NDTO Hosts Colombian and Peruvian Buyers across North Dakota

NDTO Hosts Colombian and Peruvian Buyers across North Dakota

Posted on December 8, 2022

This November, NDTO hosted a group of international buyers across ND to explore a variety of specialty crop offerings. The buyers were made up of several companies interested in dry beans, chickpeas, and other pulse products produced in ND.

Nine ND companies participated in the mission and reported positive results in making new contacts and a high potential for future business relationships. "This was our first reverse trade mission since the pandemic, and we were excited to host our South American guests. The ND companies who participated did a great job in introducing their products and showcasing some of the fruitful opportunities in ND," says Lindsey Warner, NDTO's Director of Operations, as she led the group throughout the state.

The week started off with a visit to Northern Crops Institute in Fargo to learn more about the agriculture practices and pulses grown in our region. Then the group trekked north and then west across our great state visiting exporters and processing facilities. What was sunny and nice weather for November quickly turned a little bit more, shall we say, North Dakota. The delegates got the full ND experience as a blizzard coated the fields in a fresh layer of snow, a first for some of our visitors. "Although we had some really eventful weather and got to show our guests what ND looks like in multiple seasons, it was such a great time to get everyone together, and we all know true bonds can be made during a blizzard," explained Warner. 

Overall, the mission was successful, with only a few minor travel changes and some quick thinking. Everyone made it to their destinations and home again safely. Thank you again to our Colombian and Peruvian guests, we hope you had a great time in ND! Also, a special thank you to the ND companies who adapted throughout the week!

 

US Donates to Support WTO’s Global Trust Fund Enabling Developing and Least-Developed Countries to Compete Globally

US Donates to Support WTO’s Global Trust Fund Enabling Developing and Least-Developed Countries to Compete Globally

Posted on December 8, 2022

This season we see another donation from the US, among many other nations, to the World Trade Organization (WTO), which finances activities aimed at honing in trade-related improvements and assistance for developing and Least-Developed Countries (LDC’s) across the globe. These funds are filtered through the WTO’s Global Trust Fund to finance technical assistance, including training officials and activities to improve a host of challenges when competing in the world trade sphere. 

In a statement released by the WTO, Director-General Ngozi Okonjo-Iweala describes the donation as “The United States’ contribution, which will support the implementation of trade policies aimed at achieving inclusive and sustainable growth for developing countries and LDCs,” in a press release issued on November 17, 2022. The US Ambassador to the WTO, Maria Pagan, went on to say, “Our longstanding commitment to the Global Trust Fund is an important part of our global trade capacity-building efforts. The United States’ donation will help, in particular, developing and least-developed countries fulfill their transparency obligations. Guidance and training for officials responsible for preparing this information is a priority. Our capacity-building efforts help to ensure that the work undertaken by WTO members is translated into tangible improvements in the lives and welfare of people around the world.”

The goals of the WTO is to ensure that trade flows as smoothly, predictably, and freely as possible. Part of that work is inclusivity and incorporating more trade partners into the fold. WTO’s efforts to assist developing and LDC’s to compete more readily on a global scale has been a part of their mission for decades.

The Global Trust Fund adopted several programs in 2002 aimed at supporting least-developed countries to improve market access, technical assistance, and economic diversification. More than 2,900 activities have been organized over the past 20 years under this program.

The Trade Related programs operate primarily on donations from WTO members. With nearly 300 activities per year, they reach over 14,000 government officials. The WTO does this through training activities that can be global or regional in nature, and topics can include: 

  • WTO General Agreement on Services
  • Sanitary and Phytosanitary Measures
  • Technical Barriers to Trade Agreements
  • Trade Topics and Educational Talks, like market access, customs valuation, rules of origin, intellectual property, development and trade facilitation.

Education includes training, like the first-ever virtual Sanitary and Phytosanitary (SPS) Committee training, which was completed this November and included 16 African country's government officials. The participants already hold expertise in SPS issues, and by the completion of the training, they had participated in group work, informal discussions, and formal presentations that will increase their knowledge of SPS agreements and incorporate strategies for the future.

Programs also include expedited membership to the WTO, preferential treatment for developing and LDC’s, and policy advocacy. All of which play a role as many governments decreased or removed import duties and quotas from LDC’s.

