Export Contracts Research Articles

Capital, Finance, and Trade Collapse

This paper proposes a model of international trade with capital accumulation and financial intermediation. This is achieved by embedding the Melitz (2003) model into an incomplete-markets neoclassical framework with an endogenous credit market. The model preserves the analytical tractability of the original Melitz model despite nontrivial distribution of firms' net worth and capital stocks. We use the model to examine the differential effects of financial and non-financial shocks on aggregate output and international trade flows. The model predicts that trade volume declines far more sharply and significantly than that of output (with an elasticity larger than 3) under financial shocks than under non-financial shocks. The prediction is consistent with the stylized fact that most countries that experienced major financial crises had significantly larger and sharper contraction in exports than aggregate output (as is also true during the recent financial crisis). In the long run, however, a deeper financial market is a great source of comparative advantage -- it raises not only the level of aggregate productivity but also the ratio of trade volume to domestic output.

Russian gas at European energy market: Why adaptation is inevitable

Economic crisis of 2009–2010 plus steady decarbonisation of the European Union (EU) energy policy decrease EU energy demand while gas supplies to the EU continue to increase as well as its multiplicity. Thus competitive niche for gas in Europe tightens, especially for Russian gas supplies with rather non-flexible contractual structures and pricing mechanisms such as long-term gas export contracts (LTGEC) with oil indexation. On top of this, Third EU Energy Package changes the whole architecture of the wholesale EU internal gas market. So risks and uncertainties for oil-indexed LTGEC within this tightening market niche for gas increase. To effectively address them, LTGEC need to become more flexible and adaptable. Gazprom has recently started such adaptation of its LTGEC. Whether this will stay as a temporary step-back or will become company's new regular policy towards more flexible contractual structures and pricing mechanisms in Europe?

OS INCENTIVOS FINANCEIROS PARA A EXPORTAÇÃO: UM ESTUDO EM PMEs DE SANTA CATARINA

Nesta última década, a realidade econômica brasileira tem influenciado várias empresas a buscarem novos mercados devido à ampliação dos parâmetros de concorrência. Os programas de incentivos à exportação criados pelo governo são um exemplo disso, fortalecendo a relação dos recursos e da capacidade de desenvolvimento de estratégias de vendas e entrada em mercados estrangeiros. Assim, o uso de recursos financeiros de programas de incentivos à exportação, podem consistir em uma vantagem competitiva, visto os diferenciais relacionados aos custos dos produtos/serviços, influenciando positivamente a atividade exportadora. Preocupado em fomentar as exportações, o governo brasileiro criou linhas de incentivos financeiros que possam atender às necessidades das empresas brasileiras, como o Adiantamento de Contrato de Cambio (ACC), o Adiantamento sobre Cambiais Entregues (ACE), o Programa de Exportação (Proex), entre outros. Deste modo, o objetivo deste trabalho é conhecer as reações do empresariado catarinense quanto ao uso dos incentivos financeiros para a exportação. O método de pesquisa adotado foi a pesquisa exploratória e, quanto aos meios de investigação, foi a pesquisa de campo qualitativa, por meio de entrevistas, com base em um roteiro semiestruturado. Os resultados apontam que os motivos que levam essas empresas a ingressar no mercado internacional são: (i) abertura de novos mercados, (ii) novas oportunidades de negócios e (iii) ampliação do volume de exportação. Os incentivos financeiros mais utilizados pelas empresas são o Adiantamento de Contrato de Câmbio (ACC) e o Adiantamento sobre Cambiais Entregues (ACE).

You can't have a CGE recession without excess capacity

Simulations with dynamic, single country, CGE models typically imply that reductions in domestic demand, e.g. a cut in investment, generate increases in exports and reductions in imports facilitated by real depreciation. However, currently in the U.S. a large reduction in investment is occurring simultaneously with a contraction in exports and little movement in the real exchange rate. We show that to describe this situation it is necessary to drop the standard CGE assumption that capital is always fully employed in every industry. After introducing an excess capacity specification, we simulate the U.S. recession with and without the Obama stimulus package.

