WISCONSIN WORLDWIDE

Vol. 6 #3, January 2007

  Dollar Movements

  Success on Benelux Mission

In Late November, representatives of Bonstone Materials, Inland Printing, PremierTec, and Quantum Devices visited Amsterdam and Brussels as part of a trade mission to the Benelux countries organized by the Wisconsin Department of Commerce.  Many Wisconsin firms use the Benelux countries as distribution hubs for their European sales activities, but as Ms. Kara Smith, the Director of Wisconsin's European Trade Office, is fond of saying "Europe as a single market does not exist."  The Netherlands and Belgium are both important markets themselves for many exporters. 

As with all 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.  “Overall, I wanted to tell you how impressed I was with what you were able to do for us.  You guys did a great job and the trip was a success from our standpoint.  Job well done!” said Dave Slain, Inland Printing.  Mr. Per Andersson of PremierTec has already identified the distributor with which he intends to work and is planning a return trip to The Netherlands for January to finalize the partnership and conduct product training in order to begin selling product into the Benelux and all of Western Europe by early 2007.

 To learn more about European market opportunities, contact Mr. Brad Schneider, brad.schneider@wisconsin.gov, ph: (920) 420-1796.

While in Brussels, the Wisconsin Department of Commerce partnered with Foley & Lardner LLC, which has an office there, and the World Trade Center Wisconsin to provide the delegation members with a further understanding of how to do business in the Benelux region and the legal issues and concerns to consider.  Foley & Lardner sponsored the event and had lawyers from their Washington D.C. and Brussels offices give presentations and made themselves available to answer any questions.  Pictured in the photo from left to right: Christian Bartley, World Trade Center Wisconsin; Kate Clarke, Wisconsin Trade Office in Europe; Brad Schneider, Wisconsin Department of Commerce; Robin Schumacher, Quantum Devices; Sophie Lignier, Foley & Lardner; Peter Linzmeyer, Foley & Lardner; and Per-Olof Andersson, PremierTec.

  Wisconsin Cattle in Mexico

Wisconsin was represented at the National Dairy Cattle Show in Querétaro, Mexico, December 7-9, 2006.  Not only did Wisconsin Holstein and Jersey cattle win in the show ring, but state exporters of dairy equipment, cattle housing, and livestock reproductive materials and supplies made sales to Mexican dairy producers.  Continental Plastic of Delavan was a major sponsor of this event and recognized at the awards ceremonies.  State exports of dairy cattle genetics, livestock feed ingredients and related equipment to Mexico are experiencing double digit growth rates.  The Wisconsin Department of Agriculture, Trade and Consumer Protection will participate in two upcoming events in Mexico: the ENGALEC Conference, March 8-10 in Torreón and CIGAL, July 25-27 in Guadalajara.  If interested in joining a Wisconsin delegation to either event, contact Ms. Jen Pino-Gallagher, jen.pino-gallagher@datcp.state.wi.us, ph: (608) 224-5125.

  Focus on India

India has been receiving plenty of attention from U.S. businesses lately.  Firms that had once viewed the country only as a source of technicians or an outsourcing destination are now viewing it as an export destination.  The country is Asia's fourth-largest economy and has grown at an average of 8% in the last three years.  As of September 2006, India was the #18 export destination for Wisconsin.  Shipments there were up 25% over the previous year.

In order to increase U.S. familiarity with the market, the U.S. Department of Commerce organized its largest ever trade mission there in November/December 2006.  The mission was comprised of 238 business participants from 186 companies or organizations representing a diverse range of industry sectors.  Participants came from 35 U.S. states and the District of Columbia, with 68% of the businesses being small firms.  Half of the participants had never visited India before.  In addition to attending the three-day US-India Business Summit in Mumbai, most participants chose at least one of five other major cities to visit as part of spin-off delegations.  Mr. Stanley Pfrang of the Wisconsin Department of Commerce participated in the mission in order to develop contacts and initiate relationships that could assist Wisconsin firms seeking to export there.  Mr. Pfrang went on to New Delhi after Mumbai.