All of these initiatives have helped increase developing countries, and LDCs’ ability to increase competitiveness and participate in global trade. Assisting with the growth and knowledge of trade development will to find more commonalities and ways to support the global economy that is hopefully beneficial for all parties.

 

Additional Resources:

Global NGO Impact News: United States donates USD 600,000 to enhance developing countries’ trade expertise

World Trade Organization: WTO technical assistance and training

NDTO leads Mission to Paris for SIAL Food Innovation Show

NDTO leads Mission to Paris for SIAL Food Innovation Show

Posted on November 9, 2022

This past October, NDTO led a trade mission to Paris, France, for five ND companies to highlight their specialty crop and pulse products to European buyers and beyond. A new tradeshow for NDTO, SIAL Pairs is the world's largest food and innovation show, with exhibitors and more than 300 000 visitors from over 200 countries. The show is a must-see for industry leaders worldwide.

Five ND companies were excited to exhibit throughout the week at SIAL Paris from October 15-19. The show touts innovation and information exchange in cutting-edge food and beverage products and their ingredients. For ND, this was an excellent opportunity to highlight the food ingredients the state has to offer. With ever-increasing quality, efficiency and competitiveness on the global stage, ND producers and processes are well-established to bring premier ingredients to European markets.

The theme of the show this year was "Own the Change," with a focus on the evolution of food and its ingredients. Not only with new product offerings but show highlights new and more efficient ways to use the food. "With the shifting agribusiness practices and technology, it is important for North Dakota companies to be present and prepared to assist with how to continue to feed the globe. The state and its producers and processors are well-positioned and have great potential to support additional markets worldwide," explains Lindsey Warner, NDTO's Director of Operations. Warner efficiently led the mission and supported the ND companies, some for the first time at an international food show. Navigating such large shows can be a challenge, but the opportunities are immense. ND companies showcased a variety of products, including many dry beans like pinto, black, cranberry, lentils, and peas.

The SIAL Paris show was a great opportunity to show how much North Dakota has to offer global markets and a significant player in so many high-demand pules crops. We look forward to hearing more about how the show will impact producers and processors right here in ND.

 

How the Strong Dollar Impacts the Exporter

How the Strong Dollar Impacts the Exporter

Posted on November 9, 2022

In the last year, we have steadily seen a strong US dollar in the global economy, which is good for many, including international travelers and importers. On the other hand, a strong US dollar can be challenging for many exporters in the US and ND.

The dollar is described as "strong" when its value rises above other currencies in the foreign exchange markets. Essentially, you can buy more with a US dollar than in other currencies. The US dollar keeps getting stronger because of the increasing interest rates, global uncertainties, including geopolitical issues and inflation, are all contributors. These growing rates (more than 14% from fall of 2021)  attract investors, especially international ones, to purchase or hold US currency and assets (which cost US dollars to buy), thus, driving up the demand. A demand that has now reached a 20-year high.

The benefits of a strong dollar are definitely favorable for US travelers abroad, and expatriates as local prices for goods are less expensive in other countries. Importers also enjoy the same benefit with their dollar going further as the same goods are often less expensive as other currencies fall against the dollar.

Conversely, some challenges exist with a dollar so strong. If the US dollar is strong, that means that the cost of US items for international buyers has now become more expensive or in some cases, unaffordable. The exchange rate is very high for international buyers getting paid in their home currency. Items priced in the US dollar are essentially too expensive for foreign buyers. US exporters can struggle when the dollar is strong because US export products are less competitive and often less likely to achieve sales. Some economists even liken the strong dollar to a massive tax on purchasing US goods by foreign buyers. International consumers will often choose local alternatives rather than paying higher prices for US goods. US companies that do business abroad are also hurting as their foreign income will likely be down.

Large commodities are quoted in USD prices, including oil, wheat and metals. So, a stronger dollar means the base price for these items are higher across all markets. Because these basic items are now more expensive, cost of living, especially for emerging economies, has also increased.

