Utilizing Free Trade Agreements

Posted by Brooks Whiting, Intern

In a seminar held by the WTC, attendees learned about Free Trade Agreements (FTA) and how to take advantage of them. These included NAFTA, S. Korea, Colombia, and Panama. 

The most notable benefit of a FTA is the reduction or elimination of tariffs on imported goods.  Another benefit directly associated with FTA's is that exported goods originating from the United States receive a lower duty from the agreement than imports sourced from countries without free trade agreements.  Currently, the United States has joined with 20 countries and negotiated 14 active FTA's.  A listing of these active FTA's is available from the Office of the United States Trade Representative (USTR) website.  The United States is also in negotiations for regional FTA's, such as the Asia-Pacific trade agreement called the Trans-Pacific Partnership (TPP) Agreement and the European Union trade agreement called the Transatlantic Trade and Investment Partnership (T-TIP).

Taking Advantage of a Free Trade Agreement

The first step to take advantage of a FTA is to classify your products by their Harmonized Tariff System (HTS) code, using the GRI-General Rules of Interpretation and chapter/section notes.  The Customs Ruling Online System Search (CROSS) is a great tool to verify and double-check your HTS code. 

The second step is to find out if a tariff is being imposed on your product.  You are not required to participate in Free Trade Agreements.  If the tariff being imposed on your product is zero there is no need to involve yourself.  The "tariff tool" found on the US Dept of Commerce's website is an invaluable resource.  This tool will tell you not only how large the tariff being imposed on your good is, but any other taxes as well.  If the tariff is small, you may benefit from doing a cost analysis.  This will help determine if the benefits realized from taking part in the FTA will outweigh the costs.

Rules of Origin

The third step in taking advantage of a FTA is to determine the applicable rules of origin for your product.  In other words, you need to find out if your products qualify as being made of originating or non-originating materials.  If you are not the primary manufacturer, it may be necessary to have documentation from the primary manufacturer supporting the claim of originating material.  The rules of origin and forms that must be used vary depending on the trade agreement.

The North American Free Trade Agreement (NAFTA) is between the US, Canada, and Mexico.  This agreement uses Annex 401- Specific Rules of Origin.  The KORUS FTA is between South Korea and the US, and it has deliberate in-text guidelines to certify origin.  The Colombia Trade Promotion Agreement with the US has an entire chapter dedicated to determining origin.  Panama's Trade Promotion Agreement with the US uses Annex 4.1 for rules of origin.

Filing Certificates of Origin

After determining if your products qualify under the corresponding rules of origin, the next step is to ensure you have the proper forms and information to complete the FTA's Certificate of Origin.  Each FTA requires the completion of a form detailing aspects necessary to comply with the guidelines of the FTA. Carefully compare the differences between NAFTA, KORUS,  Colombia-US TPA, and Panama-US TPA.  Be sure to stay current on rules of origin, tariff requirements, and other eligibility constraints that may change periodically.  The law requires your business to keep all FTA documents for 5 years after filing. 

This full day seminar was presented by Mike Allocca, President, Allocca Enterprises, Inc.  His website has informational videos that cover a variety of Export and Import Compliance Training topics.  Should you wish to learn more about documentation, HTS-Schedule B or even NAFTA, his videos are available to rent or buy.  As always, our team at the World Trade Center Harrisburg is standing by to help you achieve your international business goals.  Feel free to give us a call at (717) 842-1090, we will be glad to answer any questions you may have. 

WTC’s Inaugural State of the Ports Address

Posted by Shung Li Tan, Intern

February 23, 2015 marked the Inaugural State of the Ports Address hosted by the World Trade Center Harrisburg at the Sheraton Harrisburg Hershey Hotel in Harrisburg, PA. Numerous Pennsylvania elected officials and companies interested in learning new updates about the Philadelphia Regional Port Authority and the Harrisburg International Airport attended this event.

Mr. Dominic O'Brien

There were two speakers who presented at this event. The first speaker was Dominic O’Brien, the Senior Marketing Representative for the Philadelphia Regional Port Authority. During his presentation, Mr. O’Brien gave a comprehensive update on the Port of Philadelphia, where:

• The Philadelphia Regional Port Authority experienced its fifth year of double digit growth
• The Delaware River Channel Deepening Project is 80% complete
• The world’s largest producer of eucalyptus pulp relocated its business and now ships annually to Philadelphia

Mr. O’Brien also did a comparison between the Philadelphia port and the New York port, showing the advantages and disadvantages of both. His presentation can be viewed through this link for more information.