Gas Transit in Eurasia: Transit Issues between Russia and the European Union and the Role of the Energy Charter

This paper deals with the structure of the legal relationship relating to gas supplies and, specifically, to gas transit issues between Russia and the EU. The first section examines the evolution of the contractual structure of Soviet/Russian gas supplies to Europe, based on the Groningen (Dutch) concept of long-term gas export contract (LTGEC). The second section analyses new transit risks, both within and outside the EU, in the gas value chain of Russian gas supplies to Europe (within the area of responsibility of Russian exporters); these transit risks appeared after dissolution of the COMECON and the USSR. The paper then provides a more specific analysis in the third section of the new transit risks outside the EU which reflects the result of steady move from political to market-based pricing within CIS and, in section four, new transit risks within the EU which reflect the liberalisation processes within, and enlargement of, the EU energy market. Solutions for transit risks and where they are best provided -within WTO or ECT and its draft Transit Protocol – are examined in section five and section six examines, one by one, the key debated transit issues and draft solutions within Energy Charter framework, including the new Russian initiative (of 21 April 2009) on the new international energy order. The conclusions contain a road map to finalise the draft Transit Protocol to allow Russia to ratify the ECT.

Export contracts for non-traditional products: Chayote from Costa Rica

Abstract This paper focuses on the determinants of market and contract choice for non-traditional crops and the possibilities for involving local producers in global agro-food chains through delivery relationships with packers and brokers. Main attention is given to the importance of quality for entering the export market and the impact of contractual arrangements on loyal behaviour. Core stipulations in the contract regarding the frequency of delivery and the provision of technical assistance are mediating factors between quality and loyalty. The study among traditional and recently established producers of chayote in Costa Rica confirms the importance of production scale and experience for engagement in exports. The export share is positively related to quality performance but inversely related to delivery frequency and sales at the local market. Apparently, traditional producers rely on market diversification to maintain a certain bargaining power vis-à-vis traders and processors. Verbal contractual arrangements are mainly offered to newly established but less-experienced farmers living in settlements that try to reduce risk and demonstrate a high commitment. These farmers cultivate on better soils and have more family labour available. Further quality improvement requires technical assistance and a high frequency of delivery. Supplier arrangements that guarantee timely collection, input support and flexible credit services are therefore of critical importance. Additional support from packers and exporters could enable farmers to improve product quality and is likely to be rewarded. with a high degree of loyalty.

The International Financial Crisis: Macroeconomic Linkages to Agriculture: Discussion

Korea, and eventually spread to Russia and Brazil. Figure 1 traces U.S. agricultural trade with the five crisis countries studied by Shane and Liefert over the past decade. As they note, the crisis led to a sharp contraction in agricultural exports to these countries by the United States during 1997 and 1998, which is projected to continue into 1999. At the same time, agricultural imports have remained more or less constant, causing the U.S. agricultural trade surplus with these countries to fall sharply. Shane and Liefert's story for the sharp drop in U.S agricultural trade balance with the crisis countries goes as follows: The depreciation in the exchange rate and decline in consumer income in each of the crisis

The trade balance and fiscal policy in the OECD

We explore the short-run impact of movements in different components of fiscal policy on the trade balance, exports and imports for a panel of OECD countries over 1960–1995. We find that the composition of a shift in fiscal policy and the exchange rate regime matter for its transmission to the external account. The strongest result is that an expansion in wage government consumption causes a contraction in exports and a deterioration of the trade balance, especially under flexible exchange rates. We discuss the implications of our results for fiscal and current-account adjustment.

China and Taiwan access to the World Trade Organization: implications for U.S. agriculture and trade

Abstract This paper investigates the impact of China's and Taiwan's accession to the World Trade Organization (WTO) on U.S. and world agricultural trade by means of a 12-region, 14-sector Computable General Equilibrium model for world trade and production. The simulation results show that integrating China and Taiwan into the global trading system could induce more competition on labor-intensive products and reduce their prices. It could drive up the demand for capital and skill-intensive manufactured goods, thus further improving industrial countries' terms of trade. The expansion of labor-intensive sectors in China could also induce contraction in agricultural exports from China and increase its net agricultural imports by as much as US$9 billion annually, causing food and agricultural exports from other regions to increase. Total U.S. food and agricultural exports could increase by about US$2.4 billion annually, with the non-grain crop sectors gaining the most. The biggest winner from China's WTO accession is China itself. WTO membership could bring a net welfare gain of about US$30 billion a year for China, a substantial benefit compared with the gains for the USA (US$8.5 billion).

