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WISCONSIN
WORLDWIDE
Vol.
5 #2, November 2005
Wisconsin
Worldwide's mission is to provide you
with news and insights on international trade and export opportunities
that
will help you compete in the global marketplace. If you have
comments, critiques or questions please e-mail Lou
Janowski.
The 2006
Presidential
Election in Mexico
By
Vince
Lencioni, Director of our Mexico Office
 Mexico's
last presidential race in 2000 produced the
country’s
first opposition party President, Vicente Fox Quesada. While
Mexico's financial and fiscal standing today is stronger, the Fox
Administration has been unable to deliver promised high levels of
economic growth. Expectations for Fox were high, but he found
it
almost impossible to pass legislation through a pluralist, three-party
Congress.
Fox’s party, the PAN, has chosen a young, relatively unknown
and
dynamic politician, former Energy Minister Felipe Calderón,
as
its candidate for 2006. Fox backed a different candidate,
which
actually helped Calderón gain the nomination. If
Calderón wins, Mexico will continue to pursue more or less
the
same pro-business, generally pro-US, and somewhat progressive policies
of the Fox administration. However, Calderón and
the PAN
are running a distant second at this time.
The old ruling party, the PRI, has nominated former party President
Roberto Madrazo. His corrupt image will limit his ability to
win.
The current front-runner is Andrés Manuel López
Obrador
of the PRD, Mexico's center-left party. Mayor/Governor of the
Mexico City/Federal District area for the past four years,
López
Obrador is the savviest and the most populist politician in the
race. The PRD represents about one-third of the Mexican
population. With control of Mexico City and with
disappointing
PRI and PAN candidates, it is López Obrador’s
election to
lose at this point. López Obrador has
had some
scandals in office, is provincial in outlook, anti-U.S. (he has never
been to the United States), not pro-business, and can be radical and
unyielding in his approach at times. There is a general
feeling
among the population that this might be the time to give the populist,
left opposition the opportunity to see what it can do for Mexico, just
as it gave the right opposition and Fox the opportunity six years ago.
Although the Mexican economy is strong and institutionalized enough to
weather a López Obrador presidency, his policies would not
play
well with Wall Street and other foreign financial players, nor would he
be a friend to NAFTA. However, and more importantly, he would
likely be unable to dramatically affect these issues. If the
PRI
or PAN wins in 2006, the peso will remain stable. If
López
Obrador wins, there might be a slight devaluation of the currency based
on certain anxieties about a center-left candidate. However,
we
would not expect any devaluations to be significant or sustained and no
matter who wins, the peso should avoid the rollercoaster that it
experienced in past presidential elections.
Globalization
In 1950, U.S. international
trade equaled 6.7% of our gross domestic
product (GDP). By 1970, that percentage rose to 11.4% of
GDP. At that time, U.S. international trade levels as a
percentage of GDP wase roughly comparable to that of the late 19th
century, the last great period of globalization. By 1980 the
percentage had risen to 20.1% and since 2000, the figure has been about
25% of GDP. The figure could reach 27% this year.
Unfortunately, U.S. exports peaked at 11.5% of GDP in 2000 and have
since dropped to about 10% of GDP despite the sharp fall in the value
of the dollar.
It is unclear at the moment what the future will bring. The
World
Trade Organization's game plan was to have a framework global trade
agreement in place before the WTO Ministerial in Hong Kong this
December. The essential question is and remains whether the
United States and the EU can come to an agreement on cuts in
agricultural tariffs and subsidies. If the Hong Kong summit
is
postponed, it will be because negotiators see no chance of reaching an
agreement and would prefer to have no meeting to a meeting which would
prove to be a major setback.
Economic
Growth in Asia
The Chinese economy continues to exceed predictions with the most
recent figures showing 9.4% growth in the third quarter of
2005.
Indian growth is expected to be about 7.2% this year and Thailand's
should be near 7%. Equally important have been developments
in
Japan. When Japanese Prime Minister Junichiro
Koizumi’s
plans for economic reform failed in the parliament earlier this year,
his response was to call national elections. He won a
landslide
victory and most analysts are now in the process of upgrading their
predictions on Japanese economic growth. Real wage growth has
improved and employment is rising. The Japanese stock market
is
up sharply and 2% annual growth is a real possibility. It is
likely that the Yen will strengthen - perhaps significantly against the
U.S. dollar - which will make Wisconsin products more competitive in
the Japanese market.
India
Programs
The Milwaukee World Trade
Association and the Wisconsin
International Credit Executives Group will co-host an all day program
on doing business in India on November 16. On November 17,
the
Metropolitan Milwaukee Association of Commerce will host an executive
breakfast, and Madison area international organizations will host an
afternoon program, also regarding India. Follow the links for
information on the Milwaukee
program and the Madison
program.
Foreign
Direct Investment
According to the United
Nations, global direct investment flows in
2004 were $738 billion, about half the $1.4 trillion record set in
2000. The United States was both the largest provider of
foreign
investment ($229 billion) and the largest recipient ($95
billion). In the decade of the 1990s, the United States had a
positive investment balance as opposed to 2004's negative $134
billion. Of the $229 billion invested by U.S. firms abroad,
only
$10 billion went to China and Hong Kong combined. More than
twice
that amount went to the UK and Canada. U.S. investment in
Japan,
Ireland, the Netherlands and France was also at or above the $10
billion level. U.S. investment in Mexico in 2004 was $7
billion.
The UK was the second largest destination for foreign direct investment
at $78 billion with China third at $61 billion.
Three-quarters of
the investment in China came from its neighbors in Asia.
