The U.S. and Korean Trade Agreement Initiative

The U.S. Senate Foreign Relations Committee Chairman, John Kerry (D-MA), and a Ranking Member of the committee, Dick Lugar (R-IN), called for the timely resolution of outstanding issues related to the U.S.-South Korean trade agreement.  In a committee meeting in May, senators Kerry and Lugar argued that it is in the best economic and strategic interest of the United States to strengthen ties with it’s allies. 

“The United States should work with South Korea to resolve legitimate concerns and quickly approve the U.S.-Korea Free Trade Agreement.  This step could be a significant part of the President’s goal of doubling U.S. exports over the next five years to create well-paying American jobs,” said Chairman Kerry.  “South Korea ranks among our very closest allies and partners. When Seoul hosts the G-20 meeting this November, I hope the United States can point to substantial progress on KORUS as part of a broader U.S. engagement with the Asia-Pacific region.”

Lugar adds “Improving trade is critical to meeting our economic and diplomatic challenges around the globe. South Korea is an important country and economy. Approval of this agreement will lead to greater opportunities”. Senator Lugar has been a long-time advocate of the US-Korea Free Trade Agreement.

Europe’s Version of the “10+2” Rule Poses Questions for Shippers

The European Union’s (EU) Import Control System (ICS) is mandating that shipment information as in the “10+2 Rule” be communicated to Customs in advance of a shipment.  This process is shaking up import compliance in a scenario familiar to U.S. consignees.  Similar to the “U.S. Importer Security Filing 10+2 Rule”, the ICS aims to deliver critical data to authorities before a shipment reaches the EU to better assess risks.

The EU regulation becomes effective Jan 1, 2011 and will place the burden of compliance on carriers.  Importers and exporters will have to provide the timely and accurate information or face having their shipments to be delayed.  Not surprisingly, shippers and transporters are voicing their concerns about how the information will be gathered, how the ICS will be financed, and how this effort will be launched across 27 European countries.

Shipping Could Face Greatest Short-term Spill Impact

The biggest short-term economic impact from the Gulf Coast oil spill could be a disruption of U.S. commerce through the Gulf shipping channel.  Reports say a full shutdown of shipping lanes is unlikely, but significant delays could develop if cargo ships must have oil washed off their hulls before moving upriver.

This disruption could also have broader transportation flow effects by affecting the barge, container, and tanker traffic in the Mississippi Delta and on the Mississippi River. If traffic is affected for any extended period of time, then the prices of all types of commodities could rise.

Some of the ripple effects of disruptions in and out of the Port of New Orleans on freight networks could be the diversion of some cargoes, such as export grain, to other destinations.

For instance, it could push more Midwest farm shipments off barges and onto trains headed for West Coast ports, or onto ocean ships at Great Lakes ports that move into the Atlantic Ocean through the St. Lawrence Seaway.

Aside from possible effects on the supply chain, the spill can hurt the Gulf region’s fishing and tourism industries, depressing both direct and indirect incomes from that activity.

The impact on overall U.S. commerce was hoped to be small if responders could contain the spill quickly enough.  However the impact on local industries was feared to be large.  Fishing in the Gulf is already hurt from a 10-day ban. Gulf fishing generates annual dockside sales of $660 million, employs about 27,000 people in Louisiana alone and is second in size only to Alaska’s fishing industry. If the closure lasts long enough, it could raise fish and shrimp prices nationwide.

As it turns out, both local and national economics will be significantly affected.

Higher transportation costs of using alternative shipping lanes and ports could also price the loads out of the world market, delaying shipments until conditions improve. Authorities are anxious to keep the operational for Gulf shipping to maintain vital U.S. exports and imports.  The Lower Mississippi River ports export over 50 million metric tones of corn, soybeans and wheat each year, which is more than 55 percent of all U.S. grains inspected for shipment.