AOL'S WORKPLACE

YOUR BUSINESS LUNCH CHAT
Thursday, January 29, 1998

1:00 - 2:00 PM (EST)

INTERNATIONAL TRADE IN THE SMALL BUSINESS INDUSTRY

Have you thought of starting a business in another country? James R Meenan, (JRM IMDI) has been working with the government for the past 8 years to encourage small business success in foreign countries. His experience as the Trade Advisor to U.S. Trade Representative and U.S. Secretary of Commerce has given him the some tricks of the trade to share with us in encouraging your companies growth. Join host, WPLC SharZ and the "Lunch Crew" as we explore International Trade.

WPLC SharZ: JRM IMDI, if you'd like to introduce yourself or say a few words, we'll start taking questions when you're ready.

JRM IMDI: Welcome and I look forward to a good discussion.

WPLC SharZ: LanJ.. your question?

WPLC LanJ: Are there specific businesses that are good to start in another country?

JRM IMDI: Stay with the product of service you are most familiar with and then look for the markets to serve. Markets close to home are a good start.

WPLC SharZ: LanJ..another question?

WPLC LanJ: What are the first steps in starting to do business in another country?

JRM IMDI: Know your product/service and do heavy research most of your work can be done online or with a phone call to the Trade Information Center 1-800-872-8723

WPLC SharZ: Are there certain countries that are easier to trade with?

JRM IMDI: Those close to home--Canada and Mexico-- because you can keep tabs on what is happening.

WPLC SharZ: Let's say I'm looking to get into international trade - how would I know where to go, who to talk to, what is the right move for my business?

JRM IMDI: The US Dept. of Commerce can be a major help in sorting out the best markets and developing a preliminary market strategy.

WPLC SharZ: LanJ.. go for it! :)

WPLC LanJ: Are there private American agencies/agents who assist business people in setting up?

JRM IMDI: Yes, the Dept. of Commerce is good in the public sector. I also know that the Global Business Access organization at www.globalbusinessltd.com can help.

WPLC SharZ: Is there a certain *type* of person who is ideally suited to trading internationally? Is there a type who is not suited to it?

JRM IMDI: A business that already established its operation in the U.S. Let me note that our Small Business advisory committee recently helped the Asia Pacific ministers address small business issues the report is at http://www.intl-trade-desk.org

WPLC SharZ: Thanks JRM. Anonymouze, you have a comment?

Anonymouze: I'd like to also add/mention www.sbaonline.sba.gov - is U.S. small business administration. WPLC SharZ: Thanks Anony. :)

WPLC SharZ: Are there products you are not allowed to trade? Certain products you definitely can't bring into this country, or send to others?

JRM IMDI: Yes, the Export Control Administration within the U.S. Dept. of Commerce can help you with the clearance process.

WPLC SharZ: Thanks James. LIQNET... your question?

LIQNET: If your dealing in a GATT (General Agreement on Trade & Tarriffs) country, i have heard that you can get a GSP (Generalized System of Preferences) certificate to defer duties on certain items, what do you know about this? Are there a certain amount of GSP certificates that are issued per country?

JRM IMDI: Yes, GSP does apply in most countries and you will need to check the product being imported.

WPLC SharZ: Anonymouze... you're next. :)

Anonymouze: I'm working now for a firm and know a bit about import/export - I'd like to do exporting to Australia of foodstuff made here - what would be good for me to research?

JRM IMDI: Review the Country Commercial Guide for each country you plan to enter it can provide good basic info that you can then use to talk with a product or country specialist at the USDOC.

WPLC SharZ: LIQNET - your question?

LIQNET: So does that mean that duties may be deferred? In cases like mens undergarments, that may be as much as 19.6% your saving, and may make the difference on whether or not you can compete in the marketplace.

JRM IMDI: Yes, each product has a different duty

WPLC SharZ: Can you give us any specific imported products that do better than others?

JRM IMDI: Just what is hot today and what you have the most knowledge about high tech is good and some food items.

WPLC SharZ: Thanks James! Anonymouze, did you have a comment?

Anonymouze: Yes, I notice we send things to our distributors in Canada on a temporary status... and we don't pay tariff until/unless it is sold or brought back to the US. So is that true for all countries or is this unusual?

JRM IMDI: Yes, items can enter on a consignment basis and even for trade shows without duty.

WPLC SharZ: Are there any licenses or things to apply for when trading internationally?

JRM IMDI: Just a side note the President announced in the state of the union the need for Fast Track legislation again this year--however broader support from small business will be critical the Administration will need to show what tariff and other forms of relief are to be included in APEC and FTAA if this support is to come.

LIQNET: And, some items may also enter into Free Trade Zones where they may be stored and/or assembled as I understand it, maybe JRM can explain that part better :-)

JRM IMDI: Yes, free trade zones permit the entry and processing for re-export without duty the idea is to stimulate job creation for local labor.

WPLC SharZ: LanJ... your question?

WPLC LanJ: Are there certain countries to avoid doing business in, right now? If so, which specifically?

JRM IMDI: Revolution and unstable economic conditions usually dictate where business will or will not go but due check with the USDOC first.

