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Metropolitan Export Data Series Fact Sheet

Released January 24, 2008

Summary

The Metropolitan Export Series was released on January 24, 2008, by the U.S. Department of Commerce’s Bureau of the Census and Manufacturing and Services. The metropolitan data series is available for 2005 and 2006. It contains merchandise export values for 369 metropolitan areas, as well as:

• Metro area exports as a percentage of the state total, where possible;
• Product exports to individual countries for the 50 largest metropolitan areas;
• Top five merchandise export categories (3-digit NAICS) by value;
• Merchandise export value and some commodity detail for exports to ten major geographic and economic country groups, including NAFTA, the EU, Asia and South America; and
• For largest metro areas, top five merchandise export destinations by country.

Methodology

All metropolitan merchandise export numbers were tabulated by matching the Origin of Movement (OM) five-digit ZIP codes entered on U.S. export declarations with counties that are assigned to specific metropolitan areas by the Office of Management and Budget (OMB).

Although this new series resembles an earlier metropolitan export series that was discontinued in 2001, there are significant methodological differences. With the introduction of a new electronic collection method, significant changes were observed in the recorded export data. While the Exporter Location Series (the standard measurement of export data at the time) was drastically affected, a separate state export series based upon the OM series was not. The OM series was ultimately adopted as the standard measurement of export data, and a new measurement of metropolitan exports was possible.

In addition, metropolitan areas are redefined with each decennial Census. Earlier data was based on 1990 metropolitan area definitions, and the most recent 2005-2006 series is based on the 2000 Census definitions. Comparisons should not be made between the two series.

Highlights from metro export series for 2006

• Seven metro areas posted 2006 export sales of $25 billion or more. These metro areas were responsible for 30 percent of total U.S. merchandise exports in 2006.
• An additional 30 metro areas exported between $5 billion and $24 billion. These top 37 metro areas accounted for 61 percent of total U.S. merchandise exports in 2006.
• The New York-Northern New Jersey-Long Island metropolitan area was the nation’s top exporting metropolis in 2006, shipping a total of $66.2 billion in merchandise to foreign markets.
• In 2006, New York-Northern New Jersey-Long Island was followed by Houston-Sugar Land-Baytown ($53.3 billion), Los Angeles-Long Beach-Santa Ana ($48.7 billion), Seattle-Tacoma-Bellevue ($46.3 billion), and Detroit-Warren-Livonia ($43.3 billion)

Claiming Tax Benefits for Exporting

by Rob Aldridge, FortisTCS

From a federal perspective, claiming tax benefits for exporting can be fairly straightforward as most items “manufactured, raised or grown” in the USA can qualify. Incentives are available for manufacturers, wholesalers and retailers, relative to their respective level of net sales receipts. If your company has direct or indirect export sales in excess of $2 million per year then you may want to investigate taking advantage of either the EIE or the IC-DISC tax benefit programs summarized below.

The EIE or "Extraterritorial Income Exclusion" program was created in late 2000 but due to complaints from the World Trade Organization, which evidently considered it too generous, is in the process of being phased out. The EIE works by excluding a portion of the profits on qualifying export business from your federal taxable income. Since an eligible exporter can go back and re-file for the benefits they could have received over the last three or four tax years, however, it is still worth pursuing for any firm that had significant exports during this period.

For this and future tax years, setting up an IC-DISC or "Interest Charge – Domestic International Sales Corporation" should be considered. Done properly, an IC-DISC moves the profit on exports into a business entity that pays taxes at the 15% long-term capital gains rate, rather than the 35% corporate rate, thereby providing a permanent 20% tax savings.

If your firm wishes to pursue tax benefits available under the EIE or IC-DISC programs, then time is of the essence. Under the EIE, claims can only be made for “open tax years” which generally means those where the tax return was filed less than three years ago. As the years pass, the option to reach back and recover back taxes (plus interest) is reduced. Under the IC-DISC, the first year’s tax benefits are usually prorated based upon how long the tax saving entity was in place. The sooner it is set up, therefore, the greater the first year’s tax savings will be.

Rob Aldridge is a tax specialist at FortisTCS in Oregon. He can be reached at Robert.Aldridge@N0SPAM.fortistcs.com

New! Free Trade Agreements (FTAs) Resource

As the Commercial Service continues to promote Free Trade Agreements (FTAs), we would like to make everyone aware of the resources available to exporters.

FTAs have proven to be one of the best ways to open up foreign markets to U.S. exporters, and since 2001 the United States has implemented FTAs with 11 countries. Today the United States holds FTAs with 14 countries. In 2006 countries with which the United States had FTAs comprised 7.5% of global GDP (not including the United States) while accounting 42.6% of U.S. exports.

As part of an interagency effort between the U.S. Departments of Commerce, United States Trade Representative, Treasury, State, and Agriculture, a new web site has been launched to provide the public with the latest information on America's trade agreements. The site will be regularly updated with news about existing agreements, as well as pending free trade agreements with Peru, Colombia, Panama and South Korea.