A high-value dollar not only impacts the movement of goods globally, but it has trickle-down impacts that can be challenging, especially for small and medium businesses that are unable to insulate through other financial means. This could mean a slowing of production in the light of fewer sales, employment reduction in an already challenging workforce situation, and taking an even lower cut of the profits. These items are compounded when considering the high shipping cost and other expenses incurred in a global business environment.

The US dollar is likely to remain strong for the foreseeable future, so some countries attempt to intervene in foreign exchange markets to boost their own currencies by selling their own USD assets. These efforts can slow down the decrease of a country's own currency but will not likely temper the upward trend of the dollar.

Overall, many economic theories predict that the fluctuations will revert back to a more "normal" rate as demand for less expensive goods from foreign countries are imported and thus the prices on those goods can rise. But until then, there will still be tough decisions to be made as many exporters are challenged by the strong US dollar.

 

Additional Resources:

EconoFact: Global Repercussions of a Stong Dollar

Forbes: How U.S. Companies Suffer From A Strong Dollar

Franklin Templeton: Quick Thoughts: Why the US Dollar Matters

Investopedia: Strong Dollar: Advantages and Disadvantages

 

Grow Your Exports One STEP at a Time

Grow Your Exports One STEP at a Time

Posted on October 21, 2022

The North Dakota Trade Office is excited to announce a new year of the State Trade Expansion Program (STEP) to continue the support of ND companies interested in exporting. The STEPND program is a grant funded by the Small Business Administration (SBA) to assist small businesses with entering and expanding into international markets. NDTO was awarded  $300,000.00 to assist ND companies with a variety of activities, including trade missions, focused international sales trips, international marketing, translation projects, and more.

"The NDTO is proud to continue with the STEP Program as it continues to support North Dakota exporters. With increased funding from last year's award, we hope to make an even bigger impact on the global stage with North Dakota products and services. With so many opportunities, we see a bright future for the state's small businesses and their global exports," says Drew Combs, NDTO's executive director.

This year marks the 10th year of the SBA's STEP program, which has awarded over $195.5 million to all 50 states and six territories to assist more and the 12,000 small businesses in exporting opportunities. As a whole, the federal STEP program assisted companies in expanding to 141 countries across the globe. In 2022, $20 million in grant funding was awarded to 52 states and territories. Great impact is seen with this program as the SBA reports that every dollar spent returns $42 in export sales. ND typically ranks as one of the highest in return on investment with STEP funding.

In 2021, ND exported $8.4 billion, primarily from mineral fuels, cereals (wheat, corn, barley, and oats), oil seeds (soybeans, sunflower, rapeseed or colza seeds), followed by industrial machinery. "We want to continue growth and diversification in North Dakota's economy," says Combs, "and STEP in conjunction with the work we do at the NDTO, helps to engage partners and leverage resources to assist in exporting success." 

The STEP program opens up many opportunities beyond the traditional exported products in ND. Technology, software, and services are among some of the increasingly exportable products coming from ND. With this grant, there is ample opportunity to assist small businesses with their exporting potential.

Both for companies new to exporting or those expanding their exports, STEP can assist with a variety of projects geared towards ND exporters, including:

  • Market research
  • Translation of marketing materials
  • Design of marketing materials for international markets
  • Foreign sales trips
  • International tradeshows
  • Sample shipping
  • Compliance testing
  • Website localization
  • Domestic tradeshows with 25% international presence

Each year, the NDTO tries to simplify and streamline the process while keeping aligned with the grant goal and requirements. Applications have been updated and are available for projects after October 1, 2022. ND's STEP for 2022 has a three-part application process, including a Company Application, Activity Application, and Reimbursement Form. Each application provides NDTO the opportunity to ensure your company and projects are well-suited and eligible for funding.

STEP 2022 is available for ND companies seeking up to two eligible projects to be reimbursed for 75% of eligible expenses up to $5,000 ($10,000 total) through October 1, 2023. If there is still remaining funding, additional applications may be accepted to fund eligible companies up to $25,000. 

If you are interested in applying, learn more here: https://ndto.com/step-nd/

Our team at the NDTO is happy to assist with any questions you may have. Contact Amanda@ndto.com for questions or to set up a meeting.