Several themes were brought up repeatedly during the visit:

• India started its reform process in 1991 and while Indians recognize that it has been a slow process (and still has further to go), they are also confident that it is irreversible.
• India is very cognizant that it is competing with China, but the country’s leaders are confident in their advantages.  It was repeatedly stated that “China is an easy market to enter, but it is difficult to operate there for the long term.  India may be a difficult market to enter, but the rule of law makes it an easy place to operate once you get established.”
• Indian business and government officials kept stressing that the natural cooperation between India as the world’s largest democracy and the USA as the oldest large-scale democracy will lead to positive economic growth based upon the freedom and entrepreneurial spirits of both countries.
• India recognizes that its infrastructure is woefully inadequate.  Issues of power generation and distribution, water, port facilities, and highways are priorities of the federal government.  Unfortunately, the divisions of responsibility and financial resources between the central and state governments are hampering efforts.
• Indian businesses are ready to invest in the United States in order to build sales here.  Last year was the first time that Indian foreign direct investment in the United Kingdom exceeded U.K. investment in India.

Ms. Jennifer Thompson, Director of International Planning and Policy at Oshkosh Truck, attended the summit and had this to say about the Indian market, “[The trip] provided a good setting to meet with US government officials able to assist with our exports and also yielded productive opportunities to talk with potential customers.  I experienced first hand the significant infrastructure challenges present and learned that there must be much patience and persistence in a successful business venture.  However, India is a rapidly growing part of the world economy and holds much potential for US companies; the business climate seems very warm and there is much enthusiasm to work with Americans.”

The World Trade Center Wisconsin is sponsoring two half-day programs on India on Tuesday, January 23.  The morning will include an introduction to the US-India Business Forum and the afternoon presentation will be on “India and China: A Strategic Comparison.”  More information on the programs is available at the WTCW website.

On Wednesday, January 24, the UW-Eau Claire Continuing Education and Small Business Development Center will be hosting a half day program on business opportunities in India.  Click here for more information.

“India is not a journey for the faint hearted, or for those who expect overnight success," said the US Ambassador to India, David Mulford in his address to summit participants.  "You will need a strategy - a long term view - patience, and persistence.  But one of the world's great markets is here."

  EU Expansion

On January 1 the European Union (EU) grew to 27 member countries and a population of 500 million with the addition of Romania and Bulgaria.  There is a major income gap between the two new additions and the Central European countries that joined the EU in 2004 and a much more significant gap with the 15 Western European countries that composed the EU prior to 2004.  Per capita GDP in Romania and Bulgaria are $8,785 and $9,600 respectively, compared to $28,100 for the European Union as a whole.  Bulgarian and Romanian workers will face more restrictions on their ability to relocate within the EU than those from the 2004 additions.

The debate on how much further the EU should expand and how much more integrated members need to become is ongoing.  Some pundits have said an “expansion fatigue” is setting in.  According to a Eurobarometer poll published in July 2006, 45% of the EU population support enlargement while 42% oppose it.  Several Balkan countries are still hoping to join the EU and negotiations on membership for Turkey were suspended in November ostensibly because of disagreements related to access to Turkish ports by Cypriot vessels.

  Canadian Unemployment at 30-year Low

On January 5 Statistics Canada reported that our northern neighbor’s employment increased by an estimated 62,000 in December, pushing the unemployment rate back down to the 30-year low of 6.1%.  Employment grew by 2.1% (+345,000) in 2006, the highest growth rate since 2002.  This was the 14th consecutive year of employment increases in Canada.  The resources boom in western Canada has spurred demand for new workers in Alberta, but eight out of the ten provinces recorded job gains in December.  Ontario accounted for almost two-thirds of the added employment (41,600).

Of the jobs created in December, 37,000 were higher-quality full-time jobs and 25,000 were part-time.  The bulk of the new jobs created last month were in the service sector.  Economists said the one potential weakness in the December jobs data was that 49,000 positions were characterized as self employed.  The full report can be viewed on the Statistics Canada website.

For more information on business opportunities in Canada, contact Mr. Stanley Pfrang, stanley.pfrang@wisconsin.gov, ph: (608) 267-0639.

  Brazil’s Share of World Trade Growing

Over the last four years both Brazil’s imports and exports have been growing and in 2006 the country accounted for 1.2% of global trade.  Mr. Fernando Riveiro, economist of the Foundation Center for Foreign Trade Studies (Funcex) in Rio de Janeiro, is confident that the country’s expanding trade will continue in 2007.  “The trend for imports to increase is stronger, and even after growing about 25% this year, next year they should register rates above 20%.  Meanwhile exports, which grew about 17% in 2006, should rise 10% in 2007,” he said.

