Talking Trade

 In the latest episode of “Talking Trade,” Pawan Bhatnagar of Kasvu Consulting and Asian Insiders touts the strength of the Indian economy. 

He says India has “proven to be remarkably resilient in the face of the headwinds” facing global markets, pointing to inflation, the war in Ukraine and other factors. 

“India is on track to become the world’s third-largest economy by ‘27, surpassing Japan and Germany,” Bhatnagar said. “And just to tell you, we may have the third-largest stock market by 2030.” 

The country is expected to more than double its current DGP of $3.5 trillion to $7.5 trillion by 2030, according to Bhatnagar. This projected growth is linked to three major trends, he said, pointing to global offshoring, digitalization and energy transitions. 

He also highlights “expanding credit availability, creation of new businesses, improving the quality of life and increased consumer spending” and the country’s growing manufacturing sector as contributing factors. 

In the latest episode of “Talking Trade,” Rebekah Sweeney of the Wisconsin Cheese Makers Association discusses the “recipe for success” for dairy exports in 2022. 

Sweeney, the group’s senior director of programs and policy, says last year was “an outstanding year” for U.S. dairy with more than $9.6 billion in exports. 

“That represents a 25 percent increase overall, and creates a new record both in terms of volume and value,” she said. “And I always like to say — and I really believe — that dairy processors’ success is built on a firm foundation of their commitment to quality and safety.” 

She also touts their efforts to build business relationships with export markets around the world. Sweeney highlights rising sales to Mexico, as well as other countries in Central America and South America, parts of Asia, Australia, Canada and elsewhere. 

“It’s an unmitigated success story, though perhaps one that could have been even greater absent some global disruptions,” she said, pointing to Russia’s invasion of Ukraine, supply shortages and inflation limiting consumers’ purchasing power. 

Sweeney also shares her perspective on economic forecasts for 2023, arguing it’s unrealistic to expect dairy exports to rise another 25 percent this year. 

In the latest episode of “Talking Trade,” Armada Corporate Intelligence Chief Economist Chris Kuehl discusses a recent shift in the global economic outlook. 

“If people were listening to the commentary even a few weeks ago, it was pretty doom and gloom,” Kuehl said. “It was looking at 2023 as a year of serious recession, maybe starting in first and second quarter and extending through the year.” 

But in the past several weeks, several new data points have helped to challenge that assumption, Kuehl explained. For one, he noted some information suggests global inflation had peaked in November or December of 2022. 

“We started to see a decline in commodity prices, we started to see a decline in shipping rates,” he said. “We saw a little bit of a decline in factory gate pricing — not like it’s gotten back to where we were prior to the pandemic, but considerably less than what we saw earlier in the year. And less than what had been anticipated for the coming year.” 

He also discusses expectations for China’s role in the global industrial community, touching on the country’s COVID-19 response, competition from India and other Asian nations, and more.

In the latest episode of “Talking Trade,” Orbis Corporation Senior Director of Global Logistics Mike Heindselman says trade compliance efforts need to be company-wide to be effective. 

“There’s no compliance without teamwork,” he said. “This can’t be one faction, or one department, or one functional area of a company that’s leading the charge on that. It has to be multiple areas that understand the goal, how it impacts them and why we are doing this.” 

To ensure that broad understanding, he underlines the importance of senior management buy-in as well as coordinated education. 

Heindselman also shares his perspective on the status of international tariffs and how they’ve influenced compliance efforts. 

“One challenge that we found was sourcing from different markets,” he said. “I think there’s a lot of people that were entrenched in certain markets that now had to learn the nuances or the ins and outs or specifics of a different market where they’re getting product overseas.” 

In the latest episode of “Talking Trade,” recently retired Trek Bicycle Corporation executive Maureen Muldoon discusses industry trends and how the company weathered COVID-19. 

Muldoon, who was the vice president of international business development for the Waterloo-based bike maker, highlights the “bike boom” seen early in the pandemic. 

“They wanted to get bikes for their kids so they could do some things outside, people were buying bikes because they were doing stay-cations, etcetera,” she said. “It ended up being that there was this sort of boom of sorts. We reacted quickly to that, we increased our [purchase orders] with our vendors.” 

Looking forward, she expects the trend of increased sales to slow down as people return to more typical buying habits. 

“Things are going to settle in, they’re starting to settle in now,” she said. “But what we’re seeing is we’ll land the plane at a higher level than what we were pre-pandemic.” 

She also discusses the effects that supply chain disruptions had on the industry. 

“There’s so many different parts that go into a bike, if you’re missing a disk brake, you can’t build a bike,” she explained. “So in some cases, our vendors had a lot of product, a lot of inventory … but they couldn’t build a product because they were missing one item.”

In the latest episode of “Talking Trade,” Asia Society Policy Institute Vice President Wendy Cutler says it’s unlikely that tariffs on Chinese goods will be lifted anytime soon. 

She discusses the recent news that tariff exclusions on several hundred products have been extended for another nine months after being set to expire at the end of last year. 

“But we’re talking about 352 products out of thousands and thousands,” she said. “And so, the exclusion relief also has been pretty minimal under the Biden administration. But I do think what you’re seeing is businesses are learning how to live with these tariffs, and how to do workarounds, and how to restructure their businesses.” 

Cutler notes some vocal advocates have been urging the United States to engage more with China and “get back to the negotiating table,” but says those perspectives are now in the minority. 