Member Profile: Brushvale Seed

Member Profile: Brushvale Seed

Posted on October 21, 2022

Exemplary quality and strategic genetics have kept Brushvale Seed exporting for more than 35 years. It is now a state-of-the-art processing facility focusing on quality, identity-preserved, food-grade soybeans with global impact. Several generations ago, the Miller family started farming near Wahpeton, ND, and with difficulties plaguing the farming industry in the 1980s, they considered a different approach to selling their crops. After a research trip to California, the Millers were on a new path to focus on high-quality seeds for export. 

The company more recently became engrossed in seed genetics, including a breeding program dedicated to developing non-GMO soybean varieties suited for production and processing through Brushvale's identity-preserved system. . Initially, when working with Japanese buyers, they quickly learned quality was of the utmost importance. Brushvale was initially complimented more on the quality of lumber used to create a bulkhead in the containers to ship the soy products rather than the beans themselves. At that point, Brushvale knew higher quality beans would be crucial to their success. With this attention to detail, a high-quality standard would make their future products stand above others

Brushvale Seed continues to take extraordinary measures to preserve and provide high-quality food-grade soybeans for natto, soymilk, tofu, and miso. We spoke with Tessa (Miller) Mohs, a 4th generation Miller who works closely with the seed genetics for many of the Brushvale offerings. She explains that "our soybean varieties are specifically bred for superior food quality and agronomic traits through traditional plant breeding methods." Each soybean variety from Brushvale is evaluated to ensure top yields and disease resistance to growers. Beyond that, their proprietary seeds and breeding program closely align with soy food manufacturers' needs to enhance their desired value-added traits. "By supplying our growers with proprietary seed and supporting them throughout production, Brushvale can sustain the overall value and deliver a high-quality product to our customers," says Mohs. Her passion is research and development, creating new varieties, and seeing them come full circle. In addition, Mohs loves the hands-on approach of day-to-day operations, from genetics and selection to seeing the seeds go into the ground all the way through harvest, testing, and until the containers leave our facility. "It's all quite amazing," Mohs says, "but it does come with a lot of challenges, time, investment, and hard work." From breeding to growing and getting the product to processors, there are many conditions outside their control, such as weather and logistics, but maintaining the superior quality remains of the utmost importance explains Mohs.

Increasingly, manufacturers and customers value the food chain and knowing exactly where and how their food is grown. With an Identity Preserved (IP) process, strict separation and documentation is required and ensures end-users know the product they receive has specific seed quality and nutritional characteristics. This is specifically important for some international markets with different regulations for genetically engineered foods or food manufacturers that want to maintain labeling standards such as "non-GMO." Most companies require certain product specifications and insist on an IP process to ensure quality and consistency.

Brushvale maintains IP documentation on every step of the process for traceability, which requires a lot of time and management, but is well worth it. Their production and trials run throughout MN, SD, and ND, with varieties specifically bred for the grower's success and end users' needs. Bruhvales' research and development program focuses on different attributes based on manufacturers' needs, such as increased protein, sugars, sucrose, and healthy oils. With several of these increased qualities, their soybeans have become more attractive to their longstanding customers both domestically and overseas.

Brushvale continues to innovate according to the needs and wants of its customers, including nutritional needs, improved shelf life, and elevated protein levels. New seed varieties can take up to ten years to develop, so patience is key in this business, which works well for them as exporting can often be a long process with hopefully satisfying results. It can also be a challenge for growers to take on new seeds or manufacturers to try new varieties, but all of this can be worth it when the end user holds the final products with such a high value. "It's incredibly rewarding to see your varieties make it into food," adds Mohs.

With a bright future ahead, Brushvale Seed is going to continue its holistic approach to seeds and grain exports. From breeding programs, growers, and food manufacturers to consumers, their products will continue to shine as a piece of ND is spread globally.

https://www.brushvaleseed.com/

Governor Burgum Led Trade and Investment  Mission to Japan

Governor Burgum Led Trade and Investment  Mission to Japan

Posted on October 21, 2022

ND Governor Doug Burgum led a successful Trade and Investment Mission to Japan in the first week of October 2022, emphasizing agriculture, energy, technology, and investment. The mission achieved a host of new partnerships between ND business professionals, the private sector, and government entities. Solidifying these relationships will bring about positive change for both ND and Japan.

