NAFTA, the North American Free Trade Agreement is currently the world’s largest free trade zone but that position will soon be overtaken by the Trans Pacific Partnership (TPP) agreement, which involves the United States and 11 other countries that produce 40% of the world’s total GDP of $107.5 trillion, 26% of its trade and over 793 million of its consumers. It is basically a trade agreement that will help support economic growth and jobs by removing trade barriers (such as steep tariffs) for goods and services between the 12 countries involved. The TTP help boosts exports and economic growth by increasing the employment of the 12 countries involved. It is estimated to increase exports by $305 billion per year by 2025, by removing the 18,000 tariffs placed on US exports to the other countries.

So obviously the agreement creates an advantage to our country’s economy, but what would it mean to the state of California?

California has important trade and investment ties with the 11 other countries involved with TPP. In 2013, California exported $70.1 billion worth of goods to these countries, hence with the TPP agreement in motion, it will surely help strengthen the trade and investment relationships between California and the 11 countries and support the California jobs that depend on them. The TPP agreement will also provide California with an opportunity to increase its trade in goods with current US FTA partners, which of the 11 TPP countries, there are 6 of them (Australia, Canada, Chile, Mexico, Peru and Singapore). California exported $54 billion worth of goods to these six countries in 2013, accounting for roughly 32% of California’s goods exports globally. The TPP will help to support these global supply chains and facilitate further trade with these current FTA partners, along with 5 other countries that has the potential to expand in terms of trade relationship with California.

As mentioned before, the TPP will also provide California with the opportunity of expanding its market for goods and services to the 5 other countries that are currently not a part of the US FTA. The 5 countries which have a combined population of 252 million people, and a combined economy of $5.6 trillion have the potential to be new markets for Californian exports. Although currently California has good trade ties with some of these countries, exporting $24.6 billion in goods and services in 2013 to the 5 aforementioned countries, the state still faces very high level of tariffs to export to them. For example, the tariff rate for export of fresh Californian Oranges go as far 32.0% to Japan.

All in all, the TPP creates a better opportunity for California to not only expand existing trade between the six current US FTA partners, but it also help California expand to new markets around the world, which leads to an increase in the state’s economy, in terms of increasing investment ties between California and the TPP countries, and also supporting jobs in California.

 

Finland is a Northern European country with five million habitants. I’m one the five million. Until recently I have known shamefully little about my home country’s trade.

I knew that Sweden – our neighbor on the western side – is our biggest export destination, and that Europe’s economic giant Germany is a significant market as well.

But I wouldn’t have guessed that this year the U.S. bypassed Russia as the third biggest destination of Finnish exports.

Though it shouldn’t be a surprise.

Finland’s trade with Russia has stalled because of president Putin’s repellent expansion politics and the economic sanctions that EU has passed on Russia.

 

Finland – a small EU country and member in Eurozone –no longer has means to control its own economy with its’ own monetary policy as it no longer has its’ own currency. Many Finns now consider joining the monetary union was an unfortunate decision.

At the moment there is, however, one slight cause of happiness with weakening Euro, and that is the interest American buyers are showing towards Finnish products.

The overall exports of Finland have decreased at an annualized rate of six percent during last five years. During the first six months of year 2015, Finland’s exports to the U.S grew eight percent from the previous year. The markets of all the main export goods – electronics, machinery, ships and boats, paper and paperboard, refined petroleum products, and telecommunications equipment and parts – expanded, and the total value of Finland’s trade to the U.S is now €1.9 billion.

 

One man in Los Angeles is particularly happy and proud of the brightened prospects of Finnish products’ sales over the Atlantic. He is the consul general of Finland Juha Markkanen.

Markkanen has been in LA for three years focusing on helping Finnish companies to find buyers, investors and co-operations in the country.

He acts along Finnish governments (and previous governments) strategy. In 2011 the government of Finland created a project called Team Finland. Its’ goal is to bring together Finnish diplomats and government bodies with businesses and organizations to accelerate especially Finnish small and medium size companies’ exports. The whole staff of consulate of Finland in Los Angeles has reshaped its priorities since: they are here less for the foreign policy (that is done in Washington and more and more on EU level) and more for economic networking.

