STRICTLY PRIVATE AND CONFIDENTIAL
GLOBAL TRADE
August 2017
GLOBAL TRADE
CONFIDENTIAL
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Prospects for Global Trade Average World Trade and GDP Growth, 1991‒2015 (percent change, annual average) 8
2.5
7 2 6 5
1.5
4 1
3 2
0.5 1 0
0 1991-2000
2001-2007
GLOBAL TRADE
World trade volume growth
2008-2014
World real GDP growth
2 Source: IMF World Economic Outlook
2015
Trade elasticity (RHS)
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Trade Concerns
Brexit Political divisiveness Trade Policy Tax Reform
U.S. Ex-Im Bank The U.S. Dollar Banking Regulation
GLOBAL TRADE
China, Russia, North Korea, Turkey, and so on…
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46% of GDP growth driven by exports
1% of U.S. firms export
Exporters sell more and pay higher wages
GLOBAL TRADE
95% of consumers live outside the United States
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2017 Chase Business Leaders Outlook
56%
of Middle Market* firms are globally active
74%:
new customers, new markets
GLOBAL TRADE
68%: expect export sales to grow
* Middle Market companies have annual revenues from $20MM to $500MM ** Source: 2017 Business Leader Outlook Summary
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Carolinas Export
North Carolina Top 5 Export Destinations
Japan 10%
South Carolina Top 5 Export Destinations
Mexico 11%
Canada 43%
Saudi Arabia 11%
United Kingdom 15%
China 35%
China 15% Canada 19% Germany 20%
GLOBAL TRADE
Mexico 20%
6 Source: www.census.gov, usglc.org; brookings.edu
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Carolinas Imports
North Carolina Top 5 Import Destinations
South Carolina Top 5 Import Destinations
Japan 7%
Japan 12% Canada 14%
Germany 13%
Germany 32%
China 43%
Mexico 17%
Canada 14%
GLOBAL TRADE
Mexico 19%
China 29%
7 Source: www.census.gov, usglc.org; brookings.edu
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Macro Trends Government and Multilateral Trade Initiatives
Transatlantic Trade and Investment Partnership (TTIP)
Trans-Pacific Partnership (TPP)
WTO Trade Facilitation Agreement
WTO’s Information Technology Agreement (ITA)
Asian Infrastructure Development Bank
GLOBAL TRADE
One Belt, One Road
8 Source: www.census.gov, usglc.org; brookings.edu; crda.org
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Assessing Global Trade Transactions Challenge
Risks
Description Counterparty/Buyer’s Credit
Foreign Exchange
Operational
Political
Reputational
Legal and Compliance
Visibility
Business Processes
Increased complexity due to ever-changing requirements Expertise required to navigate cross-border trade, customs and FX regulations
Growing need to have end-to-end supply chain and trade flow visibility to maximize
liquidity and to minimize risk
Global trade processes continue to be manually intensive and paper-driven
Costs
Market Barriers
Competition
GLOBAL TRADE
Financing / Terms
Global trade can be risky and costly, but managed properly can be the key to long term growth
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Considerations in Global Trade Transactions Global Trends Emerging markets are key to global expansion, although
economic slowdowns and political turmoil in certain regions are creating significant uncertainty Sweeping global regulatory change - multiple regulations
affecting business and banking relationships Increasing pressure on business for greater efficiency to
maximize working capital and reduce costs
GLOBAL TRADE
Internal Stakeholders
External Resources
Finance
Bank
Sales
Legal Counsel
Credit
Logistics Services Provider
Purchasing
Customs Officials
Production
A/R Insurance Broker
Logistics
Export Credit Agencies
Compliance
Multilateral Agencies
Mitigating financial risks in your cross-border trade business can expedite transactions, reduce costs and support expansion into new markets.
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Global Trade Finance Trade finance supports a company’s fundamental need to buy and sell products and services
Buyer (Importer)
Goods
$
Seller (Exporter)
Facilitate cross border activity Payment Document flow Data flow and visibility Connectivity
Manage the risk Importer: verification before payment Exporter: certainty of payment Mitigate country risk
Access financing Discounting/acceleration of extended payment terms for seller/exporter Financing options for buyers, importers, and suppliers Working capital loans and guarantees 11
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CB International – What is Trade Finance? Product Solutions
Buyer (Importer)
Goods
Seller (Exporter)
$
Facilitate cross border activity • Letters of Credit Documentary Collections
Manage the risk • Commercial Letters of Credit Collections Standby Letters of Credit Guarantees Letter of Credit Confirmations
Access financing LC Discounting Banker’s Acceptance U.S. Ex-Im Programs Export Credit Agencies Multilateral Agencies Supply Chain Finance programs
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Export.gov
U.S. Department of Commerce’s International Trade Administration
Collaboration with 19 U.S. Government Agencies
Small Business Association (SBA)
The Export-Import Bank (Ex-Im)
GLOBAL TRADE
Overseas Private Investment Corporation (OPIC)
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Global Macroeconomic Trends World Bank Group 2017 Global Growth Forecast
World
Advanced economies
Emerging and developing economies
5%
4%
3%
2%
1%
0%
GLOBAL TRADE
2012
2013
2014
2015
14 Source: World Bank Group, 2017
2016
2017
2018
2019
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