The U.S.-Korea Trade Agreement: One year later

Acting U.S. Trade Representative Demetrios Marantis marked the first anniversary of the U.S. – Korea Trade Agreement. Within this year, U.S. exports of transportation vehicles increased significantly, achieving a 48% rise.

The Office of the USTR expects that by 2016, 95% of U.S. exports to Korea will be completely duty free. Ambassador Marantis said, “One year in, I am pleased to see that the U.S. – Korea Trade Agreement is already producing promising results for U.S. businesses and workers in America’s factories, farms, and firms. As both of our economies improve, we look forward to seeing America’s growing exports to Korea support even more jobs here at home.”

Correlation Between International Trade and Local Transportation Employment

Source: International Trade Administration (ITA)

Despite criticism that international trade exports jobs, about 9.7 million jobs were supported solely by the export of goods and services in 2011. Normally, great attention is placed on the effects of trade on employment or wages in the manufacturing sector, overlooking the impact of trade on the transportation sector because of the many factors that affect transportation employment. But a recent study has been written examining how employment in the transportation sector can significantly be affected by international trade.

The study found the following information:

  • The expansion of U.S. exports between 2003 and 2010 added between 63,000 and 140,000 workers to the sector, with a central estimate of 101,000 workers.
  • The positive contribution of U.S. exports to transportation sector employment offsets some of the national decline in transportation employment over this period.
  • The 30.4 percent increase in the value of exports between 2003 and 2010 helped to limit the national decline in transportation employment to about one percent over this period.

To download the study click here.

Global Transportation Issues To Keep In Mind

An important aspect of the global supply chain is that of physical distribution and transportation mode choice. Transportation is one major factor to consider because it determines how and when goods will be received. It can be further divided into three components: infrastructure, the availability of modes, and the choice of modes among the given alternatives. It is the role of the international manager to then understand the transportation infrastructures in other countries and the various modes of transportation. The choice of these modes will depend on the customer’s demands and the firm’s transit time, predictability, and cost requirements. In addition, noneconomic factors, such as government regulations, weigh heavily in this decision.

Source: Czinkota, Michael R., Ilkka A. Ronkainen, and Michael H. Moffett. Fundamentals of International Business. Mason, OH: Thomson/South-Western, 2004. 311.

Episode 18: J. Michael Farrell on the Panama and Suez Canals

In this episode of “Thoughts on International Business, Marketing, and Strategy,” Professor Michael Czinkota is joined by J. Michael Farrell, an attorney at law in Washington DC. Mr. Farrell discusses the similarities between the Panama and Suez Canals and transportation in a post-9/11 world.