“The climate in Washington is you can’t be tough enough when it comes to China,” she said. “I think there’s a sense that if we sat down at the negotiating table with them on trade, what exactly would we negotiate?” 

She explained Chinese President Xi Jinping has made it clear the government will continue to play a major role in the country’s economy. That includes more restrictions on data and privacy. Cutler says U.S. trade policy will focus more on boosting competitiveness while working with allies to “develop a collective response to objectionable practices” by China. 

The discussion also highlights U.S. export trends, COVID-19, China’s contracting economy and resulting efforts to improve self-reliance, as well as the Trans-Pacific Partnership and more. 

In the latest episode of “Talking Trade,” Omanhene Cocoa Bean Company President Steve Wallace discusses challenges associated with growing the Milwaukee-based chocolate business. 

The company’s products are processed and produced in Ghana, one of the world’s largest producers of cocoa. 

“Overcoming history was difficult … the politics and the economics were very much centered on getting things cheaply from this part of the world and making money with it elsewhere,” he said. 

Wallace explained his goal for decades has been to “move up the cocoa value chain.” Ghana and the Ivory Coast are the two largest cocoa growers on the planet, but most of the value linked to cocoa and other commodities from the area is added elsewhere such as Europe or the United States, he said. 

“So we were disrupting this existing value chain, and there were a lot of parties — both within and without Ghana — that benefited from the old way of doing things,” Wallace said. 

State and federal officials in October announced Niche Cocoa of Ghana was partnering with Omanhene to establish its first North American manufacturing facility in the Franklin Business Park. According to the Wisconsin Economic Development Corp., the project represents the largest food and beverage investment by an Africa-based company in U.S. history, and the largest Ghanan foreign direct investment ever made in Wisconsin. 

While Wisconsin wasn’t initially a top-of-mind destination for the project, Wallace pitched the Milwaukee area as “the perfect place” for the factory. 

“Largely because of our manufacturing expertise — in particular, the food and beverage expertise and ecosystem here — and the very highly trained and capable labor force, and the universities and the agricultural history of this state,” he said. 

In the latest episode of “Talking Trade,” former diplomat Andy Rothman of the firm Matthews Asia highlights the benefits of U.S. engagement with China and says an initially bumpy transition from strict COVID-19 protocols will improve next year.

Rothman urges continued engagement, including international investment and trade, as well as academic exchanges, partnering on innovations in science and medicine and more. 

“All of that engagement I think over the last several decades has been really, really positive for most Americans,” he said, citing positive Wisconsin trade numbers with China. “And I think it’s also been really positive for most Chinese people as well. On the business side, it’s really worked.” 

While he conceded China doesn’t follow all of the rules laid out by the World Trade Organization, he said “they follow enough of the rules” to facilitate growth in the U.S.-China trade relationship. 

He noted U.S. exports of goods to China have risen by 600 percent since China joined the WTO. That’s compared to a 100 percent increase in exports to other countries. 

“Our agricultural exports — important for Wisconsin — are up 1,600 percent to China,” he said. “It’s now our largest market in the world for agricultural goods.” 

Rothman also weighs in on China relaxing its “zero-COVID” policy and possible implications for U.S. industries and the pandemic response. He notes the country has dropped restrictions that were seen as disruptive to daily life and normal economic activity. 

“In the end — certainly by the spring or early summer in the coming year — this is going to be good news for everybody, for Chinese people and for us as well,” he said. 

Chinese health officials announced yesterday the country would begin limiting its reporting of COVID-19 data as cases there are on the rise. 

In the latest episode of “Talking Trade,” Europartnerships Managing Director Mark Dodsworth says businesses in the United Kingdom “have been hit very hard” by the pandemic, the war in Ukraine and Brexit. 

“These have caused a number of serious disruptions, which have led to, for example, 11 percent inflation as of today,” he said. “Rising interest rates, exchange rate volatility, supply shortages, energy price rises, shortages of labor and consumer spending under pressure.” 

But despite these challenges, he said the U.K. economy has proved to be “fairly resilient.” After a dip in 2020, its GDP rose 7 percent in 2021, Dodsworth explained. And the current quarterly GDP is only 0.4 percent below its pre-pandemic level. 

“At the moment, things are not too bad but they are likely to get a lot worse,” he said. “And there are major concerns about a prolonged recession in 2023/24.” 

He also highlights some areas of opportunity for U.S. companies, including financial technology, digitization, electric vehicles and charging infrastructure, energy efficiency, and health care and life sciences. 

In the latest episode of “Talking Trade,” Michael Best Strategies Principal Mike Dankler says a federal review of Section 301 tariffs on China could be “a sign of some tariff-liftings to come.”

Federal officials recently opened a comment period on these tariffs, and Dankler says Michael Best Strategies has been encouraging clients to apply to submit comments on this process.  

“I think there’s a lot of people hoping that they may use it to rebalance things somehow, maybe use it as pretext to reopen an exclusion process,” he said. “As we’ve been telling clients, there’s an old political adage that, ‘if you’re not at the table, you’re on the menu.’” 

Dankler also discusses potential actions federal lawmakers could take related to trade regulations and programs in the wake of the recent midterm elections. And he touches on the possibility for a rail worker strike and how Congress may respond. 

He also explains the chair position for the House Ways and Means Committee is up for grabs between three lawmakers from Missouri, Florida and Nebraska. 

“All of them are likely to chart kind of a free-trader type of path on trade policy,” he said.