UPDATE

MBITA is continuing to explore and implement new online trade promotion services available for small to mid-sized enterprises (SMEs) in California. A number of new initiatives by the Department of Homeland Security (DHS) that address port security are now law or soon will be law.


SMEs that are importing or exporting need to have the know-how and the online tools to effectively implement these new requirements. In the coming year MBITA and World TradeWinds will conduct and monitor a number of conferences and seminars on Homeland Security and how these requirements will effect SMEs in their global trade operations. Stay tuned!

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President
Tony Livoti
MBITA

Vice President
Shay Adams
AIM Medical Sales

Members:

Dr. Edward Valeau
Hartnell College
Salinas

Dr. Victor Cordell
Monterey Institute of International Studies (MIIS)

Marcelo Siero
IdeasSiero

Jim Faith
TradePort.org

Staff:

Cristina Polesel
General Manager

Emi Hirano
Marketing Assistant

Tomoko Takamura
Marketing Assistant

Lidia Thompson
Eastern European Consultant


This newsletter has been created by MBITA's editor
Cristina Polesel
cristina@mbita.org



MBITA New Member: Homeland Security Innovation Association (HLSIA)


Port Security ...
A Brave New World

By Donald Masters, Ph.D.
Homeland Security Innovation Association (HLSIA)

Port security is a top priority for the U.S. Department of Homeland Security and the task is huge. Some three-quarters of U.S. merchandise trade is shipped through the nation's seaports. In the three years following the 9/11 terrorist attacks, the United States has taken the lead in tightening port security through three important initiatives:



1) Customs Trade Partnership Against Terrorism (C-TPAT) is a joint government-business initiative aimed at building "cooperative relationships that strengthen overall supply chain and border security". Essentially, it is a non-contractual voluntary agreement whereby applicants complete the C-TPAT Supply Chain Security Questionnaire and sign a C-TPAT Agreement to Voluntary Participate. The program requires participants to encourage their business partners to incorporate security recommendations/guidelines along the entire supply chain. Participants in the program benefit by receiving preferred customs treatment i.e. accelerated customs clearance. The relationship is based on U.S. Customs gaining familiarity with the importer or shipper which in turn leads to a lower risk score. The system is subject to periodic verifications and either party can withdraw from the relationship by simple notification. By May 2003, some 3,000 companies had signed up, including 2,119 importers, 20 U.S. port authorities/terminal operators, 410 carriers and 806 brokers/freight forwarders.

2) Container Security Initiative (CSI) focuses on U.S. inbound shipping containers, of which 90 percent originate in thirty countries. The CSI is a four part program which includes:


a.) establishing security criteria to identify high risk containers;

b.) pre-screening high risk containers before U.S. arrival;

c.) use technology to pre-screen containers quickly and

d.) develop secure and "smart" containers.


Implementation of CSI requires bilateral international agreements with the world's major ports. It involves the assignment of U.S. customs personnel to foreign ports to inspect cargos being loaded on containers destined for U.S. ports. The goal is to improve security without slowing down legitimate trade. The program, based on reciprocity, does not cover the costs of inspection equipment in the foreign port. At present, some 30 mega-ports worldwide are participating in the program.

3) "The 24 Hour Advance Vessel Manifest Rule" is perhaps the most burdensome and controversial initiative launched to date by the U.S. Government. It aims at information collection and is closely associated with the CSI program. The goal of the "24 hour rule" is to identify prior to loading those containers which are thought to be high risk. The rule was strengthened considerably under the U.S. Trade Act (2002) which imposes sanctions and penalties on shippers who fail to comply. As amended, the act requires the shipping community to provide advanced electronic information for cargo. Prior to 2002, only carriers participating in the vessel Automated Manifest System (AMS) were required to provide information electronically.

However, more recent regulations effectively oblige all vessel carriers operating in U.S. trade to use AMS. Moreover, the requirement now includes both U.S. exporters and importers. While technically only Cargo Declaration (CF-1302) needs to be filed 24 hours prior to container loading at the foreign port, considerable additional manifest information must be completed prior to arrival at the U.S. port. Finally, these regulations affect containers that are in transit to U.S. ports. In other words, containers transported on the same ship but are not off loaded at the U.S. port are subject to manifest declarations and the 24 hour rule.



