Pine Needles Lodge & Golf Club Southern Pines, North Carolina September 15-17, 2004

Overview

The 2004 NCWTA Annual Meeting marked the 39th occasion upon which North Carolina trade professionals gathered to exchange ideas, receive updates on contemporary issues, network, and have fun. Seventy-one members and guests participated in the annual golf tournament. Over a hundred conferees, including exporters, importers, and service providers, heard from nine major speakers, participated in Trade Café breakaway events, and witnessed the inaugural Great Trade Debate, pitting John Bassett III, CEO and President of Vaughn Bassett Furniture, and Chris Warren, President of Mayland Court, LLC.

Highlights

Ray Owens, Vice President and Senior Economist
Richmond Federal Reserve Bank
Will the Dollar Continue to Provide Benefits to North Carolina?

Dollar valuations have a substantial impact on global trade. Generally speaking, a weak dollar enhances U.S. exports and manufacturing employment. However, a weaker dollar also dampens foreign direct investment in the U.S. Today the American trade deficit has reached record levels, largely because of the soaring price of oil. Nevertheless, when viewed over the long haul and even in light of the oil surge, the U.S. dollar appears to be relatively stable in its relationship with other major currencies. China is the 900-pound gorilla of contemporary trade, but it’s not necessarily the most competitive nation in every sector. China is experiencing inflation and needs to implement significant economic and banking reforms if it is to continue to grow. No other nation can match the U.S. in its development of technology. Given all these factors, it’s reasonable to conclude that the U.S. can continue to run a substantial trade deficit over a long period without unacceptable effects on growth. The deficit may be a drag on the economy, but it’s not a stopper. The weak dollar shouldn’t be a growth buster for North Carolina.

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John Beard, President
Beard Hardwoods
Dealing with the Changing Furniture Industry in a World Market

The American furniture industry has been experiencing some tough times, largely owing to its own failure to make essential capital improvements and technological investments. Today, it doesn’t need tariffs; it needs to learn to compete in the global marketplace. Anti-dumping duties won’t grow jobs; innovativeness will. North Carolina’s furniture firms can compete with Chinese firms, if Tar Heel executives can optimize creativity, productivity, transportation, and forest management – all distinct U.S. competitive advantages. Beard Furniture’s experience has been that American companies can prosper because, unlike firms from developing states, they deliver on their promises.

Bob Graham, Managing Partner
Ridge Partners, LLC
A Strategy for Winning the Trade Game

In today’s globalized economy, the keys to success are worldwide sales, uncompromising customer service, and unbridled flexibility. The best strategic advice an executive can receive is to follow his or her supply chain; that is, look to reliable sources and cozy up with them to reduce costs and maximize productivity. Outsourcing all logistics makes sense for most businesses. Smart companies also make their suppliers do most of the work and move their customer support operations overseas. However, off-shoring is not a panacea; churning is a worldwide phenomenon. Taxation remains the greatest impediment to U.S. operations. America needs a reasonable, competitive corporate tax structure if it expects to prevail.

“Wonderful, exactly on point with my experience.”
                                        Barbara Neidinger, E&Y

“Very interesting…. I particularly enjoyed his approach to base his presentation on a hypothetical client to discuss applicable issues.”
                                         Tracey LeRoy, Kennedy Covington

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Elaine Marshall, North Carolina Secretary of State
Lead, Follow or Get a Partnership

Great things are in store for North Carolina in the global marketplace. U.S. trade policy has not always benefited North Carolina; nevertheless, the state enjoys some significant advantages, including the size, education, and productivity of its workforce. To attain maximum benefit in the era of globalization, North Carolinians must abandon their proclivity for rugged individualism and focus on creating partnerships. With quality partners from around the world, North Carolina can be a world-class generator of ideas and jobs. Such jobs aren’t just about exports; there is nothing evil about importing. All great nations achieve a balance between exports and imports. Trade friendly legislation; support of industry, governmental, and cultural exchanges; and an internationally astute education system are all essential if the state is to succeed. North Carolina must adopt an international mindset. Its partnership efforts with Moldova offer a great example of that mindset and an outreach strategy that makes sense on a much larger scale. Only by investing in partnerships can North Carolina expect to be a global winner.