In the evaluation of Mr. Ingo Plöger, a well-known Brazilian business executive and president of IP Desenvolvimento Empresarial e Institucional, the important thing is that Brazilian internationalization continues to increase.  According to the economist, Brazilian exports to neighboring countries should surpass exports to the United States this year.  Brazil’s increased integration with other Latin American economies will make the country more confident about its ability to compete internationally and open its own market further.

Plöger added, “The productive chains should be rethought.  It is necessary to cut labor costs, review tax policy and motivate innovation,” he said, noting that Brazil is the only one of the BRIC countries (Brazil, Russia, India, China) with a floating exchange, and because of this it should be acknowledged for being an economy that is already more open and that does not use exchange rate policy in place of high tariffs.

For more information on business opportunities in Brazil, contact Ms. Susan Dragotta, susan.dragotta@wisconsin.gov, ph: (262) 691-5147.

  Slovenia Adopts the Euro

Slovenia became the latest country to join the Eurozone on January 1.  The northernmost region of former Yugoslavia is the first of the ten countries that joined the European Union in 2004 to meet the criteria to adopt the euro as its official currency.  From January 15 onward all payments will be in euros only, though the dual display of prices in euros and Slovenian tolars will continue until mid-2007.  One euro is currently worth 239.6 tolars.  The transition has gone smoothly, but restaurant and café goers are reporting that businesses are using the change as an excuse to raise prices.

  Chinese Ag Delegations in Wisconsin

The Wisconsin Department of Agriculture and the University of Wisconsin Babcock Institute hosted three different delegations from the People's Republic of China in recent months.  The delegations represented ministries critical to regulating the import of Wisconsin agricultural products into the Chinese market.  A group from the Shanghai Municipal Food and Drug Inspection Institute visited on November 16 to learn about Wisconsin’s inspection program for dairy production and processing.  They were also interested in research into dairy product quality and education/training support programs.

A second group from the China General Administration of Quality Supervision, Inspection and Quarantine focused on the newly opened Wisconsin Veterinary Diagnostic Lab on the University of Wisconsin Campus during its December 11 visit.  Lab services to ensure the health of the state and region’s animal populations and testing of animals and animal products bound for the world market are critically important to the work of the Chinese regulatory officers.  The lab plays the lead role in making sure our livestock products comply with China's import requirements.

On December 15 a third delegation of top agricultural policy officials from the China Ministry of Agriculture were hosted at the Executive Residence for a Wisconsin Christmas reception and received certificates for their participation in the University of Wisconsin Babcock Institute education and policy program.  Agriculture Secretary Rod Nilsestuen and UW-Madison College of Agriculture and Life Sciences Dean Molly John expressed our state's appreciation to the delegation and willingness to develop trade and agricultural policy beneficial to both Wisconsin and China.

All of the delegations left impressed with the abilities of our university, government, and laboratories to meet the Chinese import requirements for agricultural products.  This should help eliminate the duplicative and expensive testing and documentation requirements currently needed for many products to enter China.  Reduction of regulatory compliance costs is the most important key to making Wisconsin agricultural products competitive in China.

For more information on livestock exports, contact Mr. Dan Vogel, dan.vogel@datcp.state.wi.us, ph: (608) 224-5113.

  Vietnam Joins the WTO

Vietnam officially became the 150th member of the World Trade Organization (WTO) on January 11.  When Vietnam was approved for membership on November 7, WTO Director-General Pascal Lamy said “Viet Nam has shown how anchoring domestic reforms in the WTO can yield dramatic results.  Viet Nam’s economic growth topped 8% last year, foreign direct investment rose steeply to over $6 billion, and exports surged by over 20%.  More must surely follow with the new laws, administrative measures, and commitments on goods and services that are in Viet Nam’s membership package.”

WTO membership requires Vietnam to reduce its tariffs and open sectors of its economy to foreign investment.  While some changes will take effect immediately, others will be phased in.  Foreign banks, for example, won't be allowed to open their own branches until April 1.