Mr. Scott Miller

The second speaker of the day was Scott Miller, the Deputy Director of Business Development and Strategic Marketing for the Susquehanna Area Regional Airport Authority. Mr. Miller presented interesting facts about the Harrisburg International Airport, where:

• Nearly 1.3 million passengers connect to the global economy through HIA
• An estimated 60% of total air cargo is outbound
• HIA generates about $991 million in economic output 

Mr. Miller also addressed the challenges of Harrisburg International Airport (HIA) in attracting more airlines to provide a variety of flight options for its customers. More information can be found in his presentation via this link.

Finally, there was a Q & A session at the end of the presentations. The attendees were given the opportunity to interact with the speakers and to get their honest opinions on various issues regarding the Philadelphia Regional Port Authority and the Harrisburg International Airport.

Overall, WTC’s Inaugural State of the Ports Address was a success! All of the attendees were not only able to learn more about the developments of the Port of Philadelphia and Harrisburg International Airport; they had a chance to network and form relationships between various companies and the ports.

Thank you to all who attended and we hope that everyone could takeaway something useful from this event.

We would especially like to express gratitude to the Philadelphia Regional Port Authority and Harrisburg International Airport, the event’s gold sponsors, and to Fulton Bank, MANTEC, and UPS, the event’s silver sponsors for their continued support. The success of this event would not be possible without their partnership and contributions.

Action Plan: Developing an International Marketing Strategy

Posted by Brooks Whiting, Intern

Have you ever dreamed of offering your product/service abroad, but were unsure of how to make this dream a reality? The "Pennsylvania International Trade Guide" has readily available resources to help your business reach new customers and begin making global sales.  These resources include "expert tutorials" in subjects such as: 

• Export Basics
• Culture
• Finance
• Legal
• Logistics
• Marketing

This series of videos provides expert advice and informs on best practices for companies seeking to expand abroad.  

The tutorial I found most appealing is called Developing a Marketing Plan, which can be found in the marketing section.  During my senior year in college, my international business coursework required that I research a specific product, identify an under-served market segment, and propose an international market expansion plan.  Completing this assignment taught me the complex nature of international expansion.  Looking back, I wish I would have viewed these "expert tutorials" when I was completing my assignment.  

The lessons that took me months to comprehend are condensed within these practical videos.  The four sections within the market development section include:

• Developing a Marketing Strategy
• Researching Markets through Government Agencies
• Researching Global Markets
• Export Opportunities via Development Agencies

Developing a Marketing Strategy advises the viewer of key differences between domestic markets and international markets. Further, it conveys the immediate and long-term benefits of enacting an international strategy.  The most important take-away from this section is the fact that despite domestic economic slowdown, international markets may grow.  For more information on the tutorials and for additional resources, visit the website.

Researching Global Markets is an important factor in international market development.  This ensures that your product will be offered in an area where consumers want to purchase your product or service.  Such research will give an indication as to how competitive your product will be when compared to similar products in the foreign market.  Price, product attributes, and warranties will each have an impact on the international competitiveness of your product.  

Many countries have technical standards that imported goods must comply with.  Detailed research will allow a company to determine if their product is in accordance with these measures.  Action steps your company may have to take to comply could be converting components or acquiring foreign certification.  Examples of component changes include converting hardware from standard to metric or altering power plug voltage. 

Certifications vary by country.  In Europe, a CE certification indicates that the good complies with the European Union legislation pertaining to said product.  In China, the CCC mark is required for many goods and represents that the good is in accordance with the China Compulsory Certificate.  

Foreign customers will likely require labels that are translated and adapted to fit cultural norms.  Labeling laws for food products are often more complex, as ingredients and nutritional information requirements vary for each country.  

The cost of exporting your product will also play a deciding role in whether or not a proposed target market is viable.  Landed cost calculations are the sum of import taxes, transportation costs, and insurance fees associated with international shipment. These costs may either promote or deter a company from offering their good in a specific country.  Barriers to entry, beside import duties, foreign standards, and costs of shipment may also include governmental content restrictions and “buy national” policies.  Content restrictions bar goods that contain prohibited substances (i.e. chemicals) from being imported into the country.  “Buy national” policies are efforts to support retention of domestic jobs and efforts to minimize a country’s power distance index.  These factors pose a threat to make exporting a product difficult or costly and must be considered as an element of market research.  

