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Hello, and welcome to the 2012 Silicon Valley International Trade Update.
My name is Lucy Newcomb and I am head of the NewComm Global Group,
an international management consultancy specializing in global market leadership.
Joining me today is Joanne Vliet, Director of the Silicon Valley Export
Assistance Center
and Joe Hedges,
International Program Manager for the city of San Jose.
We’ve got some exciting information for you and we look forward to sharing it with
you now. Joanne?
I'm delighted to be here today to participate in the Silicon Valley 2012
International Trade Update.
Exports are critically important to the San Jose metropolitan area.
As it turns out, as a metropolitan area
the San Jose region
is the region in the United States that derives
the most number of jobs directly from exporting, so it really is very important
to our regional economy.
Companies that are exporting generally pay higher wages
Companies that are exporting, both in goods and services,
grow jobs more quickly
and in the last twenty years, exports have increased to almost two trillion dollars
and the majority, the vast majority of the world's purchasing power lies outside
the United States borders which is very important reason for U.S. companies
to pursue this as part of their global business strategy.
In 2010, the Obama administration
launched the National Export Initiative.
Now, the National Export Initiative was a major push to
create a single comprehensive strategy to promote U.S. exports.
The goal is to
double U.S. exports in five years,
to support two million U.S. jobs,
to not only increase the number of companies that are exporting, but for those
who are exporting to increase the number of markets that they are exporting to.
It also expands the availability of credit for small and mid-sized enterprises
It will aim to develop a variety of on-line tools to make finding information
on exporting easier for U.S. firms
and it will also work to reduce trade barriers and allow greater market access
for U.S. exporters.
Recent highlights from the National Export Initiative which were
delivered to the president a few months ago and were quite
promising. In fact,
in the last fiscal year in 2011
we've reported that more than fourteen thousand successful export
transactions on behalf of companies that have been used U.S. government services.
Those export transactions were valued at more than fifty four billion dollars
so, it was very promising.
We led thirty nine trade missions to twenty-two markets and five hundred U.S.
companies participated
in those activities.
We had more than fifteen thousand foreign buyers come to U.S. trade
shows where we facilitated transactions with U.S. exhibitors between
those foreign buyers
and we successfully advocated on behalf of U.S. companies that were going after
foreign government projects
and those projects totaled…
there were 55 foreign government projects that we worked on
supporting U.S. companies and the U.S. content of exports for those was
twenty three
billion dollars
So, quite phenomenal and in fact, we looked at the trade numbers and our goal
was to have increased U.S. exports by fifteen percent at this point
and in fact that we've reported sixteen point one percent increase.
Part of the National Export Initiative was to
bring together the number of U.S. government agencies that touch upon
export promotion in some fashion.
Perhaps the leading U.S. government agency that
deals with export promotion is
the U.S. commercial service which is a unit of the International Trade
Administration in the Commerce Department.
The U.S. Commercial Service has as its primary focus, the promotion of
U.S. exports of goods and services
primarily by small and medium-sized companies. We've been around since 1980
and we have offices throughout the United States, including the one
here in Silicon Valley. We have them in communities around the country
and then overseas we have offices in approximately one hundred and fifty overseas
locations co-located within the U.S. embassy or the U.S. consulate which is a
phenomenal
very important resource
for U.S. companies to know about. Especially small and medium-size
companies that might not have offices all around the world
They have the U.S. government support there locally in Ghana, in Greece,
in Mexico, in Canada, in China
to support them to gain traction in the market.
Some of the
many services that are provided by the U.S. Export Assistance Centers and by
the U.S. Commercial Service
is in trade counseling and that could be anything from assisting companies in
doing basic market research as well as highly customized
market analyses
It is, in addition, assisting companies with finding
out about tariff and tax information, any kind of documentation they might need,
export licensing,
the mechanics of export promotion,
market information is also provided here at the local office.
Our market research is all available, freely available, online at export.gov
which is our main portal
and the market research that is placed placed on
our website is produced locally by our staff in these offices around the world.
So you're getting primary market
researching information
directly through the portal for free.
One of the most frequently requested services of the Commercial Service and
the one that we have had in place for the longest time is called our Gold Key Matching Service
Essentially, that is an opportunity for or a way for a U.S. companies that
may not have access to a large repository of potential foreign business partners
to really hone in on
three to six potential screened and qualified foreign business
partners in a given market, and that
program is put together, it's customized for the individual U.S. exporters
It’s done by the staff at the U.S. embassy in the market and we offer that program worldwide.