About
$10 billion of the investment in China came from offshore tax
havens. Much of this money is from Taiwan; some of it is
money
re-cycled from China itself.
Credit
Insurance
It might be a good time to
consider credit insurance. Credit
insurance is more or less a standard practice for commercial
transactions within Europe and several major insurers are now
aggressively trying to expand its use in both domestic commerce and
international trade in North America. Over the last three
years
credit insurance rates have dropped significantly in the North American
market in part because of strong competition. Besides its
obvious
value in mitigating risk, credit insurance allows a company the ability
to offer more competitive terms, which can be crucial in markets where
the cost of borrowing money is exceptionally high. Credit
insurance is available for most markets from both the public and
private sectors. There are a number of brokers in Wisconsin
offering a wide range of private sector policies. Follow the
link for a look at
programs offered by the U.S.
EXIM Bank.
Avian Flu
Key points:
- Virtually all human cases are believed to have come from
direct
contact with birds.
- In a very few cases, it is thought to have been passed between
family
members.
- Scientists say it is difficult for the current strain of H5N1 to
pass
from human to human.
- So far, results are a 50% mortality rate in birds and humans.
To keep track of avian flu and the real and potential threats it may
pose, go to the State
Department's website,
the
CDC
website, and , the World
Health
Organization site.
Business Mission to Australia
The
Wisconsin Department of Commerce, in conjunction with the Council
of Great Lakes Governors (CGLG), invites you to join us on a trade
mission to Australia from May 19-27, 2006. The mission will
focus
on customized, one-on-one business appointments in Sydney and
Melbourne. The CGLG Australian Trade office staff will also conduct
market research to help identify the market viability and sales
potential of your specific products in the Australian market.
The United States is Australia’s #1 trade partner and this
partnership is expected to grow thanks to the Free Trade Agreement
(FTA) which took effect on January 1, 2005. As a result of
this
FTA, 99% of tariffs have been eliminated on manufactured goods giving
U.S. products an average 5% price advantage over other international
competitors. If you are not already active in this important
market, or if you are looking in increase your existing market share,
contact John Konkel by email at: jkonkel@cvtc.edu
or by phone at (715)
833-6441.
Lou's Retirement
Lou Janowski, the editor and
driving force behind this newsletter,
will retire as of Thanksgiving. His 40 years of international
experience will be missed. Lou's years of diplomatic service
in
Africa, the Middle East, and South Asia proved extremely valuable to
Wisconsin exporters seeking to do business in those unfamiliar
markets. Lou plans to write and travel, but will be
interested in
staying informed of events and activities of Wisconsin's international
business community. He can be reached at his personal e-mail:
lou.janowski@gmail.com.
Upcoming
Events
Understanding
Documentation and Payment Terms
Friday, November 18, 7:30 am - 4:00 pm in Pewaukee
The Global Education and Trade Center of Waukesha County Technical
College will also host a day-long seminar on the specialized shipping
and banking terms and paperwork that can either speed up or slow down
payment for international transactions and affect customer
service. For registration or related
questions, contact Marilyn Jenkins at (262) 691-5551 or
mjenkins@wctc.edu.
Doing
Business in the CAFTA Region
Thursday, November 10, 8:30 - 10:00 am in Pewaukee
The Global Education and Trade Center of Waukesha County Technical
College will host an executive roundtable discussion regarding doing
business in the CAFTA region on Thursday, November 10, 8:30-10
a.m. Roundtable facilitators will include Matthew Luening of
Harley-Davidson Motor Company and Sara Midence of the Honduran Foreign
Ministry, who is currently serving as a Fellow through the Partners of
the Americas group at the Wisconsin Department of Commerce.
The
event will be held at the Pewaukee campus. For more details,
contact Aleda Bourassa at (262) 691-5219 or abourassa@wctc.edu.
BioPartnering
North America
February 5-7, 2006 - Vancouver, BC, Canada
BioPartnering North America is one of the premiere networking events
for researchers, venture capitalists, and other biotech industry
executives. Last year's conference attracted 850 delegates
representing over 450 companies from 26 countries. A 10%
discount on delegate fees and additional networking opportunities are
available to Wisconsin companies registering through our
Canadian Trade Office. For more information, contact Brad
Schneider, ph: (920) 420-1796 or
check out the event website.
GLOBE
2006, 9th Biennial Trade Fair & Conference on Business
& the Environment
March 29-31, 2006 - Vancouver, BC, Canada
Exhibit as part of the U.S. Pavilion and prepare to do business with
the international environmental business community at North America's
largest environmental business event. Best prospect sectors include:
Alternative Energy, Air Quality Management, Water Supply &
Waste Water, Climate Change, Energy Efficient Vehicles, Fuel Cell
Technologies, Green Building Products & Technologies, Energy
Efficiency, Pollution Prevention, Waste Management & Recycling,
Sustainable Construction, Urban Environmental Management.
9,000+ total participants, 75 countries represented. Partner
with our Canadian Trade Office to schedule matchmaking business
appointments. Contact Christine
Stamm for more information at
(608) 264-7824.
BIO2006
April 9-12, 2006 - Chicago, IL
The
Biotech Industry Organization is one of the largest biotech
associations in the world. Its annual meeting
draws some 25,000 executives, scientists and business
contacts. The
Wisconsin Pavilion will once again include opportunities for trade
show booth space, live presentations, and
sponsorship alongside nearly 30 of Wisconsin's most successful and
influential
biotech companies and associations. Click here for more information on the
show. To learn about options for participating in the Wisconsin
Pavilion, contact
Jan Alf, ph: (262) 691-7873.
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