WPLC SharZ: Anony..your comment?

Anonymouze: I've found "consumer reports travel letter" a useful guide as to what countries would not be a wise choice to export/import - due to war/disease or poverty.

JRM IMDI: The US State Dept. also issues travel advisories--but do call 800-872-8723 first.

WPLC SharZ: How much intervention does the U.S. gov't have? The other country's?

JRM IMDI: The U.S. Trade Rep. is the key player in raising trade issues but the U.S. also has a commercial "war room" in the U.S. Dept. of Commerce to help U.S. businesses.

WPLC SharZ: Let's say you decided to trade with another country, but the products they end up sending you are not the quality you had agreed on. Is there any recourse? How hard is it to fight a battle like that when it comes to another country?

JRM IMDI: Yes, product standards are the key issues of today and use of the Letter of Credit with a certificate of product quantity and quality standards are key to insuring you do not take a loss.

WPLC SharZ: Can you tell us what a *Letter of Credit* is?

JRM IMDI: The the bank letter of credit is the key method of making payment on imported goods it contains the documentation requirements in order for the supplier to collect the terms are set by the buyer to and the supplier collects once he shows he has performed as required.

WPLC SharZ: Thanks James. Doppel... your question?

DoppelBock: What economic indicators should one look for in a potential country to start business?

JRM IMDI: Good GNP growth, a stable economic and regulatory environment and a reasonable financial system.

WPLC SharZ: Are there any statistics as to how many companies in the US are trading internationally now?

JRM IMDI: USDOC does keep some minimal tab however, while the economy is heavily small business focused, they play a very limited role in international trade that is why the future growth belongs to small businesses but Govt. has not found the formula to help yet.

WPLC SharZ: Doppel, you had a comment?

DoppelBock: They seem to very viable indicators, but how reliable can they really be? Do countries, in your opinion, mis-report their actual numbers?

JRM IMDI: No. The problem is that the Govt has poor data on which to base its policies only now are they trying to automate exports so the export data in one country can also serve the customs clearance in another. The Govt. data todayhas relied on port of export so land locked states get under reported.

WPLC SharZ: I've heard that China is now very interested in trade with the US. Is there a particular reason why?

JRM IMDI: China is now passing Japan as the country running the largest trade deficits so the U.S. becomes key to their continued economic growth however, we need to strike a better balance using our technological skills without giving them away for market access.

WPLC SharZ: Doppel.. your comment?

DoppelBock: Many Chinese companies operate in a murky and complex decision process. It involves establishment of long term relationships and calling many decision makers. Just like the US.They all like to be taken out to dinners, lunches, etc...Do our smaller companies have the resources to do this?

JRM IMDI: Personal relationship are key in business this is key in asia--however, in china, the public sector are often involved in running "private" firms and this has caused problems in enforcing intellectual property rights.

WPLC SharZ: LIQNET... you're on!! :)

LIQNET: I know that there are alot of websites that are devoted to information on IT, such as Trade Compass, do you happen to know of any others that have trade resources or stats?

JRM IMDI: The US ITA and Department of Commerce public sites are most helpful if you also follow up with a call to the industry or country specialist who can better relate the info you see to your own needs.

WPLC SharZ: Is it ever permissible to *not* show where the imported product is made - making it look like it was produced in the US?

JRM IMDI: Imported goods in most cases must show source and origin data so you can determine where it was made and from where it was sold this opens a whole issue of % content requirements etc.

WPLC SharZ: Doppel.. your question?

DoppelBock: What is your view on domestic Labor Unions?

JRM IMDI: Unions serve to set work or employment conditions suitable to their members in trade foreign labor conditions do play a role in so far as import prices are affected.

WPLC SharZ: Can you give us the first 3 specific steps in getting started in international trade?

JRM IMDI: Research--Research--Reseach. However, small business need better access to market info, finance, skills, and technology--these points were made in the recent report submitted the the APEC Ministerial Meeting for Small Business. We now await the U.S. and other 17 country positions on these recommendations. The better prepared one is to enter a foreign market the better chance to make it work.

WPLC SharZ: Doppel.. your question?

DoppelBock: What is your experience with Japanese firms?

JRM IMDI: Japan takes time a good friend in Sri Lanka bacame part of the family of a major firm but he first had to learn to play golf then speak some Japanese in short it took 5 years and a lot of personal contact--now that he is in, much is done by phone and personal trust.

WPLC SharZ: Before we end our chat today, is there anything you wish we had asked today?

JRM IMDI: Seems most topics have been covered. FYI--Our trade advisory committee at the U.S. Dept. of Commerce is looking for a few more Small Businesses to participate in the discussions on how better to involve small business in trade including current trade negotiations.

WPLC SharZ: Well, unfortunately, we're out of time. JRM IMDI, thank you for being our guest speaker today! It was a pleasure! Do you have a website, newsletter, book, class, etc., where we can contact you or learn more?

JRM IMDI: Yes, stop by and visit the International Trade Desk at http://www.intl-trade-desk.org I was one of the first to open this help desk for small business on AOL. Thanks for all today.

WPLC SharZ: Don't forget to visit our International Trade chat or message board.