Another very frequently requested service is International Company Profile
which we commonly
call our international background check service which is
also very very important for not only small companies but large
companies as well to know who they are doing business with
overseas when they're getting ready to sign a business partner.
We have companies that regularly as part of their corporate due diligence
have us do a background check on their foreign business partner prior to them
signing contracts. So that is a service provided again by
the U.S. Embassy.
I wanted to provide
a list of handy links and resources for companies that may
be interested in finding out more information, not only about the U.S.
Commercial Service, but
a number of the other federal agencies that, as I mentioned before,
touch on export promotion in some way.
One I want to highlight in particular on this slide
is the Foreign Trade Zone program which is a very important piece of the
U.S. government’s overall National Export Initiative strategy.
The Foreign Trade Zone program is administered by the Commerce department
and is
carried out locally by the city of San Jose’s Foreign Trade Zone. That is
such an important piece of
not only export promotion but the promotion and support of U.S. manufacturing.
Well thanks Joanne, that was a wealth of information and folks will have
contact information for you at the end of this presentation as well.
The National Export Initiative is very exciting and of course now we look forward to
hearing more from Joe Hedges about the Foreign Trade Zone opportunities in San Jose
and Silicon Valley.
Thank you, Joe.
Lucy, thank you. Pleased to join you and Joanne today
and to talk to you about the Foreign Trade Zone program.
The Foreign Trade Zone program in the United States was
the Federal government's
I think earliest initiative to promote economic development in the
United States
and to showcase
U.S. leadership in advancing global trade and commerce.
The Foreign Trade Zone helps to facilitate U.S. exports
and to maintain and enhance jobs
in the United States
but particularly to enhance the global competitiveness
of companies operating in the united states.
So the Foreign Trade Zone program
can be utilized by U.S. owned companies or foreign-owned companies that are
operating in the United States
The city of San Jose is the grantee of the Foreign Trade Zone
so in San Jose our Foreign Trade Zone was established in 1974.
We were the eighteenth Foreign Trade Zone established in the United States
and the Foreign Trade Zone in the United States is very different from similar type
programs in Asia, Europe, and Latin America
in that the U.S. Foreign Trade Zone
provides the greatest flexibility to companies.
Both domestic and foreign merchandise can be in a Foreign Trade Zone
and it's for both U.S. and for International consumption.
The city of San Jose administers the Foreign Trade Zone
not only in San Jose but in the Silicon Valley region.
We are the only Foreign Trade Zone in Silicon Valley.
By definition,
our border
is sixty miles
or ninety minutes driving time from the San Jose border.
So the Foreign Trade Zone that we had administer includes all of Santa Clara county,
Monterey county, San Benito county,
Santa Cruz county,
and the southern region above Alameda and San Mateo counties.
The Foreign Trade Zone is territory in the United States that is considered to
be outside of the jurisdiction
U.S. customs.
So, products in a Foreign Trade Zone
are considered to be an international commerce.
There are
a number of benefits for a company that utilizes the Foreign Trade Zone.
Companies that are engaged in International trade
that import products into the United States are able to
delay, reduce, or eliminate
customs duty payments
on that imported
merchandise.
So, for example,
it allows, the Foreign Trade Zone allows, a company to better conserve their cash flow.
So if they bring a product into the United States and do not need the product
immediately or possibly the entire
container of a product
that can remain in the Foreign Trade Zone
and the company is able to delay the payment of duty
while it is in the Foreign Trade Zone.
Companies that
import, for example, components and then
use that component in the manufacturing of a product
and then that product is sold in the United States, the company is able to
pay the most possible duty.
In the United States the duty rate tends to be higher on
a component than the finished product
so, if a company brings a component into the Foreign Trade Zone they’re able to pay the duty rate
on the finished product rather than
component.
Finally, if a company
exports from a Foreign Trade Zone,
no duties are paid.
It allows the company to,
again, to delay, reduce, or eliminate customs duty payments on products that
are brought into the United States.
In addition, companies are able to
seek approval from U.S. customs and border protection
and destroy damaged or defective merchandise
and thus avoid paying the duty.
Products that are subject to quota can enter a Foreign Trade Zone
and then once that quota is lifted
the product can leave the Foreign Trade Zone.
But, outside of a foreign trade zone
no product that is subject to quota can enter the U.S. territory.
Thanks Joe. That’s such an interesting set of information. Are there different kinds of trade zones?
Yes, Lucy, there are.