In conclusion, new U.S. security regulations impose significant compliance costs on the international shipping community. These costs relate to fixed costs of new equipment and technologies being deployed to screen shipments plus administrative costs related to the extensive new reporting requirements for U.S. customs.


Contact

Donald Masters , Ph.D.
Homeland Security Innovation Association (HLSIA)
Tel. 831-277-4593
Fax 831-622-0368
Web: www.hlsia.org
email: masters@hlsia.org



MBITA New Member:
Bart Meza & Associates

MBITA would like to introduce its new member Meza & Associates. The President of the company, Mr. Bart Meza migrated from Peru to the USA in 1955 and has been a resident in Pacific Grove since 1958. He worked in the construction business for ten years and became a building contractor in 1967.


With this background and experience, Mr. Meza has become very familiar with construction materials such as hardwoods and he is aware of their various applications. Some species of hardwoods are good for fine furniture making while other applications include interiors like exposed staircases and inside trims in commercial buildings, as well as exteriors such as wood decks and walkways.


Several varieties of hardwoods are abundant in the jungle area of Peru which is the third largest country in South America after Brazil and Argentina and fourth in population. The geographical location of Peru makes it an important gateway for business, tourism and trade. Its 53,5 million hectares of rain forest make it an Amazonian country.

Meza & Associates is starting to do business with Peru by exporting sawmills and furniture-making machinery and by importing hardwoods to the construction business in the U.S. The fact that Peru has just started to implement a reforestation project for wood harvesting insures a continuous supply of hardwoods.


However, the company's interest goes beyond the construction business. The natural resources that enrich the jungle are so diverse that indigenous livelihood and sustainability as well as the global community can benefit from them. The Peruvian Amazon forest offers products such as fruits, precious woods, minerals and refined oil.


One of its treasures is excellent organic cooking oil that is extracted from the palm tree and Meza & Associates is now seeking American cooking oil companies for import into the U.S.


As a native of Peru, Mr. Meza also has a humanitarian interest in Peru and trade with Peru means helping its economy grow to improve the quality of life of its population while working with the Peruvian government to develop successful bilateral trade with the U.S.


Political instability resulting from presidential election and Fujimori's subsequent departure from office resulted in limited economic growth since 2000 but President Toledo, who assumed the presidency in July 2001, is working to reinvigorate the economy and reduce unemployment.

"The bureaucracy that Peruvians have to deal with to comply with their political system and their lack of information to overcome these hurdles impairs the growth of Peruvian economy", states Mr. Meza.

On September 13th, 2004 the U.S. Ambassador James Curtis Struble and the Andean community signed an agreement to facilitate bilateral trade between the U.S. and Peru. Mr. Meza states "this agreement is a good step towards helping economic development, as well as helping the spirit of solidarity in the international community and it should encourage bilateral trade with Peru while improving for the people of Peru".

"Another added benefit of this agreement will also decrease the Peruvians interest in the production of the coca leaves which will curtail the export of cocaine from Peru", Mr. Meza concludes.


Contact:
Bart Meza, President
Bart Meza & Associates
Tel. 831-372-9314
email: bartmeza1@yahoo.com


MBITA New Member:

Based in Scotts Valley, CA, Avenue Two provides international business consulting, import/export services and high-tech marketing to companies in a variety of industries. Focusing primarily on marketing and partnering, trade and distribution with Asia and North America, Avenue Two has been successful in bringing manufacturers, wholesalers and retailers together to successfully expand their business prospects.

Avenue Two was founded by Rebecca Cavagnari with the vision of expanding business opportunities on both sides of the Pacific Ocean. With over 15 years experience in the high-tech industry and with a background in international business and international relations, Ms. Cavagnari struck out on her own to fill a niche in the international trade arena. With a working knowledge of Chinese, Portuguese and Turkish languages she has had the opportunity to work and travel in most areas of the globe.