Every foreign market is different; each of the above components of research should be applied for individual countries.  The most effective method for researching global markets is to start with a number of possible countries.  Then as criteria are either met or not fulfilled, countries should be eliminated from your search.  This process should continue until you are left with a few, viable options of which to explore.

The following topics should be addressed during the international research phase:

Economic Research:
• Market Size
• Import and Export Percentage of Total Economy
• Per Capita Consumption of Products of Foreign Origin
• Projected Growth of Market 
• Disposable Income and Expenditure Patterns

Country Data:
• Per Capita GDP
• Business Environment
• Economy, Finance, and Trade
• Industry and Infrastructure
• Age Distribution
• Regional and Local Transportation Facilities

Cultural Aspects:
• Language Barriers
• Literacy Rate, Educational Level
• Geert Hofstede Dimensions - Common Areas of Cultural Differences: Domestic vs. Abroad
• Religious Restrictions
• Lifestyles and Trends

Political Environment: 
• System of Government
• Government Involvement in Business
• Attitudes toward Foreign Business Trade
• Political Stability
• Fair/Free Trade Mindset
• National Trade Development Priorities

Product Potential:
• Customer Wants and Desires
• Local Production, Imports, and Consumption
• Competitive Cost in Local Currency
• Adequate Distribution Network
• Documentation and Import Regulation
• Patent, Trademark, or Copyright Protection
• Tax Rates and Laws

The best way to get started is with an export counselor at local, state, or federal levels.  In Pennsylvania, local organizations work with the state to form a Regional Export Network.  If you are within the eight counties of southcentral Pennsylvania (Adams, Berks, Cumberland, Dauphin, Franklin, Lancaster, Lebanon, and York), your first point of contact is World Trade Center Harrisburg.  The World Trade Center Harrisburg is your local connection to all of the State of Pennsylvania's free counseling services.

Your Regional Export Network will provide:

• Export Counseling
• Market Research
• Market Entry Strategy Development
• Foreign Company Background Checks
• Product Review
• Certification/Regulation Requirements
• Customized Searches for Qualified Buyers, Agents, Distributors, and Partners
• Trade Missions and Low-Cost Exhibition Opportunities at Prominent International Trade Shows
• On-the-Ground, In-Country Support to Schedule Appointments or to Arrange your Travel Logistics
• Access to the State's Network of Overseas Trade Offices
• Provide Information about Grants and Financing Plans 

At the federal level, the US Export Assistance Center, under the US Department of Commerce (USDOC) will help you reach international markets.  Locally, the closest US Export Assistance Center to our region is in Philadelphia.  They offer international sales and marketing assistance, logistics insight, and financing recommendations.  Their website contains a wealth of information on foreign markets and technical aspects of global trade.   

For a fee, your company can also receive market intelligence services which include:

• Country and Industry Reports
• Customized Research
• Background Reports
• Trade Data and Analysis
• Commercial Diplomacy

WTC's 18th Annual Holiday Luncheon and Reception

Posted by Hannah Copenheaver

This year, we celebrated our 18th Holiday Luncheon and Reception at the Out Door Country Club in York, PA. Every year, we choose a different global location to learn more about how their culture celebrates holidays and exchanges gifts during these times. This year, we decided to choose Africa (specifically East Africa) because their holidays really showcase the diversity of the continent and of each country. Special thank you to Dr. Eucabeth Odhiambo from Shippensburg University for sharing such an enjoyable presentation!


We also decided to collect donations for the Central Pennsylvania Food Bank. Together, we donated over 160 pounds of food and also several monetary donations! Thank you to all who donated to this wonderful cause, especially with the holidays upon us. 


Congratulations to our food drive raffle basket winner! (Jeanmarie Nobile, Turkey Hill - a WTC Member)

Thank you to all who attended and celebrated with us! Event pictures can be viewed on our Facebook page by clicking here.

Special thank you to our sponsors of this year's luncheon: Fulton Bank, MANTEC, McNees Wallace & Nurick LLC, Met-Ed, Sub-Saharan Africa Chamber of Commerce, UPS, Zeigler Brothers, Inc.

Happy Holidays! 

- Jan, Tina, and Hannah