The 35-member delegation included ND Agriculture Commissioner Doug Goehring, leadership and staff from the North Dakota Trade Office (NDTO), ND Department of Commerce, ND Governors Office, Bank of North Dakota, North Dakota State University, and representatives from several ND companies. All of which contributed to strengthening ties with Japan as an important ally for ND and the US.

To start the mission, the US Ambassador to Japan, Rahm Emanuel, hosted the delegation for an evening reception at his official residence in Tokyo. This event was invaluable for state department officials, Japanese business representatives, and the ND delegation members to network and discuss potential trade and investment opportunities.

Throughout the mission, Governor Burgum highlighted the technology and innovation blossoming in ND for a variety of industries. Eight export-focused companies met one-on-one with interested buyers and associations to build relations and showcase ND products. Each company represented the state well in its key export industry. The delegation was welcomed warmly throughout, and it was a privilege to have such gracious hosts during the week-long mission. 

NDTO’s executive director, Drew Combs, explains, “Missions are the bread and butter of the NDTO, and I am overwhelmed by the support we received from our State and Federal partners, as well as honored by the tremendous effort shown by our Japanese counterparts. A very special thank you to Consul-General Tajima and the Japanese Consulate (Chicago) for all the special attention they gave to the mission! Although travel to Japan was not optimal due to issues surrounding the ongoing pandemic, we appreciate our Japanese friends who made it possible. I believe that the mission was a success overall, and North Dakota and Japan will see the benefits for many years to come.”  

Japan is one of ND’s top export markets, with total exports in 2021 reaching $40.1 million, with high-volume exports of ND commodities, including soybeans, spring wheat, and corn. With more than 125 million people living in Japan and being one of ND’s top export partners, this mission was an excellent opportunity to understand the needs of Japanese consumers. Japan was also the largest supporter of foreign direct investment in the US in 2020, contributing to nearly 1 million jobs and over $679 billion in investment.

Connections and partnerships with the Japanese have been long in the making with ND. With the onset of a global pandemic, several activities were postponed, and all parties were excited to have ND visit Japan and continue longstanding bonds for future collaborations.

Portions of the export mission were funded in part through a Cooperative Agreement with the U.S. Small Business Administration. The State Trade Expansion Program (STEP) ND program supports qualified small businesses from ND with their export initiatives.

United States-Kenya Strategic Trade and Investment Partnership

United States-Kenya Strategic Trade and Investment Partnership

Posted on August 31, 2022

In mid-July, talks were underway between United States Trade Representative Katherine Tai and Kenya's Ministry of Industrialization, Trade and Enterprise Development Cabinet Secretary, Betty Maina, to launch the United States-Kenya Strategic Trade and Investment Partnership (STIP). The agreement was signed on July 14, 2022, and aims to increase investment, promote sustainable and inclusive economic growth, benefit workers, consumers, micro, small, and medium-sized enterprises, and support regional economic integrations in Africa. 

A roadmap is underway for these key outcomes:

  • Agriculture
  • Anti-Corruption
  • Digital Trade
  • Environment and Climate Change Action
  • Good Regulatory Practices
  • Micro, Small, and Medium Enterprises (MSME)
  • Promoting Workers' Rights and Protections
  • Supporting the participation of Women, Youth in Trade
  • Standards of Collaboration
  • Trade Facilitation and Customs Procedures

Overall, ND does have some trade with Kenya, totaling $1.4 million in 2021. Primarily in edible vegetables, roots & tubers,  non-railway vehicles/parts, and industrial machinery. ND does export more than $13.9 million throughout the African continent, with primary exports in cereals, edible vegetables & tubers, non-railway vehicles, and industrial machinery. Some language in this new agreement shows an intention to include East Africa, and with the Prosper Africa Initiative forthcoming, looking into Africa as a trading partner may become easier.

ND may see some impact in sustainability and technology upgrades for Kenya as the country strives for food security. With some increased inflow of technology and modernization of farming practices, there could be some great strides in these areas.

MSMEs will also be a focus from both sides to increase integration for these smaller businesses and help make it possible for them to participate on a global scale. In a similar vein, incorporating opportunities for women and youth into trade policy is being examined. Information sharing and best practices exchanges are being discussed to infuse new energy and ideas into these businesses.