Avenue Two provides consulting services designed to assist companies with the expansion of their international business endeavors, including but not limited to trade, manufacturing and distribution partnerships.


Recent consulting projects have included:
  • Business Planning and Business Plan preparation
  • Market Research, Strategic Planning & Feasibilities Studies
  • Merger & Acquisitions
  • Joint Venture Partnering
  • Manufacturing Vendor Selection Process
  • Entrepreneurial Process Training
  • Start-up Organization Structure and Growth
  • International Business Development
  • International Marketing and Channel Development
  • Cross-Cultural Training
  • Doing Business in the U.S. and U.S. business training for foreign managers
  • Foreign Delegation and Trade Mission Coordination
  • International Conference and Seminar Planning

Rebecca Cavagnari is also an adjunct professor for UCSC, SJSU and the Monterey Institute of International Studies where she teaches and advises students on international projects, entrepreneurial training, business planning and market research. She has been working with MBITA for many years and is the acting Sales & Marketing Director for TradePort, the premier online resource for comprehensive information and links to global trade assistance centers throughout California. Ms. Cavagnari holds an MBA from the Monterey Institute of International Studies and a BA in Global Studies from World College West.

Ms. Cavagnari is currently planning a Trade Mission to China in the October/November timeframe. Participants will attend the Canton Trade Fair and meet target companies and government officials for their industry sectors. Additional details can be found at: http://www.avenuetwo.com/pr01412.htm.

Contact:

Rebecca Cavagnari
Founder / Principal Consultant
Avenue Two
Tel and fax 408-850-1952
Web: www.avenuetwo.com
email: rebecca@avenuetwo.com

MBITA Member Success Story:

Based in Santa Cruz, CA, MBITA Member IP Society is a donor supported membership organization working to increase public awareness of, and participation in, the evolution of intellectual property rights and emerging technologies. IP Society's mission is to provide outreach from the intellectual property professions to entrepreneurs, technologists, artists and investors.



The general public has a growing thirst for knowledge concerning the interaction of intellectual property in the realms of private, entrepreneurial, governmental, social and communal activities. The IP Society addresses this thirst and engenders wider popular support for the enforcement of reasonable and beneficial intellectual property rights.

The IP Society enriches the collaborative process of the evolution of the scopes, definitions, modalities, and applications of intellectual property rights by including the public, professionals, academics, corporate leaders, intellectual property stake holders and thought leaders into a thoughtful exploration of these rights and their impact on local, national and global communities.

For more information, contact IP Society's President Patrick Reilly at 831-332-7127 or Patrick.Reilly@ipsociety.net


Contact

Patrick Reilly , President
The Intellectual Property Society
Tel. 831-332-7127
Web: www.ipsociety.net
email: Patrick.Reilly@ipsociety.net

TradePort Announces Trade Finance
Online (TEFO), an Initiative in Trade Finance
by Jim Faith, Director of Operations

TradePort is pleased to announce TradePort Export Finance Online (TEFO), a trade finance program for small business. TEFO provides consulting services in trade finance and access to pre-export working capital for California's small and mid-sized enterprise companies (SMEs), their buyers, suppliers and partners worldwide.



Large multinational banks are generally thought to be the most experienced in trade finance. Frequently these services are reserved for their major clients and maintain transaction minimums of $1M or more. These banks are less interested in working with SMEs because of smaller deal size and volumes accompanied by greater risk. In fact, small importers and exporters often present a business profile that creates obstacles to financing. Even SMEs with large trade deals are not attractive to larger banks due to risk and credit issues such as loan concentration, debt-earnings ratio restrictions or insufficient collateral.


The TEFO Program is a managed financial network of banks, lenders and brokers focused on the SME market. The TEFO/TradePort partnership brings together the international trade strengths of TradePort, CalTrade Coalition California's trade promotion community, private sector banks and lenders, the U.S. Department of Commerce, the U.S. Export-Import (EXIM) Bank and the Small Business Administration (SBA) for the benefit of SMEs trade development.


