A Commercial Perspective on MDAA Commercial Perspective on MDA

David LongDavid LongDirector Director Office of Service IndustriesOffice of Service IndustriesU.S. Department of CommerceU.S. Department of Commerce

Navy-Industry International DialogueArmy-Navy Country Club

April 19, 2005

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TopicsTopics

Commercial background to MDA– Growing interconnection at every level– Trade and investment flows– Supply chain issues

Maritime security programs in the systemImportance of MDA to commercial world

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Colombia$4.5 B

Morocco$524 M

Jordan$404 M

Bahrain $301 M

Australia $14.3 B

Singapore$19.6 B

Thailand $6.4 B

Southern African Customs Union $3.3 B

Central America + DR $17.4 B

Panama$1.8 B

Chile $3.6 B

Bolivia $194 M

Ecuador$1.7 B

Peru $2.1B

U.S. Exports to Selected CountriesU.S. Exports to Selected CountriesYR 2004 YR 2004 (goods)(goods)

China $34.7 BEU $172.6 B

India $6.1 B

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Colombia$7.3 B

Morocco$515 M

Jordan$674 M

Bahrain $405 M

Australia $7.5 B

Singapore$15.3 B

Thailand $17.6 B

Southern African Customs Union $6.9 B

Central America + DR $25.9 B

Panama$316 M

Chile $4.7 B

Bolivia $261 M

Ecuador$4.3 B

Peru $3.7B

U.S. Imports from Selected CountriesU.S. Imports from Selected CountriesYR 2004 YR 2004 (goods)(goods)

China $196.7 BEU $282.6 B

India $15.6 B

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Trade Growth ImpactTrade Growth Impact

0

50

100

150

200

250

300

Chile China EU Singapore

2004 Exports/Imports (Billion $)

ExportsImports

196.7 BUp 29%

3.6 BUp 33.5%

4.7 BUp 27.8%

34.7 BUp 22.4% 15.3 B

Up 1.1%

172.6 BUp 11.2%

282.6 BUp 11.7%

19.6 BUp 18.4%

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America’s Major Commercial ArteriesAmerica’s Major Commercial Arteries

2569

638

1128

659465

628

128 260 302 190

0

500

1000

1500

2000

2500

3000

Europe Asia-Pacific,Africa, and the

Middle East

Canada Mexico Latin Americaand the

Caribbean

Source: ITA, Office of Service Industries

Affiliates' Sales, 2002 Trade, 2002

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Other Forces in GlobalizationOther Forces in Globalization

Fuller levels of business integration based on technology and new business practices

Berlin Wall and 9/11 Workflow software Open-sourcing Outsourcing Supply chain Insourcing

– Emergence of China, India, and Russia Source: The World Is Flat, by Thomas Friedman (2005)

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Typical Supply ChainTypical Supply Chain

“24-hour Rule”

Customs-Trade Partnership Against Terrorism

Container Security Initiative“96-hour Notice”

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Port Container Growth at Long BeachPort Container Growth at Long Beach(in millions of twenty-foot container units)(in millions of twenty-foot container units)

00.5

11.5

22.5

33.5

44.5

5

1990 1999 2001 2003

175% increase since 1990

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US Infrastructure ConsiderationsUS Infrastructure Considerations

More than 360 ports, 1000 harbor channels, 25,000 miles of domestic waterways

Nearly $750 billion of America’s GDP and handles 95% of all overseas trade

Railways carry 16% of freight today.

Avg. export travels 1,000 miles to port vs 100s in other markets

Highway system carriers 78% of domestic tonnage.

Just-in-Time delivery

Shortages of truck drivers

Fewer train locomotives

River transportation slow

Port capacity

Structure Factors Delivery Factors

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Impact of Port ShutdownImpact of Port Shutdown Difficult to assess

– Depends on timing, location, severity

West Coast Port Shutdown in October 2002 – 23-day work backlog; more than $6

billion of disrupted trade; affecting 64,000 jobs

– Large impact on foreign end

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Private Sector Participation vital to MDAPrivate Sector Participation vital to MDA

Generates majority of domain activities and operations

Generates virtually all economic activity in MDA

Faces maximum risks for security incident

Possesses substantial resources for awareness and information networking

Bears majority of the costs

Requires new, advanced operational systems and technologies (incl. sensors, airborne equip, comm. systems)

Requires enhanced communications with the non-Federal domestic and international stakeholders

Risk Factors Requirements

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Selected Security PartnershipsSelected Security Partnerships

Advance Presentation of Cargo InformationContainer Security Initiative (CBP)Advance Notice of Arrival (Coast Guard)C-TPAT (Customs-Trade Partnership

Against Terrorism) (DHS CBP)Security and Prosperity Partnership

Initiative (Canada, Mexico, US)International Cargo Security Programs

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Engage and Enhance Intl. Partnerships Engage and Enhance Intl. Partnerships

(Notable Discussions on Trade Matters)(Notable Discussions on Trade Matters) Multilateral (big bloc party)

– WTO/GATS– OECD– Universal Postal Union

Regional (smaller bloc party)– APEC– FTAA– AGOA, CBI

Bilateral (one+one, multiple)– FTAs (NAFTA,US- Australia,

Singapore, Chile, Israel, Jordan, Morocco,CAFTA

– Air Courier and Postal Services

– Air Transport– Distribution Services– Express Delivery Services– Land Transportation Services– Maritime Transportation

Services– (Security issues are not

negotiated in trade agreements)

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Conclusions

Huge economic stakes– Everything inter-related, national and international– Private sector participation vital– Control costs, encourage growth

Need to see whole private sector picture– Large, medium, and small business impact

Need your participation in workshops and conferences

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Any Questions

David Long Director, Office of Service Industries U.S. Department of Commerce ITA-H 1124 Washington, DC 20230 Tel 202-482-3575 Fax 202-482-2669 david_long@ita.doc.gov

General: 1-800 USA TRADE