China and Taiwan access to the World Trade Organization: implications for U.S. agriculture and trade

AbstractThis paper investigates the impact of China's and Taiwan's accession to the World Trade Organization (WTO) on U.S. and world agricultural trade by means of a 12‐region, 14‐sector Computable General Equilibrium model for world trade and production. The simulation results show that integrating China and Taiwan into the global trading system could induce more competition on labor‐intensive Products and reduce their prices. It could drive up the demand for capital and skill‐intensive manufactured goods, thus further improving industrial countries' terms of trade. The expansion of labor‐intensive sectors in China could also induce contraction in agricultural exports from China and increase its net agricultural imports by as much as US$9 billion annually, causing food and agricultural exports from other regions to increase. Total U.S. food and agricultural exports could increase by about US$2.4 billion annually, with the non‐grain crop sectors gaining the most. The biggest winner from China's WTO accession is China itself. WTO membership could bring a net welfare gain of about US$30 billion a year for China, a substantial benefit compared with the gains for the USA (US$8.5 billion).

THE EXPORT‐FINANCE INADEQUACY CONFRONTING U.S. SMALL BUSINESS

The case is strong for declaring an inadequacy of export finance for small business. In 1988–90, the documentation has expanded beyond that of academic research and claims by the Small Business Administration to Congressional testimony by exporters and bankers, surveys by trade associations of manufacturers and bankers, and investigations by the Government's export finance agency as well as our central bank. Nonetheless, small business is exhorted to look abroad in its marketing efforts and so to participate in reducing the U.S. trade deficit. As one means of alleviating this international marketing challenge, the Export‐Import Bank of the United States (Eximbank) has moved to convert a pilot program of 1988–89 into a fall‐fledged decentralized effort to deliver export finance to qualified small firms. The intention is that carefully trained administrators in selected states will be able to match qualified exporters with financial institutions and thereby assure that the small firms receive working capital in adequate quantity to meet terms and conditions of an export contract. While Eximbank's staff is poised to support the marketing and credit analysis work of the state/local administrators, this paper examines the need for a fully cooperative effort among four parties or groups in the face of a national retrenchment by many banks in the provision of export finance for small firms.

METHODS

3CR12 Calms an aggressive environment. Cromweld Steels' low cost stainless steel, 3CR12, has helped a company to fulfil an export contract for a waste heat recovery unit worth £½ million.

Learning from Japan: Plant imports and technology transfer in the chinese iron and steel industry

There has been considerable controversy as to the, extent to which Japanese technology can be transferred to developing Asian nations. This paper describes one particular institutional form of transfer, the plant export contract, using Japanese iron and steel plant exports to the People's Republic of China as an example. It surveys the domestic background of the Japanese firms supplying technology and the nature of demand on the side of the Chinese buyers, as well as the operation of the projects themselves. It concludes that the problems encountered have arisen as a result of misconceptions concerning technological knowledge and the ways in which it is conditioned by the economic environment within which it is developed. J. Japan. Int. Econ., March 1988, 2(1), pp. 42–62. Department of Chinese Studies, University of Leeds, Leeds LS2 9JT, England, United Kingdom.

Impact of Canadian Regulatory Changes on Cross-Border Trade

In the year following oil deregulation Canada's crude oil productive capacity grew by 5%, but production was unchanged due to a lack of pipeline capacity, the effects of prorationing and a lack of price flexibility. While Canadian oil demand remained stable, exports of crude oil increased by one-third and imports by one-half. Export prices followed world trends with light crude oil export prices declining from $C 40/bl to $C 15 in July 1986. Natural gas exports were down by 17% in the first nine months of the 1986 contract year. This period coincides with the implementation of the Agreement on Natural Gas Markets and Prices, but was also a period marked by declines in US gas prices, declining US gas demand, and significant changes in US gas industry regulation. Prices for gas exports by licence have been renegotiated and some short-term interruptible sales have been made. Export prices approached those for interprovincial sales, which typically offered a better load factor. Licence holders have been able to average export prices over all sales under a licence to satisfy the minimum export price requirement in relation to the domestic reference price. As a result, since the Agreement of 31 October 1985, all renegotiated prices for exports of gas by licence have been approved. The factors having the most impact on gas exports by licence appear to be the 6% decline in US gas demand, limitations on pipeline access during the period of transition in US pipeline regulation, priority given by US pipelines to managing lower-48 take-or-pay obligations, and the changing role of US pipelines to being transporters rather than merchants of gas to the detriment of some Canadian gas export contracts. Exports by licence were at a level of 42% of authorized volumes for most of 1986. Volume authorizations were therefore, not an impediment to exports by licence. There was no volume restriction for short-term exports by order. Gas exports by short-term interruptible order faced US pipeline access restrictions but were affected by the domestic reference price floor. Short-term interruptible exports grew rapidly after the Agreement, peaking in January 1986 and then declined as US competitive prices fell below comparable Canadian domestic prices. Short-term interruptible exports have accounted for only 3% of total exports in the first nine months of the current contract year. Canada's disappointing 1985–6 gas export performance was attributable to weak US gas markets, changing US market structures, and delayed US regulatory change. Although there has been some impact on short-term interruptible sales, the overall decline in gas exports was not significantly relatable to Canadian gas export regulation.