The city of San Jose is a General-purpose Zone
and in San Jose the General-purpose Zone is operated by San Jose Distribution Services
So, the Foreign Trade Zone is located on South 2nd street
in the Monterey quarter area of San Jose
The General-purpose Zone is for multiple companies,
any business
is able to utilize the foreign trade zone
General-purpose Zone site
and generally that is for
distribution
storage
repackaging, relabel
testing
and sometimes limited manufacturing can be
done at a General-purpose Zone site.
The second type of Foreign Trade Zone which is,
I think, the most widely used is Foreign Trade Sub zones
and sub zones are Foreign Trade Zone sites for a single company
that is engaged in large-scale manufacturing and or distribution
and when those companies aren't able to utilize the benefit of
a Foreign Trade Zone
at a General-purpose Zone site.
So, a company, a single company is able to apply
through the city of San Jose
and in turn the city of San Jose which is the applicant,
submits the application to the U.S. Department of Commerce
for a
Foreign Trade Sub zone application
and following a review by the Federal government
and if the application is approved, the company is able to activate their site
with U.S. customs and border protection
and companies are able to operate their site
as a Foreign Trade Zone.
If the company were to leave,
that designation would terminate
So, it is a benefit for a company. It carries significant responsibility
but a Foreign
Trade Zone is a
program that
can save a company millions of dollars
and enhance their global competitiveness.
The city of San Jose is in the process of
of preparing
a new application to the Federal government, to the Department of Commerce
to reorganize the Foreign Trade Zone in San Jose
and so the alternative site framework application
would allow the city of San Jose to designate
the entire city
as a Foreign Trade Zone
and this would allow companies to apply to the city
and to the Federal government, the Department of Commerce
to activate their company site as a Foreign Trade Zone site.
Currently, a sub zone application is roughly an eight month
review by the Federal government.
Well Joanne and Joe, thanks so much for those informative presentations. I'm sure
everyone has lots of questions. Why don’t we start with just a few.
Well Joanne I wondered if you'd like to tell us a little bit about
changes you've seen in our local marketplace from the implementation of
the National Export Initiative?
I know it's early, it hasn’t been in place that long but have you seen any changes or
up-ticks or
interesting things?
Well actually we have seen a big up-tick
in California exports
and the nation's exports
have grown quite substantially
in 2011 over 2010.
So have they done here in the state of California
In fact, we had double-digit growth
in markets such as Mexico, China,
the Netherlands, Hong Kong.
All of those had double-digit growth in 2011 in exports over
2010 so it's been very very strong.
That’s terrific.
And I know that your office is comprised of trade counselors
with highly specialized area so no doubt they help to go deep
as your office often does.
Well we have a fantastic team here in San Jose.
As trade specialists, we each cover a different industry sector
many folks have been here for quite some time, have a lot of very strong and deep expertise in
their particular industry
And not only that but as well have a lot of experience in trade mechanics
and in helping companies succeed internationally.
Terrific and Joe, I just wondered
as a services marketer and a professional myself, are there any services
applications for the Foreign Trade Zone Initiative. Do any of us in the services sector
have a chance to take advantage of this great opportunity?
Well, Lucy
it's largely based on products so if a company
is engaged in product either distribution or manufacturing or
if a service company is an importer
they could potentially benefit as well. So it could be a service company
that’s engaged in importing products
and either selling that product into the United States or ultimately selling
that product outside the United States.
That company could benefit as well
Great. Thank you very much.
Well I’m sure there’s myriads of questions so we will be putting up contact information
at the end of this broadcast as we mentioned.
Well we just have to ask. Is there anything special on the trade horizon in the Silicon Valley
that folks might not have necessarily read about yet that's just on the cutting
edge of
new trade opportunities here?
Well, recently the U.S. government passed
trade agreements with Korea,
Panama, and Columbia and we anticipate phenomenal growth in
exports to those markets, U.S. exports to those markets
over the next
year and in fact it's
estimated that approximately thirteen million dollars will be derived
in increase in exports to those countries and Korea’s is very very important
to the Silicon Valley.
Well in fact Joanne, Korea is San Jose’s top export market so
we’re very pleased that congress passed the trade agreement as did the Korean
assembly so
we anticipate our exports to create and grow substantially as a result of the
Free Trade Agreement.
Sounds terrific.
I think to 2012 is off to a fantastic start.
Thanks so much Joanne and Joe. I'd like to thank you viewers for joining us
today to learn about the 2012
International Trade updates
and thank my guests again Joanne Vliet, Director of the Silicon Valley Export
Assistance Center here in San Jose
and Joe Hedges, International Program Manager for the city of San Jose.
I’m Lucy Newcomb, head of the NewComm Global Group. Thank you so much for
your attention. We look forward to hearing from you
and growing international business here in Silicon Valley together.