TradeAgreements.gov is a great resource for:

• Fact sheets on all current FTAs and the four pending FTAs
• Statistics highlighting the benefits of free trade
• All speeches and press releases relating to FTAs
• The "Trade Fact of the Day"
• State by state fact sheets for all current and pending FTAs
• Links to all the agencies promoting FTAs

SBA Loans to Small Business Exporters Surpass $1 Billion

Record Lending Doubles Number of Loans Since 2003

The U.S. Small Business Administration made a record number of export loans in FY 2006 and surpassed the $1 billion mark in national export lending for the first time in the history of the program. The SBA Office of International Trade reported 3,302 loans for $1.03 billion to small business exporters in FY 2006, doubling the number of export loans made in FY 2003.

The SBA can help exporters seeking financing with two specialized export loan guarantee programs:

• The Export Express program, which provides loans up to $250,000 for export financing and is most useful to exporters just getting started
• The Export Working Capital Program can be used only to support export transactions / sales, but its maximum is substantially higher at $2 million per exporter, thanks to a co-guarantee program with the Export-Import Bank that extends financing when the SBA's loan limit is reached.

Through its Export Assistance Program, the SBA has played an important role in helping more small businesses grow and expand their export operations or break into the international trade game.

Not only did the SBA set a record in export financing, but it also:

• supported $2.1 billion in export sales,
• counseled and trained close to 10,000 small businesses, and
• trained 2,853 export lenders.

Working hand-in-hand with trade specialists in the Commerce Department's U.S. Export Assistance Centers, SBA staff contribute the export finance expertise for a seamless delivery of federal export services. They understand SBA's banking relationships and are knowledgeable in transaction financing, risk insurance, and other trade finance related programs.

During 2006, small businesses exported a record $375 billion, more than $1 billion per day, which means exports grew three times as fast as the overall economy. With exports growing faster than the economy, U.S. production is shifting to the export sector. This will continue to be an important source of growth an job creation for small businesses. As much as one quarter of U.S. growth is now attributable to exports.

Saudi Arabian Government Institutes New Customs Regulations

In late May, Saudi Arabia's Ministry of Finance announced new customs regulations, effective June 2, 2007. The new regulations stipulate that all travelers entering or exiting the Kingdom must declare at Saudi Customs precious stones, jewelry, and cash in excess of SR 60,000, or its equivalent in foreign currency. The Ministry also warned that travelers who failed to declare their possessions would be liable for punishment and made to pay fines.

The new regulations are part of an overall strategy taken by the Saudi Government to control the financial flow in the country and facilitate an open and secure environment for foreign investment. The Kingdom would ultimately like to become one of the top 10 most investment-friendly countries by 2010.

To do this, the Government has started by implementing measures aimed at securing the flow of financial capital and goods entering and exiting the country. The Ministry of Finance has sought to diminish the unnecessary transfer of funds as well as eliminate the smuggling of contraband across the border. New inspection techniques and the latest technology have aided in this pursuit. Specifically, newly installed X-ray equipment at ports and border crossings has proven highly effective in spotting contraband.

In addition, the new technology, worth over SR 460 million, has helped in eliminating delays experienced at Saudi Customs that result from manual inspections. This is also part of the Government's concurrent effort to remove obstacles in the way of those intending to invest in the Kingdom. Other measures include easing restrictions on recruitment of foreign personnel, simplifying the process for granting visas, and expediting licensing procedures.

The Saudi Government is also encouraging foreign investment by providing strong incentives. Several among these are the unhindered repatriation of profits, low rental and utility costs, and the right to apply for low-interest or even interest-free loans from the Saudi Industrial Development Fund.

Further, the Saudi Ministry of Finance has exempted foreign materials used in industrial production from import duties, a policy, which has been particularly effective in attracting foreign investors. In what is a significant move in the Kingdom's customs policy, the Government in recent months has added more than 200 items such as computers, fax machines, and mobile phones to its list of duty-free imports.

US Enters into Free Trade Agreement with Korea

On June 30, 2007, the U.S. and Korea signed an historic free trade agreement. According to the Office of the United States Trade Representative, the agreement will expand bilateral trade and investment ties and create new economic opportunities for people in both countries. The KORUS FTA is the United States' most commercially significant FTA since the North American Free Trade Agreement (NAFTA). Korea is already the U.S.' 7th largest goods trading partner. This trade agreement eliminates tariffs and other trade barriers, promotes economic growth, and strengthens economic ties between the U.S. and Korea. Nearly 95% of bilateral trade in consumer products will become duty-free, with the remaining tariffs eliminated within 10 years. More than half (or $1.6 billion) of current U.S. farm exports to Korea are duty-free immediately, including a broad range of high-value agricultural products such as: 

• almonds,
• pistachios,
• bourbon whiskey,
• wine,
• raisins,
• grape juice,
• frozen orange juice from concentrate,
• fresh cherries,
• frozen French fries,
• and pet food.