While large companies normally have structures in place to generate, market and expand their businesses, SMEs often need direct, customized assistance in taking their first steps into global markets, or in expanding the number of markets in which they trade. TEFO's mission is to provide access to affordable trade finance and credit, which is considered the key to the growth and health of a company's trade capacity.

TEFO will assist exporters and importers in finding and negotiating better deals on their trade financing. TEFO will provide loan counseling and access to pre-shipment working capital and transaction financing from $10,000 to $10,000,000, as well as Letters of Credit, Factoring, Purchase Order financing, Medium term Foreign Buyer financing, Supplier financing and Forfait financing.


Approximately 40,000 companies exported from California in 2003. Nearly 94 percent of these companies - accounting for almost 40 percent of the state's total exports - were SMEs with less than 500 employees. In fact, more than 85 percent of all California exporters were small firms with less than 100 workers.

In the past, SMEs turned to the California Export Finance Office (CEFO) for their specialized financing needs. CEFO was a state-funded program managed by the Technology, Trade and Commerce Agency. CEFO helped finance export sales by providing working capital loan guarantees to financial institutions on behalf of the SME. CEFO also worked in partnership with the SBA and the EXIM Bank to co-guarantee loans used to finance the purchase of materials, services and labor to fulfill an export sales order or contract. Since its inception in 1985, CEFO helped facilitate $1,792,990,347 in export sales to California's economy, issuing 1021 bank guarantees totaling $304,481,568.


However, on January 1st, 2004 all of California's international trade and investment programs, including CEFO, were disbanded by the Legislature as part of cost saving measures enacted in the 2003-04 State budget Act. Due to the continuing budget crisis, returning to a state-run model of the past is no longer a viable option.


Today, TEFO and its partners seek to fill the void left by the closing of CEFO. TEFO is taking the leadership role in developing a public-private partnership and collaborative effort to assist SMEs by mobilizing private sector capital for their trade finance needs.

Importers and exporters can use the TEFO website to research their trade finance options, with additional tutorials provided on the TradePort site. Users can submit their contact information and financial requirements via an online form. TEFO staff will review the information contact the borrower for follow-up, qualification and discuss various options. More and more of this process will be automated over time and as funding becomes available. Ultimately, with private sector partners, TEFO will provide a seamless, end-to-end solution for the SMEs' financial supply chain.

The TEFO Pre-export Working Capital Program is based on loans against Documentary Letters of Credit for export transactions only. Under this unique program, Pre-export working capital is provided to the beneficiaries of an L/C or the beneficiary's suppliers or vendors. This financing is transactional in nature without traditional collateral requirements.


TEFO will arrange credit for:
  • Short-term working capital loans for specific international sales purchase orders (up to 12 months).
  • Single or multiple transactions (revolving lines of credit).
  • Direct loans and/or standby letters of credit.Credits arranged by TEFO may be used to finance the purchase of materials, services and labor to fulfill export sales orders and contracts. Qualified California exporters may receive loans to extend post-shipment payment terms to creditworthy foreign buyers.


Credits arranged by TEFO may be used to finance the purchase of materials, services and labor to fulfill export sales orders and contracts. Qualified California exporters may receive loans to extend post-shipment payment terms to creditworthy foreign buyers.

TEFO's loan counseling is provided free of charge. Neither the service provider nor the lender will increase their respective fees to cover these costs. Since there are no additional costs, it may be advantageous to check with TEFO and see if we might provide a better solution than you may have found on your own.

TEFO's loan counseling is provided free of charge. Neither the service provider nor the lender will increase their respective fees to cover these costs. Since there are no additional costs, it's advantageous to check with TEFO and see if we might provide a better solution than you may have found on your own.


TradePort is owned by the Bay Area Economic Forum and the Los Angeles Area Chamber of Commerce and managed by the Monterey Bay International Trade Association (MBITA)

Contact:

Jim Faith
TradePort
Tel: 831-425-7255 (Direct)
Fax: 831-469-0917
Web: www.tradeport.org
email: jfaith@tradeport.org

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