Processing passport and visa applications and issues are, of course, still an essential function of the consulate – but that, too, can be seen as clearing paths for the economic co-operation, says consul general Markkanen.

What else a diplomat does in order to accelerate trade?

Markkanen is a precise man and gives numbered answers.

Four ways how diplomacy is helping Finnish businesses to export.

 

One. The diplomat shares information. Markkanen and his consulate know all the details of legislation and agreements concerning the trade between Finland, EU, Eurozone and the U.S. The consulate helps business people with their concerns with trade tariffs and possible barriers. Equally important is to advice people how to approach the market. For that, Markkanen has created “ten commandments”: 1. Networking is key. 2. Visit the US early, often, and before you have a final product. 3. Ask questions, lots of them, and then ask more. 4. Local presence is crucial. 5. Work with local players. 6. Pick the best partner, never the first. 7. Be swift (24-hour-rule). 8. Be patient and think long-term (follow up). 9. Do the sales/marketing in the US way. 10. Give the market what it wants, not what you think it wants!

Two.  The diplomat offers connections. Consul general Juha Markkanen shows the folder where he has collected all the business cards he has got during his years in LA. There are hundreds of them. Consulates mission is to find networks and to connect Finnish professionals with Californian counterparts.

 

Three. The diplomat makes visits and organizes them for others. Markkanen points out lines of Finnish business that he thinks have nowadays particular potential in California: 1. Clean tech. 2. Health and wellness. 3. ICT. 4. Creative industries.

He wants entrepreneurs from those branches to know the hubs in California -LA / Silicon Beach, San Francisco / Silicon Valley and San Diego – and otherway round.

He visits these hubs and lobbies for Finnish innovations. When the consul general asks for an appointment with, companies and organizations usually find time for an appointment.

The Finnish consulate recently organized stage time for pitching for five Finnish clean tech companies in a big clean tech conference in LA.

 

Four. The diplomat uses his residence. The residence of consul general is a beautiful, big house. The foreign ministry of Finland does not buy or rent these kinds of beautiful big houses for its’ diplomats just because diplomats should have a nice home abroad. Juha Markkanen hosts numerous events in his residence where he brings together Finns and Americans. He may allow Finnish business delegations to organize meetings or conferences in his residence. He invites and receives Finnish groups over in LA.

 

Before I met consul general Juha Markkanen, I had a very vague image of what a consul general does. Now I know that he is an ambassador of Finnish exports.

Though that shouldn’t be a surprise.

If I was to expand my (imaginary) business from Finland to California, who would I contact to have advice? The consulate, surely.

When you hear the word “McDonald”, what is the first thing that comes to your mind? 99% of the time it will be the iconic golden arches. The logo is often the first thing customers think of or associate with a brand when the brand name is mentioned. Nonetheless, many brands often ignore or underscore the importance of their logo and economic implications it can have.

In October, 2010, Gap, a multinational clothing retailer, decided to change its signature logo from a blue square with white “Gap” in the middle, to a unfamiliar logo where the word Gap is written in black with a small blue square overlapping with the “p”.

The customers were not happy about the change. Shortly after the debut of the new logo, GAP received large amounts of negative feedback and backlash on its social media platforms, with many comments asking to bring back the original logo and stating the refusal to shop with GAP. One of the comments on Facebook wrote, “This is the worst idea Gap has ever had. I will be sad to see this change take place, if this new logo is brought into the store I will no longer be shopping with the Gap.”

The company argues that it changed its logo in order to build a stronger connection with its target audience, the millennial generation. However, considering the lack of support from its online community and unfavorable comments from its target audience GAP made the decision to return to its original logo within a week.

A brand’s logo serves as a means for the company to communicate its value and emphasize its uniqueness to its customers. “A good logo can be a synthesizer of a brand that is readily used by customers for identification, differentiation and positive associations.” According to an article from MIT Sloan Management Review, an effective corporate logo relates positively to customer’s commitment to the brand.