  Re-Election in Venezuela

President Hugo Chávez of Venezuela was sworn in for another six-year term on January 10.  He won the December 3rd election with 63% of the vote.  His opponent, social democrat Manuel Rosales, Governor of Zulia state, received 37%.

Booming oil revenues have helped the country’s economy grow by 9% in 2004, 10.7% in 2005, and an estimated 10.8% in 2006.  This level of growth in the Venezuelan economy has benefited US exports tremendously.  Through the third quarter of 2006, US exports to Venezuela were up 37% over the same period in 2005.  Growth in 2005 and 2004 were an impressive 34% and 64% respectively.  Wisconsin’s exports to the country have shown even stronger returns.  Through the third quarter of 2006, our state’s exports to Venezuela were up 90%.  Top export categories include cereals, machinery, aircraft and parts, paper and paperboard, and medical devices.

While the Venezuelan economy continues to benefit from high oil prices, there are some reasons for concern.  The inflation rate in the country is forecast to close the year at about 15%, on top of 16% and 14% respectively in 2005 and 2004.  Other concerns may include access to foreign exchange, allocation of bank credit, an increase in the number of state-owned enterprises, and an overall reduction in the number of local manufacturers.  During the swearing in ceremony for his new cabinet, President Chavez announced plans to nationalize companies in the telecommunications and electricity sectors.  He has also said he would like to strip the central bank of its autonomy.

Another of his stated goals is to reform the constitution in order to remove all term limits for presidential re-election.  Because the opposition chose to boycott a legislative election last year, it has no representatives in the National Assembly.  Government supporters control the judiciary and most other government institutions, resulting in limited opposition to proposed changes. 

The February meeting of the Milwaukee World Trade Association will address oppotrunities in Latin America.  Click here for more info or contact the Department of Commerce Latin America Specialist,  Ms. Susan Dragotta, susan.dragotta@wisconsin.gov, ph: (262) 691-5147. 

  New Polish Central Banker has Wisconsin Connections

Incoming head of the Polish Central Bank, Mr. Sławomir Skrzypek, has a Wisconsin connection.  He received his MBA from the University of Wisconsin – La Crosse.  Some Polish analysts and opposition politicians are worried that Mr Skrzypek was lukewarm about Poland's euro-entry prospects and that his long-standing friendship with eurosceptic president Mr. Lech Kaczynski could cause political interference in fiscal work.

  Updated US Tariff

The 2007 version of the Official Harmonized Tariff Schedule of the United States that lists the duties on products imported into the United States should go into effect on February 3.  You can view the “unofficial” draft version and the list of additional changes resulting from recent trade agreements at the United State International Trade Commission website.   

  China RoHS

Effective March 1, 2007, the Chinese Ministry of Information Industry will implement a set of Regulations on Hazardous Substances (RoHS) regulations, new marking and disclosure requirements for hazardous substance content in electronics products.  Covered products will need to be marked and accompanied by a written disclosure in Chinese of any components or packaging that contain any of the six regulated substances: lead, mercury, hexavalent chromium, polybrominated biphenyl (PBB) and polybrominated diphenyl ethers (PBDE)(>0.1%) and cadmium (>0.01%).  Prescribed marking and disclosure requirements address the Environment-Friendly Use Period, Hazardous Materials and Content and Packaging Materials.

The Chinese RoHS requirements apply to a wider range of electronics than those covered by EU regulations.  See our July issue for info on EU regulations.  Chinese authorities have not adopted any of the EU exclusions or exemptions at this time.  Chinese RoHS currently cover semiconductor and other large scale manufacturing equipment, medical products, automotive electronics, production materials, and consumables, as well as many individual components and component materials.

For an unofficial English translation of the China RoHS regulations, contact our Asia Specialist, Ms. Beng Yeap, beng.yeap@wisconsin.gov, ph: (608) 266-1480.

  New Passport Requirements

Beginning January 23, citizens of the United States, Canada, Mexico, and Bermuda will be required to present their passport or another accepted document that establishes the bearer's identity and nationality in order to enter the United States when arriving by air from any part of the Western Hemisphere.