INDUSTRY

£¼M Export contract. Close co‐operation between two British companies has resulted in a £¼ million order involving shipment of 240,000 glavanised steel panels for a construction contract placed by a Middle Eastern Defence Ministry.

Quality Control in Export Coal

This paper addresses the quality control problem faced by a coal mine of satisfying a specified minimum net calorific value (NCV) requirement for the coal loaded at an export harbour, by means of a control strategy on the gross calorific value (GCV) at the mine's wash-plant. From the NCV:GCV relationship a formula for the target mean GCV at the wash-plant is derived. This takes into account the variation of the GCV from the wash-plant, the joint variation of GCV, hydrogen, total and air-dried moistures at the ship sampler and the minimum NCV requirement specified in the export contract. A Bayesian control strategy is derived whereby the specific gravity of the heavy-liquid medium in the wash-plant is changed in response to deviations in the GCV from its target value. Finally, the theory is used to establish a quality control strategy for an open-cast coal mine.

Managing information on a viewdatabase

ECGD is a Government Department which provides insurance cover to exporters against non‐payment for goods or services by buyers overseas and provides guarantees to banks which assist in the provision of finance for export contracts. The Department has two headquarters locations (London and Cardiff). The following figures for the financial year 1982/83 give some idea of the scale of activity:

The application of linear programming to a coal-mining problem: A case study

This article describes the application of linear programming to a problem faced by a small coal-mining company. The company owns two operating collieries, one supplies the general inland trade market while the other supplies a power station under a 30-year-tied contract. The company was awarded an export allocation for a 30-year period and as a result was trying to establish how to supply the coal for the various markets. Only the colliery that supplied the power station had sufficient reserves to base an export contract on. It was underlain by two economically recoverable seams of coal. The quality of the coal reserves is, however, low compared to international standards and is therefore unacceptable in its raw state. It is, however, possible to upgrade the coal by washing it. The grade of the final product (float) can be adjusted by altering the density of washing. However the yield, as a percentage of the raw coal feed, falls off rapidly as the grade is increased. Furthermore the sinks can likewise be upgraded by washing. The company wondered how they should optimize the flowsheet. How much coal should they mine from each of the two seams, how much from each source should go to the power station, how much should they produce for export, how should the upgrading be done, and to what extent. A linear programming model was formulated to solve the problem facing the company.

Financing Major Export Contracts

An examination of the effects different methods of financing export contracts have on payment terms, cash flow, price escalation and payment guarantee problems.

A Note on the J-Curve

The current theory of the J-curve states that the response of the trade balance to exchange rate changes has a J-shape over time; e.g. in the case of devaluation the trade balance deteriorates before it gets better, and vice versa for revaluation (unless unrealistic combinations of the currency of invoice are assumed).' This pattern is caused by the contracts outstanding during the exchange rate change. The theory is based on the implicit assumption that the currency of invoice is always the exporter's currency; i.e. the country's exports are invoiced in domestic, and its imports in foreign currency. However, empirical evidence on all the countries studied shows this assumption to be grossly violated in reality. Carse et al. (1980, p. 18) summarize the existing evidence on the currency of invoice. It suggests that for all the countries, the share of exports invoiced in foreign currency is lower than the respective share of imports. The shares appear to increase, the smaller the role of the country's currency in international trade. Accordingly, 59 % of Danish exports and 81 % of Danish imports are invoiced in foreign currency,2 while most of the trade between the United States and Canada is invoiced in U.S. dollars.3 The authors suggest that there exists a hierarchy of currencies in international trade. The higher the currency is in this hierarchy, the higher the probability that it is used as the currency of invoice, other things equal. Conversely, currencies on the bottom of the hierarchy-all but some ten currencies-have no international role. That is, most countries in the world both pay and invoice in foreign currency. Indeed, Nars (1979, p. 198) reports that 96.6 % of Finnish exports and 97.4 % of Finnish imports are invoiced in foreign currency. (Recently, both shares have declined to 90%.) This has important implications for the J-curve itself. Assume that the country's exchange rate change does not affect the cross-rates between foreign currencies. In the short run, the quantities do not have time to adjust so that the currency of invoice determines the change in the domestic currency values of export and import contracts