Brendan Hewson, Senior Vice President
Bank of America
Building a Better Mousetrap

When it comes to security, women’s intuition is the eighth wonder of the world. Business people operating in the global marketplace must listen to their intuitions and consistently apply the "Make Sense Test". They must also become practiced masters in conducting reasonable due diligence inquiries at every turn. Few things are what they purport to be; the key is to identify the truth and then to minimize risks. False identity – known globally as ghosting – stands at the heart of most financial crime. It is motivated and exacerbated by greed, ignorance, naiveté, and stupidity. It is defeated by due diligence, common sense, and alertness.

Dr. Andrew Brod, Director
Office of Business and Economic Research, University of North Carolina, Greensboro
What Trade Really Means to North Carolina

Trade is a tough sell in North Carolina. Neo-mercantilism is alive and well in the Tar Heel state. It survives and even thrives based on the acceptance of five patently wrong myths: (1) NAFTA, operative since 1994, has been bad for North Carolina – In fact, exports grew by 9% per year from 1993 to 2000, and job loss trends in textiles were well established even before NAFTA's implementation; (2) Dumping is a huge trade issue – Opinion leaders and politicians want to tie dumping to wage and job losses. In reality, the core issues are competitiveness and total economic benefit. There is nothing wrong with importing, and the dumping standards sought by American manufacturers to limit imports are just anti-competitive, protectionist ploys at odds with global agreements and the best interests of the American consumer; (3) The U.S. is the good guy in world trade – In fact, the U.S. is among the worst offenders when it comes to truly free trade. Cultural arrogance, huge subsidization of major sectors like agriculture, and focus on non-trade issues like environmental and labor compliance have a tragic impact on economic development in the poorest countries of the world; (4) Outsourcing is devastating the American workforce – In reality, the number of jobs migrating overseas is miniscule when compared with the number of jobs lost and created domestically. Outsourcing is a win-win for all concerned; even the few jobs going off-shore are having a positive economic impact at home. There is no hollowing of America; Lou Dobbs is just wrong; and (5) Washington is making bad trade deals that hurt North Carolina – In fact, many Americans erroneously link trade deals with long-term economic trends when the two have no relationship at all. Most of the multi- and bilateral trade deals extant and in the works will prove net pluses for America and North Carolina. Protectionist policies, draconian security protocols, and government subsidies are the real causes for concern because they can, over time, erode America’s competitiveness, attractiveness, and leadership.

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Jon Fee, Partner
Alston & Bird, LLP
Big Tickets in Compliance

Compliance and security programs, including C-TPAT, CSI, Advanced Manifest Transmission, and Bio-Terrorism Rules for Food are all maturing. C-TPAT has become more user-friendly: while CSI has become more effective. Advanced Manifest Transmission remains a pain in the neck, but one that professionals are getting used to. The final food rules won’t be available until at least June 2005. January 1, 2005, will mark a new world for textiles. There is a wide array of theories about what impact the demise of quotas will have on the textile market. Only one thing is for sure: quotas, which were to have protected domestic companies and eased sector transition to free trade, have done neither. The most likely scenario is that textile production will go to countries now using up their quotas and capturing off-quota markets. Regional preferences will help some Central and South American producers, and domestic producers will file a host of safeguard actions. The whole notion that government action should be based on the threat of market disruption rather than demonstrated market impact will likely be big news in 2005 and will probably lead to at least three years of sub-optimized textile industry operation. In terms of trade agreements, CAFTA will likely pass and the Andean FTA will occur. A watered-down Free Trade Area of the Americas is possible. And the Geneva ministerial of the WTO’s Doha Round may actually yield some positive results. Trade professionals will need to keep a special watch on the renewal of Trade Promotion Authority, which expires in 2005.

“The best as usual!”
                                    Wendy Miller, Glen Raven

“Everything I needed to know about import compliance but was afraid to ask.”
                                     Sean Jones, bioMerieux

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Jim Giermanski, Professor and Chair
Department of International Business, Belmont Abbey College
The Southern Border: A Security Conundrum

All outgoing and incoming cargo traffic along the U.S. – Mexican border is substantially delayed, not by government checks, but rather by the archaic drop-lot system controlled by powerful Mexican brokers. Not only does the system impose the equivalent to a 2% tax on shipments , but it also creates major security concerns. Among the several possible answers to the latter problem, smart containers appears to the best, or at least a component of an objective system.

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Jim Leonard, Deputy Assistant Secretary
U.S. Department of Commerce
International Trade Issues

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