These new travel document requirements make up the Western Hemisphere Travel Initiative (WHTI). In order to obtain national security benefits as quickly as possible, and to expedite the processing of arriving passengers, the plan will be implemented in multiple phases.  The first phase involves the passport requirements for those arriving by air that goes into effect later this month.  The final rule for the air phase of the WHTI rule will be published in the Federal Register on November 24, where it can be viewed at www.regulations.gov . That rule is also available on the Department's consular web site, travel.state.gov and on the Department of Homeland Security's web site, www.dhs.gov.

A separate proposed rule addressing land and sea travel will be published at a later date proposing specific requirements for travelers entering the United States through land and sea border crossings. As early as January 1, 2008, U.S. citizens traveling between the United States and Canada, Mexico, Central and South America, the Caribbean, and Bermuda by land or sea could be required to present a valid U.S. passport or other documents as determined by the Department of Homeland Security. While recent legislative changes permit a later deadline, the Departments of State and Homeland Security are working to meet all requirements as soon as possible.

The federal government has dedicated additional resources and personnel to meet the increased demand for passports generated by these requirements. In Fiscal Year 2006, a record 12.1 million passports were issued to American citizens, and 16 million passports are expected to be issued in Fiscal Year 2007. U.S. citizens can find information about how to apply for a passport at travel.state.gov or by calling 1-877-487-2778.

  Addition to Commerce Team

After having worked as a Limited Term Employee for the last six months, Ms. Truphosa Mwololo is the newest permanent employee at the Wisconsin Department of Commerce’s International Division.  Ms. Mwololo serves as the Executive Staff Assistant to Division Administrator Mary Regel and provides day-to-day logistical assistance to division staff and the international offices.

Previously Ms. Mwololo worked with the Bureau of Minority Business Development at the Department of Commerce. She also has banking experience with M&I Bank.  She received her BA degree in Economics from UW-Madison and MBA from Edgewood College.  Her two years at the United World Colleges of the Atlantic, in Wales (UK), opened opportunities for travel to Africa, Europe, Asia and Latin America.  She was born in Kenya and speaks fluent English and Kiswahili, not to mention four other languages from Kenya.  Ms. Mwololo is conversational in Italian and Spanish.  She is a member of the African Association and International Professionals of Madison.

  CIBER Outreach Manager

The UW-Madison Center for International Business Education and Research (CIBER) has hired Ms. Suzanne Dove as its Outreach Manager.  Ms. Dove is returning to Wisconsin from the Washington, D.C. area, where she has worked for several years.  Since 2001, Ms. Dove served as a Senior Analyst for the U.S. Government Accountability Office (GAO) on the International Affairs and Trade Team.  Prior to her time at the GAO, she spent three years at the World Bank working on poverty reduction and economic management issues for Latin America and the Caribbean.  A fluent Spanish speaker, Ms. Dove received a PhD in Political and Administrative Science in 2002 from Universidad Autonoma de Barcelona in Barcelona, Spain.  While in Spain, Ms. Dove also conducted research on free trade issues in Europe and Latin America for the Escuela Superior de Administracion y Direccion de Empresas (ESADE).  She holds a Masters degree in Public Administration from New York University and completed her undergraduate degree in European Cultural Studies at Brandeis University.  Ms. Dove will also provide outreach services for the Center for World Affairs and the Global Economy (WAGE), and is consulting with a variety of campus departments and the business community to design workshops, seminars and conferences which address a range of global business topics.

  India Workshop in Eau Claire

With a billion people, India is the largest English-speaking country in the world as well as the largest democracy.  The Indian economy is expanding rapidly with significant growth in science, engineering, and technology fields, pharmaceuticals, biotechnology, and manufacturing sectors.  Over 100 of the Fortune 500 companies are currently present in India.  The UW-Eau Claire Continuing Education and Small Business Development Center is hosting a workshop to give Wisconsin business people a better understanding of Indian culture and how it differs from western ways and business methods. 

OPPORTUNITIES IN INDIA
January 24, 2007
9am to Noon at the Plaza Hotel in Eau Claire

Speakers include Professors Rama Yelkur and Raj Aroskar from the University of WI - Eau Claire, who will address important background information on the cultural and political environment of India, and Mr. Mohit Uberoi, President of Megtec Systems of De Pere, who will speak about his company's experiences in doing business with India.

The cost of the workshop is $59.  To register, call (715) 836-3636 or go to http://www.uwec.edu/ce/Intlexporting/opportindia.html.

  Food Promos in Japan and Taiwan