WISCONSIN WORLDWIDE

Vol. 6 #2, November 2006

  Wisconsin Trade Missions Go All Over the World

Exporters know that visiting a market and meeting one-on-one with potential agents, distributors and customers is one of the best ways to evaluate a market and gain the first-hand knowledge necessary to plot a successful sales effort.  Three upcoming Trade Missions organized by the Wisconsin Department of Commerce offer a focused business perspective into different regions of the world.

  Central America

A Wisconsin delegation will be leaving the cold and snow behind them as they seek to increase their exports to Panama and Costa Rica January 28 – February 2, 2007.  Central America is currently a hotspot for Wisconsin exports.  During the first six months of 2006, Wisconsin’s exports to Panama grew by 67%.  Exports to Costa Rica were up by 38.5% in the same period.  See the article about the Panama Canal Modernization for more information about the Panamanian economy.

Southeast Asia

Kuala Lumpur, Malaysia; Singapore; and Manila, the Philippines will be the destination for a joint Wisconsin/Minnesota trade mission February 5-14, 2007.  These three fast growing and stable markets in Southeast Asia offer excellent opportunities for Wisconsin exporters.  Taken as a region, Southeast Asia is already Wisconsin’s #7 export destination, but there are significant opportunities for increased exports, especially in the environmental technology and IT sectors.

South Africa 

South Africa is one of the fastest growing export markets for American companies.  Wisconsin exports to South Africa were up 33% in 2005 and the South African economy is expected to grow 5% in 2007.  Initiating or expanding business activities in this important market can be accomplished through a multi-state trade mission initiated by the Council of Great Lakes Governors, February 16-25, 2007.

What are the benefits for Wisconsin companies?  As a part of all Wisconsin Department of Commerce-organized trade missions you will receive an individualized schedule of appointments designed around your firm’s particular interests and needs, briefings from government officials and business people operating in the market, assistance with travel and logistical arrangements, and the opportunity to network with and learn from other Wisconsin firms facing similar challenges and opportunities.

Five Wisconsin companies (The CMM Group, Elwood Corporation, Harley-Davidson, Midwest Hardwood, and Service Tool and Die Two) and two Mississippi companies recently participated in a multi-state trade mission to Mexico September 24 -30.  The week was spent in business appointments with prospective clients, representatives and/or distributors, in Mexico City, Guadalajara, and Monterrey.  During a business briefing in Mexico City, mission participants were provided an up-to-date review of macroeconomic and political issues, sector-specific forecasts, how to work with local representatives and distributors, sales and credit strategies, and financing sources.  The mission was scheduled to coincide with Eximueble, a furniture trade show in Monterrey.  The local lumber industry trade groups in Guadalajara and Monterrey facilitated additional sessions where their members were able to meet with the wood companies in the delegation.  These events provided the mission participants the opportunity to meet with many potential buyers in a short period of time.

Mr. Rick Barrett, of Midwest Hardwood had this to report about the mission, "The trip was very well planned.  I kept busy and walked away feeling the week was very worthwhile.  Midwest is very appreciative of a job well done."  As a result of contacts made during the mission, Mr. Barrett is expecting to book sales with new Mexican customers within the next 12 months.

Harley Davidson’s Monterrey dealer hosted the group for a tour of the dealership and a dinner with a spectacular view of the mountains of Monterrey.  The individuals in the photo are: back row, left to right: Kevan Leedle, Elwood Corporation (WI); Richard Rothwell, Hankins Lumber (MS); Bill Rogers, Newman Lumber (MS); Donald Pierce, Service Tool and Die Two (WI); Carlos Mejia, Harley Davidson dealership in Monterrey; front row, left to right: Marcos Hernandez, Wisconsin Trade Office in Mexico; Susan Dragotta, Wisconsin Department of Commerce; Rose Boxx, Mississippi Development Authority; Rick Barrett, Midwest Hardwood (WI); Claudia Garber, Harley Davidson (WI); Lorena Mejia, Harley Davidson dealership in Monterrey.  Dave Martin of The CMM Group was not available for the photo.

