list of World Trade Month events is on their website’s Event Calendar.

The North Dakota Trade Office (NDTO) has programming this May and beyond, which is sure to assist new and experienced exporters. Keep an eye on NDTO’s Events page for more details.

Happy World Trade Month to all of you from the NDTO!

Exporting in the Time of COVID-19: Trade Policy

Exporting in the Time of COVID-19: Trade Policy

Posted on March 31, 2021

To continue NDTO's series on the effects of COVID-19 on different aspects of global trade, we are taking a closer look into recent trade policy trends. The global economy continues to be impacted by the pandemic, magnifying disparities, trade practices, and what can be changed for the future. Trends in trade policy can ease burdens, while others may cause more problems in the long run. The pandemic has offered an opportunity to take a closer look into underlying issues in many countries' economies and infuse trade policy to align with well-intended values for change.

There were quick reactions to COVID-19 on the trade policy front from many countries, both to liberalize and restrict imports and exports for specific products. Many pivots in policy change were made as short-term measures, while other policies were enacted without an end date in sight.

In a short period of time, large sections of the global trade shifted. One of the most comprehensive lists of trade policy updates relating to the pandemic is on the World Trade Organizations (WTO) website listed in the references below. Of this list, nearly 1000 policies are tied to medical products. While some policies removed tariffs on these types of imports, others apply export restrictions. For instance, in March 2020, Canada waved all tariffs and sales taxes on goods imported by public health agencies, hospitals, testing sites, and first response organizations. The US recently extended a restriction to export medical resources (e.g., surgical N-95 filtering facepiece respirators, PPE surgical mask, PPE nitrile gloves, level 3 and 4 surgical gowns and surgical isolation gowns, syringes, and hypodermic needles) requiring Federal Emergency Management Agency (FEMA) authorization through June 2021. Many examples like this exist across the globe, but some of these new rules and growing trade tensions have caused trade experts to revisit ideas of protectionism and its impact on the global economy.

Protectionism essentially favors domestic products and creates policies and practices to reduce competition from foreign countries. These policies and practices are seen in government subsidies, tariffs, quotas on goods, and more subtly in currency manipulation. While experts typically agree that there are short-term benefits to protectionism, the practice ultimately slows industry improvement and global competition, as noted by Kimberly Amadeo, president of World Money Watch. Free Trade Agreements (FTAs) are a good way to avoid protectionism and encourage a thriving economy.  More recently, the US and many developed countries have agreed to some of the largest FTAs in history. The US Mexico Canada Agreement (USMCA) is currently the largest, but with the upcoming finalization of the Transatlantic Trade Investment Partnership (TTIP), it may have a greater impact on the global economy. The US is not currently a part of TTIP.

Under the Trump Administration, the "America First" policies will see changes as the Biden Administration announced its goals for trade policies in early March of 2021. On this agenda, COVID-19 is at the forefront to "Build Back Better" with an emphasis on a fair international trading system taking into account more than just the bottom line.

In the 2021 Trade Policy Agenda, COIVID-19 recovery is the top priority for this administration. With that, the pandemic has brought to light several areas of concern in the global trade realm, such as supply chain vulnerabilities, fair labor practices worldwide, and domestic inequities. The 2021 Trade Policy Agenda states that "In the past year, the COVID-19 pandemic exposed the devastating effect of persistent economic disparities on communities of color." The administration seeks data and community input to take corrective action, which will, in turn, impact trade policy through labor, wages, and increased economic opportunities.

As with the US, many other countries see a magnification of social issues pertaining to business ownership, inequality in the workforce, and previously unrealized obstacles due to lockdowns and shifting economies.  Trade policy can be implemented as a top-down approach, says Dr. Amarita Bahri, Assistant Professor of Law, ITAM and Co-Chair Professor, WTO Chair Program, Mexico. "This crisis presents a unique opportunity to explore how trade policies, including the pursuit of free trade agreements (FTAs), can contribute to women's empowerment and hence place women at the heart of economic recovery in the post-COVID-19 world," says Bahri. Although there are many existing provisions in FTAs regarding gender equality and enthusiasm as high, follow-through is often lacking. Many of the standing agreements do not provide funding, implementation, or means to favor these practices. While the policies are well intended, without proper support, many can be considered dead on arrival. Awareness is key to inserting humanitarian issues into trade policies as more than just best practices. The global pandemic has increased the visibility of economic disparities for many countries, creating an atmosphere primed for discussion for future improvement.

In September of 2020, a "Policy Hackathon" was organized by the United Nations Economic Social Commission for Asia and the Pacific (ESCAP) and a collaborative effort United Nations Regional Commissions (ECA, ECLAC, ESCWA, and UNECE), UNCTAD, and WTO. The program collected ideas from government, academia, think tanks, and private sector experts to hypothesize or develop provisions for trade policies during times of crisis (such as a global pandemic). The result was over 100 contributions from 134 individuals and 45 teams. The information takes the form of policy briefs, research papers, and team reports, all of which are publicly available through ESCAP. They are grouped into several topics, including essential goods/import-export restrictions, trade facilitation, agriculture and foodstuffs, gender and regional trade agreements, and government procurement.

The global pandemic's impact has been significant across many sectors, and trade policy is only one of many. Though this article does not explore the vast amount of specifics, it may encourage visibility and awareness for how trade policy impacts our everyday world and what we can see for long-lasting effects.

References :

Word Trade Organization: COVID-19: Measures Affecting Trade in Goods

Kimberly Amadeo, The Balance., Trade Protectionism Methods with Examples, Pros, and Cons

2021 Trade Policy Agenda and 2020 Annual Report: Biden Administration Releases 2021 President's Trade Agenda and 2020 Annual Report

UNESCAP, Online Repository of Contributions to the Policy Hackathon Model Provisions for Trade in the Times of Crisis and Pandemic

Bahri, Amarita, Trade Experettes,  Putting Women at the Heart of Post-COVID-19 Economic Recovery: How Trade Agreements Can Help