In September 2015, Google changed its old logo, serif typeface, to a new logo, a san serif typeface. The original logo was created in 1999 and even though Google has made minor changes to the original logo, changing the typeface is the first major move the company has made in the last 16 years. Besides the change from serif to san serif, Google transformed its logo from words to an animated symbol, with red, blue, orange, and green dots.

Why did Google decide to change its logo at this moment? Some speculate that Google is trying to change its brand image from a dull search engine to an interactive and friendly portal that is capable of leading you to anything and anywhere. According to the article ”Google’s New Logo Is Trying Really Hard to Look Friendly”, Google wants its users to see its brand as a benevolent guide to this new world, one that considers humans, not machines, argues Rhodes.

Positive and negative reviews came along with the change of Google’s logo. For some, the new logo brings positive energy and refreshes Google’s brand image. “…they’ve modernized the logo in a way that feels very true to who they are and what they stand for.”, said Debbie Millman. For others, the change is unnecessary and superficial. “It’s almost this fake, artificial intelligence, the machine trying to act like your friend. And when Google as a corporation tries to do that, they sound like an automated friend-bot.”, said Ellis.

Although it is difficult to mathematically calculate the success of a logo change and its underlying affects, one thing that we know for certain is that logos certainly play an important role in brand and its implications will, positive or negative, will trickle down.

When cargo ships arrive to the Port of Los Angeles they are typically full, but what do the containers ship when they leave? When an Economist named Michael Keanan on a Port of Los Angeles boat tour was asked this question, there was no hesitation with his answer of “air”. Most often when cargo ships leave the Port of LA, there are many empty boxes, because China imports more than the U.S. exports back. With the recent setback of China’s economy, the rise of empty containers is at an all-time high for U.S. exports and has become a concern.

Michael Keanan elaborated on how cargo is brought in from Asia to provide for an entire nation, while the U.S. exports typically come from the mid-west and are in lower quantities. The economist continued explaining why cargo ships arrive full but half of them leave empty.  “When containers leave, half the containers are empty,” Michael said, “the other half are filled with low value items such as scrap metal, waist paper and agricultural products like soy beans, hay, and grains”. The items received from Asia are higher in number and more profitable then the goods leaving the U.S, which is one of the reasons why only half of cargo boxes are full.

A recent article by the Wall Street Journal called At U.S. Ports, Exports Are Coming Up Empty made a statement about how one of the fastest growing U.S. exports is air. The article continued to discuss the current weak demand of troubled global markets and the tough sales American exports face abroad.

China’s cooled economy has effected outgoing exports and U.S. exporters find it tougher to make foreign sales. The Wall Street Journal article claims that the stronger dollar that makes American goods more expensive has a part in the slowing. When shipments leave the Port’s to return to Asia, they carry the waist and agricultural products that were mentioned earlier. However, these items have declined in loads.

The Port of Long Beach is one of the busiest ports in the country and September was the strait 8^th month that empty containers leaving the port outnumbered those loaded with exports. Long Beach and the Port of Oakland both reported its exports of empty containers doubled and this year empties are up 20% from last year. The Port of Los Angeles empty outbound containers is up 21% compared to this time last year as well. These ports are suffering the most because they are heavily tied to trade with China.

An economist, named Paul Bingham, told The Wall Street Journal the decrease in exports that reflects economic weakness goes beyond China, it shows slowing demand in Europe as well. He also mentioned the Commerce Department stated that U.S. exports fell 2% in the month to their lowest level since October 2012.

While empties outnumbering loaded containers is beginning to be a concern, it will become a bigger issue if numbers don’t decrease within time and the U.S. continues to struggle with sales on its exports.

The field trip to the Port of Los Angeles solidified a number of the concepts we’d discussed in class with respect to international trade, but one particular aspect left me with more questions than answers: security.

Even with the massive number of containers being unloaded off multiple cargo ships, the port included only one relatively small area in which the contents of containers were checked. Otherwise, they were stacked, and loaded as efficiently as possible to get them onto trucks to have their contents distributed as quickly as possible.