This week, Bonstone Materials, Inland Printing, Mueller Sports Medicine, Premier Tec, and Quantum Devices visited Amsterdam and Brussels as part of a trade mission to the Benelux countries.  Many Wisconsin firms use the Benelux countries as distribution hubs for their European sales activities, but as Kara Smith, the Director of Wisconsin’s European Trade Office, is fond of saying “Europe as a single market does not exist.”  As with all Wisconsin Department of Commerce organized missions, individual meeting schedules were created for each mission member whether they were seeking to initiate or expand exports into the target countries or explore ways to expand their business across Europe.

To learn more about any of the missions contact one of the following staff people:

Mexico: Ms. Susan Dragotta, susan.dragotta@wisconsin.gov, phone: (262) 691-5147
Benelux: Mr. Brad Schneider, brad.schneider@wisconsin.gov, phone: (920) 420-1796
Central America: Mr. Greg Miller, greg.miller@wisconsin.gov, phone: (608) 266-0393
Southeast Asia: Ms. Beng Yeap, beng.yeap@wisconsin.gov, phone: (608) 266-1480
South Africa: Ms. Mary Regel, mary.regel@wisconsin.gov, phone: (608) 266-1767.

You can also contact our Trade Show/Mission Coordinators:

Jennifer Winner, jennifer.winner@wisconsin.gov, phone: (608) 266-0413
Christine Stamm, christine.stamm@wisconsin.gov, phone: (608) 264-7824.

  JohnsonDiversey Recognized for Canadian Patrnership

The Canadian American Business Council has selected JohnsonDiversey Inc. of Sturtevant and Virox Technologies Inc. of Oakville, Ontario to be awarded the 2006 Business Achievement Award for their collaboration in developing and distributing a safe and environmentally friendly hydrogen peroxide-based disinfectant.  In 2001, JohnsonDiversey and Virox Technologies formed a partnership in the ongoing fight against infectious diseases, and together have demonstrated that a disinfectant need not be toxic to be effective.

Each year, the Council identifies innovative and successful alliances between Canadian and American businesses to recognize the benefits that these partnerships bring to both countries - in jobs, innovation, and revenue creation.  Judges look for sustained profitability, job creation, financial strength, environmental responsibility, and exceptional innovation.  Past award winners have included Research in Motion (RIM), Intel Corporation, Syncrude, and Caterpillar.

  FEECO Receives Federal Award for Exporting Success

U.S. Department of Commerce Assistant Secretary David Bohigian visited Green Bay on November 3 and presented FEECO International, Inc. with the Department of Commerce’s Export Achievement Award.  The firm, which was founded in 1951, offers a complete range of engineering, equipment manufacturing, and construction services for the power utility, paper, fertilizer, chemical processing, mining, and other related industries.  The company recently completed major projects in such countries as Australia, Venezuela, the Philippines, China and Morocco and has other projects in the pipeline.

  Ag Companies Get Big Orders from Chinese Delegation

Four Chinese livestock feed buyers reported making $1.2 million worth of purchases during their recent visit to Wisconsin.  The Wisconsin Departments of Agriculture and Commerce hosted the group during the World Dairy Expo in Madison October 3-7, 2006 and arranged for them to meet with 12 Wisconsin agribusinesses.  The buyer mission was funded by the Food Export Association of the Midwest U.S.A. (formerly MIATCO).  Ms. Beng Yeap and Mr. Dan Vogel co-managed this USDA-FAS funded activity.

In May 2006, Mr. Vogel and Ms. Yeap, along with Mr. Paul Swenson, Director of the Wisconsin Office in Shanghai, traveled to Beijing and Harbin (capital of Heilongjiang Province in northeast China) in conjunction with the University of Wisconsin Babcock Institute Dairy Development Seminar, to identify professional dairy livestock and nutrition managers.  Four buyers: Ms. Li, John Deere (China) Investment Inc; Mr. Cheng, Huachin Hi-Tech ( Group) Inc. ; Mr Pu., Beijing SanYuan Luhe Dairy Group and Mr. Tian, Sino Farm Genetics and Seed Co; were selected to travel to Wisconsin.  In addition to attending the World Dairy Expo, the delegation visited five local dairy farms and attended a University of Wisconsin livestock nutrition research seminar.