The KORUS FTA is expected to greatly expand trade and investment flows between the two countries. For more information, visit http://www.ustr.gov.

Multiple Opportunities for U.S. Firms in the Panama Canal Expansion Project

The expansion of the Panama Canal, an infrastructure project of historic proportions, is quickly taking form. The pre-qualification of the bidders for the construction of the new locks is anticipated by the end of 2007, with the final selection by the Autoridad del Canal de Panamá (ACP, the Panama Canal Authority) expected by mid-2008. Bidding on the most significant contracts associated with the Panama Canal expansion project is scheduled to occur over the next eight months. These projects are of great interest to major U.S. construction and engineering firms, as well as to subcontractors.

BACKGROUND

In April 2006, Panamanian President Torrijos unveiled plans for a $5.25 billion project to expand the Panama Canal by constructing much larger new locks parallel to the current locks, with the capacity to accommodate state of the art post-Panamax freighters. The proposal was overwhelmingly approved in an October 2006 referendum. The ACP estimates that it will take eight years to complete and will be funded by toll increases and $2.3–2.5 billion in debt financing.

Four major Canal expansion service contracts have been awarded to date with U.S. firms winning three. On February 7, 2007, ACP selected Mizuho Corporate Bank (Japan) as its financial adviser for the expansion project. URS Holdings, Inc. (San Francisco, CA) won a contract to conduct the environmental impact study on February 16th, and the law firm Mayer, Brown, Rowe and Maw (Chicago, London) won the contract for general legal advisory services for the project on February 28. The ACP subsequently hired another U.S. law firm, Shearman & Sterling (New York), as an international legal advisor on financial matters related to the project.

The ACP is expected to release tender documents for the project manager contract in May 2007. The firm or consortium selected for this contract will provide professional services, including project delivery, procurement assistance, scheduling, and cost control. The project manager will also be tasked with ensuring that the planning, design, and construction projects are carried out in conformity with Panamanian standards. It is contemplated that the project manager will choose the risk manager. Selection as project manager will automatically disqualify a firm from the largest of the Canal expansion contracts—the design-build construction of the Pacific and Atlantic locks (estimated at 60% of the total value of the canal expansion program).

Several U.S. companies have expressed concern that the sheer size of the lock construction project, and corresponding bid, performance, and payment bonds necessitate the formation of multinational consortia. The ACP has stated that it expects to have multinational consortia bidding on this portion of the project due to its size and complexity.

Additional forthcoming tenders include: the dredging of the sea entrance navigation channel on the Pacific side (tender expected Q2-07); dredging of the sea entrance navigation channel on the Atlantic side (expected in 2008), and five contracts for access channel excavation on the Pacific side. The ACP will use its own staff and resources to dredge Lake Gatun.

KEY CONTACTS

• Robert O. Jones, Senior Commercial Officer - U.S. Embassy Panama; Robert.O.Jones@N0SPAM.mail.doc.gov , 507-207-7388
• Todd Fox, Regional Manager for the Western Hemisphere - Advocacy Center; Todd.Fox@N0SPAM.mail.doc.gov , 202-482-2327
• Miguel Romano, U.S. Business Advisor - Inter-American Development Bank; mromano@N0SPAM.iadb.org , 202-623-2598
• Matt Gaisford, Panama Desk Officer - ITA/MAC/Office of Latin America and Caribbean; Matt.Gaisford@N0SPAM.mail.doc.gov , 202-482-0057
• Danielle Caltabiano, International Trade Specialist - Team Americas, North Texas USEAC; Danielle.Caltabiano@N0SPAM.mail.doc.gov , 817-310-3744

PANAMA CANAL EXPANSION PROJECT TIMELINE.PPT

The U.S. Commercial Service's Top 10 Exporting Tips

With its network of offices across the United States and in more than 80 countries around the world, the U.S. Commercial Service utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Exporting Tips from the U.S. Commercial Service include: 

1. Dedicate top-level management and develop a clear export strategy;
2. Identify potential market(s) and conduct research and a risk/reward assessment;
3. Be patient and realistic when going international (take a long-term approach and allow sufficient time for due diligence);
4. Seek professional help from the U.S. Commercial Service, District Export Council, bankers, international legal firms, or freight forwarders;
5. Make sure the product is export-ready (standards compliance, regulations, labeling, licensing, etc.);
6. Understand and select the best distribution channel for each country (research all potential distribution partners);
7. Identify sources of finance before beginning negotiations to ensure you are not caught flat-footed in business meetings (trade financing is crucial to success overseas);
8. Create payment terms & conditions that meet the market’s needs/standards (you can offer terms to foreign buyers and meet competitors head-on by using the Export-Import Bank and the Small Business Administration’s export programs);
9. Design your company’s Web site to be attractive and responsive to foreign buyers; and
10. Take advantage of U.S. government export promotion services – everything from export counseling, financing, and market research to advocating for your products in overseas markets (they are affordable and effective, regardless of the size of the company).