According to Rep. Janice Hahn (D-Calif.), who introduced legislation that would reserve federal funds to improve port security, only three percent of incoming cargo is scanned.

With the passage of the Trans-Pacific Partnership, which will further open up US trade with other nations along the Pacific, west coast ports are likely to see a surge in traffic. Does that mean three percent turns into two or one?

Hahn’s Scan Containers Absolutely Now Act, commonly (and fortunately) known simply as the SCAN Act, was introduced in the House a little more than a year ago and, from a brief news search, was never heard from again. Despite the ridiculous name, the bill points to a very real—and thus far, unaddressed—issue.

We spent two hours touring and having multiple people tell us how critical the port is to the US economy and, by extension, the world. A trade agreement that will increase the amount of traffic to the west coast’s busiest ports has been passed just ahead of what is already the ports’ busiest time of year.

Did I mention that more than 95 percent of containers passing through ports go completely unchecked?

Given the US’s often frosty relationship with growing economic power China, that country’s increasingly friendly relations with its neighbors (see: Regional Cooperation Economic Partnership) and rising global tensions that include what basically amounts to a proxy war with China’s neighbor Russia, is it really that far-fetched to think that negligence on port security might be an actual problem?

Of course, authorities assuredly have security measures in place that are invisible to the public, but given the fact that local legislators felt the need address it in Washington, it seems that an issue may remain.

It just seems from the outside that the level of oversight doesn’t match the relative importance of the ports to global trade. Given the short-sightedness of most legislators, that seems unlikely to change.

On October 5th, 2015, the United States and eleven countries in the Pacific Rim finalized a trade agreement after five years of negotiations. Since the release of information surrounding the agreement, many people now know it contains a range of international trade issues including comprehensive market access. According to the Office of the U.S. Trade Representative, the Trans-Pacific Partnership will eliminate or reduce tariffs and other trade barriers in order to create new trade and investment opportunities for businesses and consumers.

Seaports, which constitute a major part of the U.S. economy when it comes to exports, have the potential for the most growth from the reduction in tariffs. The American Association of Port Authorities says for every additional $1 billion in exports shipped through U.S. seaports, U.S. jobs increase by 15,000. The Port of Los Angeles, for example, has a special position as one of the major ports connected with Asia and the Pacific Rim. Michael Keenan, the director of planning and strategy at the port, believes services industries at Long Beach and in Los Angeles as a whole have a positive future ahead as trade rises.

“There are about 15,000 longshore workers that support the Port of Los Angeles and Long Beach,” said Keenan. “On top of that, there’s a huge number of railroad, warehouse and logistics workers. Trade through the port supports about 190,000 jobs in the region and under an engrossed growth scenario with the TPP, we see that number going up.”

Before the Great Recession, exports coming into Long Beach were growing at 10 to 12 percent. The financial crisis brought cargo activity down to about 3.5 to 4 percent. Keenan looks at the TPP as a way to not only boost cargo activity, but the amount of jobs in the city of Los Angeles.

Another interesting part of the Trans-Pacific Partnership was the exclusion of China from the negotiations. Although China is a major trading partner with the U.S., Keenan does not think the TPP will have an effect on trade with the Asian country. However, there could be greater opportunities for smaller countries in the region.

“I think a lot of China’s neighbors are interested in being part of an agreement that offers them a set of advantages against China.” said Keenan. “If you’re trying to be competitive against the big dog on the street, the best way to do it is to find a set of friends who have that same interest. It offers our other friends in Asia a closer relationship with the U.S., which helps us.”

Despite the positive results of the multi-part agreement, there are some downsides to the TPP in relation to the ports. The U.S. economy continues to grow stronger, but its trading partners’ economies have grown weaker and it makes goods from the United States less competitive in the global marketplace.

“I think that’s the bigger challenge. Something like TPP that offers offsetting advantage could certainly help us, but the biggest driver for exports is going to be shared growth where other countries develop stronger economies and they can buy more of what this country produces. I have high hopes we’ll be able to see that within the next five to ten years.”