  Booming Biotech in Canada

Canada continues to have the second highest number of biotechnology companies in the world demonstrating a strong entrepreneurial culture, a supportive business climate and government commitment to growing this vital sector.  According to a report by Ernst &Young, the number of Canadian biotechnology companies grew to 490 in 2005.  Of those, 81 were public companies and 409 were privately owned.  In 2005, biotechnology company revenues were CDN$3.8 billion; doubling revenues in just five years. Approximately $1.5 billion is invested into R&D annually in the sector.  Human health continues to lead the pack in Canada’s biotech sector, making up nearly 60% of the companies involved in the overall life science field.  Agribiotech follows at 17%, Food Processing at 13%, Environmental Biotech at 9% and Aquaculture, Bioinformatics and Natural Resources related biotechnology at 3% each.  Ontario, Quebec, and British Columbia are the regional leaders in biotech in Canada.

As the Canadian life science sector is made up primarily of small companies, there are great opportunities for Wisconsin companies to work as research partners and to supply products and services into the sector.  Areas that are seeing particularly strong growth are nanotechnology, stem cell research (due to a slightly more relaxed regulatory framework than in the United States), gene sequencing (SARS & RHAI) and the use of extreme light for the examination of matter (Synchrotron Project: Canadian Light Source).  Corporate alliances between Canadian and U.S. firms continue to be strong, typically in the areas of R&D and licensing. 

Wisconsin’s Canadian Trade Office, located in Toronto, will offer matchmaking at both BioPartnering North America, February 4-6, 2007 in Vancouver and at BIO2007, May 6-9, 2007 in Boston, MA.  BioPartnering North America consistently attracts top caliber pharmaceutical and investment players as well as large and small biotech companies from Canada, the United States, Europe, and Asia.  It is a highly targeted technical and networking conference, in its fifth year.  Participating in the event through Wisconsin’s Canadian Trade Office will entitle firms to a 10% discount on their registration fee, assistance with appointment setting, and additional exclusive networking opportunities for core biotechnology companies.  In addition, Forward Wisconsin and the Wisconsin Department of Commerce will work with Industry Canada at BIO 2007 in Boston to assist companies meet potential Canadian partners.  This service is complimentary and enables Wisconsin companies to maximize their time at the BIO show.

For more information contact, Ms. Nancy Ward, Director of the Canadian Trade Office, nward@cglg-canada.com, ph: (416) 368-6956.

  EU Additions

Romania and Bulgaria are on their way to joining the European Union on January 1.  The two are among Europe's poorest countries but EU membership will reward them for a 15-year struggle to convert their once communist systems to market economy democracies.  The EU says both countries still fall short of Western standards and additional progress is needed in fighting corruption and organized crime, improving justice, and ensuring better food and aviation safety.  The average monthly wage in Bulgaria is $205 and in Romania it is $400.

Membership in the EU means Romania and Bulgaria will be eligible for farm aid and other economic assistance, speeding efforts to raise living standards.  However, the United Kingdom has imposed rules to limit the number of Bulgarian and Romanian citizens who can seek work in the UK.  Prior to the 2004 enlargement which brought 10 Central and Southern European countries into the EU, UK officials had expected about 15,000 migrant workers a year to arrive in the country.  The actual figure was closer to 600,000.

Negotiations to bring Turkey into the EU were dealt another blow on November 2 after emergency talks to resolve Turkey’s refusal to allow ships and planes from EU-member Cyprus into its ports were cancelled.  Turkey has sought to enter the EU for many years and there have been counter arguments during that time.  For many years EU-member Greece fought the idea for nationalistic reasons.  Turkish “guest workers” have made a significant presence in Germany and several other countries for years but if the migratory barriers were reduced or removed new waves of young Turkish workers are expected to flow into a region that already struggles with providing jobs for its young people.  The potential migration of millions of Turkish workers would also create a potentially volatile cultural problem.  The suspicion of all things Islamic has reached a fever pitch in Europe.