Simplification of trade procedures is also being addressed to aid in the pandemic and supply chain recovery. Streamlining border procedures and accelerating WTO Trade Facilitation Agreement implementation are also up for discussion.

If you are interested in commenting on the United States-Kenya Strategic Trade and Investment Partnership (STIP)  the comment docket is open until  September 16, 2022. To access the docket, visit the Federal Register. To comment and see all the areas that will be covered in negotiations, visit www.regulations.gov and search for "USTR_FRDOC_0001-0770".

This agreement with Kenya does align with the US's Prosper Africa Initiative and will be useful in furthering connections and relations for bilateral trade throughout the continent. Such agreements, as they come into fruition, will hopefully benefit both sides and create more opportunities for trade with their desired focus areas.

NDTO will monitor updates and keep you informed as they become available.

Resources:

Office of US Trade Representative: United States and Kenya Announce the Launch of the U.S.-Kenya Strategic Trade and Investment Partnership

Federal Register: U.S.-Kenya Strategic Trade and Investment Partnership

Global Compliance News: Kenya: Shared prosperity – the United States and Kenya sign Strategic Trade and Investment Partnership

How the Newly Signed OSRA will Impact Exports

How the Newly Signed OSRA will Impact Exports

Posted on June 17, 2022

The S.3580: Ocen Shipping Reform Act of 2022 (OSRA)was signed into law by President Biden on June 16, 2022, after passing the US House of Representatives with a 369-42 vote. The law provides more oversight and investigatory authority to the Federal Maritime Commission (FMC), which seeks to reduce excessive pricing from ocean carriers, increase industry transparency, and may reduce the high inflation rates impacting the US. The new law marks the first change to US regulations on international shipping since 1984.

With increased authority to the FMC, they now have the ability to initiate investigations of unfair or unreasonable business practices hampering the movement of goods and price gouging by the ocean shipping industry. While many of these issues have been addressed before the global pandemic, COVID-19 amplified the weaknesses in supply chains and caused uncertainty worldwide.

The law aims to prevent ocean carriers from unreasonably refusing to fill containers with US exports and shipping empty containers back to Asia for a quick refill. This practice has greatly impacted  North Dakotaians, Minnesotians, and many more throughout the Midwest; agricultural producers and processors across the region have struggled to get their products moving beyond US borders. The Agriculture Transportation Coalition estimates that 22% of US agricultural exports in 2021 were not delivered because of unreasonable shipping practices.

Investigation of late fees will be carried out by the FMC. The law will prevent excessive detention and demurrage fees (charges to exporters and importers for the use of the containers when they are not moved or returned within a set timeframe or storage at ports). The burden of proof for reporting unreasonable fees shifts from the invoiced party to the ocean carriers themselves. This law states that carriers will not be allowed to retaliate against shippers who bring about formal complaints or vary their business across different ocean carriers.

The FMC will also require quarterly tonnage reporting from ocean carriers, including both import/exports per vessel. The key to this provision is that a detail of loaded imports/exports and empty containers must be provided. This requirement provides the FMC with awareness of the (now common) practice of shipping empty containers for a refill in Asia. Moreover, the FMC will be provided more transparency into the intermodal chassis pool and chassis supply.

The large shipping conglomerates have gone from twenty companies now to just nine, which have further siphoned into three alliances. This decrease in competition has been attributed to the rising costs of more than 1000% in international shipping fees and record profit postings by these large conglomerates in recent years. The Biden Administration hopes to curb inflation by reducing unreasonable, and inflated overseas shipping prices that they believe are passed along directly to consumers. Although this makes up only a small portion of the inflation issues across the US, it is seen as a step in the right direction.

As the FMC gains more authority to reign in some of the challenges at the ports, experts remind us that seaports are only part of the supply chain backlog issues. There is continued stress on the infrastructure, inland transportation, and storage capabilities in the US that need upgrades and attention.

The FMC and parties like the World Shipping Council will need to work together for the bill's implementation, and the WSC says they will do their best to minimize supply chain disruptions. Time will tell as the new regulations come into effect. Many say that progress will still be slow as the measures are adopted.

NDTO will continue to monitor and update on the latest news for the implementation of OSRA.