  China Market for Wood

Effective September 15, 2006, a new Chinese regulation went into effect applying the country’s 17% Value Added Tax (VAT) to all wood products firms.  Previously, many Chinese manufacturers could avoid the tax on imported raw material if their finished goods were exported.  That loophole effectively increased the demand for imported raw lumber that would be converted into furniture and other wood products and sold in the United States, Canada, Western Europe, and elsewhere.  The new policy will be applied to export processing zones and free trade zones.  While the enforcement of the VAT may dampen Chinese demand for U.S. raw lumber slightly, the market remains strong and will improve for Wisconsin manufacturers of finished wood products.  

Chinese Premier Wen Jia Bao has launched a “Green Building” initiative.  Both the Beijing Olympics in 2008 and the World’s Fair in 2010 are being marketed around environmental protection themes.  The government realizes that China’s great demand for imported lumber has led to extensive piracy of other countries’ forests, which does not fit the public image it is seeking to develop either domestically or internationally.  The Chinese government has been discussing draft regulations which will limit logs from Africa, Indonesia, and Russia to those from certified exporters.  There have also been discussions on developing a point of origin certification standard.

Wisconsin’s China Trade Office works with exporters to develop their China market strategies, locate agents or distributors, conducts basic market research and engages in trade promotion activities.  Any wood products firms interested in exploring the China market can contact Ms. Beng Yeap, beng.yeap@wisconsin.gov, ph: (608) 266-1480.

  Wal-Mart in China

Wal-Mart Stores, the largest retailer in the United States, is laying the groundwork to become the biggest foreign chain in China with the $1 billion purchase of a major retailer.  The acquisition of a Taiwanese-owned supermarket chain’s stores on the mainland allows the American retailer to more than double its presence in a country that, despite its size and growing middle class, remains largely untapped by foreign retailers.  Wal-Mart has grown to become the largest foreign retailer in Mexico and Canada, but it has not been as successful in all markets.  The firm has pulled out of Germany and South Korea and has struggled in Japan.  The firm expects that 95% of the merchandise sold in its stores in China is sourced from China.  In 2004 Wal-Mart reported selling $18 billion worth of Chinese-made goods in the United States.  Wal-Mart still needs approval by Chinese authorities to close the deal for Taiwanese-owned Trust-Mart but the firm expects to be successful by the end of the year.  The deal puts Wal-Mart neck-and-neck in China with Carrefour, the giant French retailer, which has more than 200 outlets in China.

  Vietnam Joining the WTO

The World Trade Organization’s General Council approved Vietnam’s application for membership in the WTO on November 7, 2006.  Vietnam still has to officially ratify the deal, and it will become a member 30 days after it has informed the WTO that it has ratified.  On November 13 the U.S. House of Representatives failed to pass a measure to normalize U.S. trade relations with Vietnam.  While the move does not bar Vietnam from joining the WTO, it makes the United States out of compliance with the organization.  More information on the commitments that Vietnam has made to bring its tariffs, quotas and ceilings on agricultural subsidies in line with WTO rules as well as open its service market can be found online by clicking here.  According to the latest WTO data, Vietnam’s merchandise exports were US$26.5 billion in 2004, and its imports were US$32.0 billion.  In 2005 Wisconsin exported $15,652,520 worth of products to Vietnam.  That was a 26% increase over 2004.  Half of Wisconsin’s exports to the Southeast Asian country are electrical and industrial machinery.  Wisconsin ranks #15 among the 50 states in exports to Vietnam.

  Panama Canal Modernization Approved

Panamanians voted four-to-one to modernize the aging canal linking the Pacific Ocean with the Caribbean Sea on October 22.  The $5.25 billion overhaul, to begin next year, will double the canal’s capacity by adding a third set of locks that are 40 percent longer and 60 percent wider than the current ones.  Constructed by the United States in 1914, the 50-mile (80km) long canal is frequently congested and too small to handle the world’s largest container vessels and tankers.  Without an expanded canal, officials predicted, shipping traffic would find other routes and Panama’s growing economy would suffer.  Nicaragua had recently proposed building its own canal.

The expansion, which will be financed by loans and higher fees charged to shippers, is scheduled to be completed in 2014.  Canal officials predict that a decade afterward the expanded canal will generate $6 billion a year, far more than the $1.4 billion expected this year. 

Over 70 Bucyrus shovels built in South Milwaukee were used in the initial construction of the Panama Canal.  Perhaps your firm can be part of the historic expansion of the canal.  The Wisconsin Department of Commerce is leading a trade mission to Panama January 28-February 2, 2007.  Some of the best prospects for the market include electric power systems, security and safety equipment, port and shipbuilding equipment, air conditioning and refrigeration equipment, telecommunications, and computers as well as cosmetics, toiletries, and furniture.  The mission will also visit neighboring Costa Rica.  To learn more about the mission and market opportunities in Central America, contact Mr. Greg Miller, greg.miller@wisconsin.gov, ph: (608) 263-0393.

  Wallet-sized Passport for North American Travel

On October 17 the U.S. Department of State announced and submitted for public comment a proposal for a card-format passport for international travel by U.S. citizens through land and sea ports of entry between the United States, Canada, Mexico, the Caribbean, and Bermuda.  The limited-use passport card will be adjudicated to the same standards as a traditional passport book.  The rule proposes a wallet-sized card that would cost $10 for children and $20 for adults, plus a $25 execution fee.

The cutting-edge technology incorporated in the proposed card was designed in coordination with the Department of Homeland Security specifically to address the needs of land border-crossings.  The proposed passport card would use long-range, or vicinity, radio frequency identification (RFID) technology to link the card to a secure U.S. government database containing biographical data and a photograph.  The card itself will not contain any personal information, and DHS will implement protections to keep the database secure.

Since only 40% of Canadians and 25% of Americans have passports, new requirements to have one in order to travel between the two countries was expected to significantly impact vacation and “spur-of-the-moment” cross-border trips.  The proposed passport card is intended to make the process easier while still beefing up security precautions.  The proposed rule is available for public viewing and comment at www.regulations.gov.  For more information, visit www.dhs.gov or travel.state.gov.

  Lula Re-elected in Brazil

Brazilian President Luiz Inácio Lula da Silva, Brazil's president for the last four years, was easily re-elected to a second term in thesecond-round of voting of Sunday, October 29.  Lula da Silva, of the left-wing Workers Party, won with 60.8% of the vote, against Geraldo Alckmin of the Social Democratic Party.  Despite several corruption scandals during his first term, Lula will begin his second four-year term as President of Latin America's largest economy in January 2007.  His fiscal conservatism and support for the country's poor are credited for his re-election.  Lula da Silva's first term was not as traumatic for the Brazilian economy as many in the business community had initially expected.  During his first term he followed policies intended to control government spending and keep Brazil's historic inflation in check.  Many of his backers are saying it is now time to start pursuing economicexpansion and social responsibility programs.

  New Corruption Index

Transparency International, a global network of 90 national chapters seeking to combat corruption, released its 2006 Corruption Perceptions Index on November 6.  Finland, Iceland, and New Zealand tied for the designation of least corrupt countries while Haiti was ranked last.  The United States was ranked as the 20th least corrupt.  Wisconsin’s top export destinations came in at #11 (United Kingdom), #14 (Canada), #17 (Japan), and #70 (Mexico and China, tied with Brazil, Egypt, Ghana, India, Peru, and Saudi Arabia).  Countries which saw a significant improvement in their rankings from previous reports include: Algeria, the Czech Republic, India, Japan, Latvia, Lebanon, Mauritius, Paraguay, Slovenia, Turkey, Turkmenistan, and Uruguay.

The Corruption Perceptions Index is a composite index that draws on multiple opinion surveys of public sector corruption in 163 countries around the world.  It scores countries on a scale from zero to ten, with zero indicating high levels of perceived corruption and ten indicating low levels of perceived corruption.   Follow the links to view the 2006 report and all 163 countries’ scores or a map showing country scores.