Additional Resources:

CNBC: How President Biden's Ocean Reform Act Could Impact Shipping and Inflation

Freight Waves: Will the Shipping Reform Act Help Rebalance Scales? The FMC chairman Thinks So

gCaptain: President Biden Signs The Ocean Shipping Reform Act Into Law

National Hog Farmer: Biden signs Ocean Shipping Reform Act

S.3580 - Ocean Shipping Reform Act of 2022

Pork Business: Pork At the Port: Industry Praises the Ocean Shipping Reform Act Approval

Reuters: Biden Signs Ocean Shipping Bill in Bid to Reduce Export Backlogs

Yahoo Finance: Fragrance Creators Applauds Passage of the Ocean Shipping Reform Act Into Law

What is the Indo-Pacific Economic Framework for Prosperity?

What is the Indo-Pacific Economic Framework for Prosperity?

Posted on June 14, 2022

The United States, Australia, Brunei, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam have joined together in shared interest to create The Indo-Pacific Economic Framework (IPEF). The goal is to cement relationships cross-culturally and advance regional economic connectivity. The framework, unveiled by the Biden administration on May 23, 2022, serves to reinvigorate interest in the Indo-Pacific region with increased commerce, trade, and investment between countries and emphasizes shared values.

The White House “acknowledge[s] the richness and the diversity of our vibrant regional economy. We share a commitment to a free, open, fair, inclusive, interconnected, resilient, secure, and prosperous Indo-Pacific region that has the potential to achieve sustainable and inclusive economic growth.”  They go on to highlight the importance of resiliency in securing supply chains and stimulating job growth, all of which were amplified by the global pandemic.

The IPEF’s key features include the broad topics of digital economies, supply chain resiliency, clean energy, and anti-corruption. Although wide-ranging, the framework represents the shared values and a way to start reconnecting with the Indo-Pacific region, which consists of 40% of the world's GDP. The framework includes these themes:

Connectivity and Cohesion: The framework hopes to achieve benefits in trade for free and fair trade commitments. They will adopt cross-border standards for the digital economy, e-commerce, and data integrity and utilization. Careful attention will be paid to small and medium-sized businesses to avoid being left out of the digital economy. Workers’ rights will also be scrutinized to impose higher environmental standards and corporate accountability.

Resiliency: A variety of commitments are being sought to prevent future disruptions in supply chains and support stability and resiliency. This notion is hoped to level price spikes by integrating technology mapping supply chains, traceability, and coordinated diversification. It is also set to ensure access to key raw and processed materials, semiconductors, critical minerals, and clean energy technology.

Increasing Clean Energy: Aligning with the Paris Agreement, a targeted approach to tackle the climate crisis will include renewable energy, carbon removal, increased energy efficiency standards, and methods to remove methane emissions.

Fair Economic Practices: Increasing access and removing the barriers to unfair tax and money laundering provisions will be adopted. The IPEF participants hope to exchange information on taxes, have strict regulations on bribery, and an overall crackdown on corruption to level the playing field.

As this agreement solidifies, it is important to remember a few key points.

The IPEF is not a free trade agreement (FTA). Currently, no tariff reductions or market access regulations are outlined, but if talks like this continue, experts say an FTA may be more likely in the future.

It serves to solidify relationships in the Indo-Pacific region. Just a few years ago, the US pulled out of the Trans-Pacific Partnership (TPP) and has not yet come back to the table for the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) that carried on after the US withdrawal. The IPEF is a cooperative framework that serves as a stepping stone to continue communication and solidifies interest in the Indo-Pacific region. The framework is based on shared values and a unified look toward the future. More to come as the IPEF progresses.

Resources:

CNBC: The Indo-Pacific Economic Framework: What it is — and why it matters

International Institute for Strategic Studies: The Political Significance of the New Indo-Pacific Economic Framework for Prosperity

The Hindu: Explained | What is the Indo-Pacific Economic Framework for Prosperity?

The White House: FACT SHEET: In Asia, President Biden and a Dozen Indo-Pacific Partners Launch the Indo-Pacific Economic Framework for Prosperity

The White House: Statement on Indo-Pacific Economic Framework for Prosperity