  Foreign Agricultural Service Reorganized

The U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) launched a major change in its organizational structure and operations effective Nov. 13.  The principal objectives of the reorganization – the first since the agency was established in 1953 – is to consolidate into FAS all of USDA’s agricultural trade, market assistance and market promotion activities, and to improve the agency’s efficiency.  Major aspects of the reorganization include the creation of nine offices organized around the agency’s core missions.

Included in the reorganization plan is the creation of a new Office of Negotiations and Agreements that will lead USDA’s efforts on formal trade negotiations and agreements, and act as the department’s principal liaison with the Office of the U.S. Trade Representative (USTR) and other government agencies involved on trade issues.  The new FAS office also is to coordinate USDA’s participation in the World Trade Organization and other major international organizations; monitor compliance of other countries that enter into bilateral or multilateral trade accords to which the United States is a party; develop enforcement strategies and U.S. responses to allegations of U.S. non-compliance with trade agreements where USDA has jurisdiction; organize USDA’s participation in formal dispute-settlement cases; and coordinate USDA’s implementation of U.S. rights and obligations under trade agreements or other mandates affecting agricultural trade.

In addition, the newly reorganized FAS will include an Office of Scientific and Technical Affairs, which is to be the lead office on sanitary and phytosanitary trade barriers, international biotechnology-related matters and food safety issues.  This office is to be responsible for developing strategies for formal and informal negotiations on technical issues, including those that arise through the use of biotechnology or other emerging technologies.  The Scientific and Technical Affairs Office’s staff is to take the lead in U.S. participation in the WTO Sanitary and Phytosanitary and Technical Barriers to Trade agreements.  It also is to work with representatives from other agencies in international forums such as Codex Alimentarius Commission, World Animal Health Organization (OIE) and the International Plant Protection Convention (IPPC).

  German VAT Increases

As of the first of the new year, Germany’s Value Added Tax (VAT) rate will rise from 16% to 19%.  German consumers have been making slightly more large ticket purchases in 2006 and are expected to curtail their spending in early 2007 in response to the tax increase.  It is estimated the VAT change will raise an extra 20 billion euros ($25.4 billion) a year in taxes.  Chancellor Angela Merkel's government sought the increase to help reduce Germany’s budget deficit to below the European Union limit of 3% of GDP.  Even with the increase, Germany’s VAT will be below the European average (19.34%), between Cyprus and Luxembourg's 15% and Denmark and Sweden's 25 percent.

  HS Changes

Don’t forget that the World Customs Organization’s (WCO) third major reform of the Harmonized Tariff Schedule will be implemented on January 1, 2007.  HS codes are used to assign tariff rates, quota limits, rules of origin, and export compliance regulations.  If your product changes classification, it may face higher or lower duty rates or new regulations come next year.  More information on HS numbers is available from the World Customs Organization.

  Queretaro Cattle Show

The Wisconsin Department of Agriculture, Trade and Consumer Protection will be represented at the annual Mexico National Dairy Cattle Show in Queretaro December 1-15, 2006.  Most of the initial agreements to purchase replacement dairy cattle from Wisconsin and U.S. suppliers are made at this gathering of all the top dairy breeders.  The 2006 event is crucial because the Mexican border was opened to dairy cattle imports on October 4, 2006 for the first time since December 23, 2003 when it was closed due to the appearance of "Mad Cow" disease in North America.  Prior to the border closing, Wisconsin dairy cattle exports to Mexico averaged $3 million annually.  Anyone interested in visiting the show and Queretaro Mexico area dairy farms should contact Mr. Dan Vogel, dan.vogel@datcp.state.wi.us, ph: (608) 224-5113.

  International Workshops in Eau Claire

UW-Eau Claire Continuing Education and Small Business Development Center is continuing its half-day workshops for exporters:

• Doing Business with China, Wednesday, December 6, 2006
• Opportunities in India, Wednesday, January 24, 2007
• Methods of Payment in Global Markets, Wednesday, March 14, 2007

All programs will be held at the Plaza Hotel and will run from 9:00am to noon.  Cost for each workshop is $59.  You can register on-line at www.uwec.edu/ce/reg.htm.  Additional information can be obtained by calling (715) 836-3636 or (866) UWE-C4CE.

  Food Promos in Japan and Taiwan