Shipping Solutions Newsletter

In the conduct of international trade transactions, any company that would consider the possibility of omitting vital information and/or providing false information should be prepared for severe ramifications. The United States Department of Commerce will thoroughly investigate and prosecute those caught submitting invalid information.

Earlier this year, MTS Systems Corp of Minnesota was fined a total of $800,000 USD and placed on probation for two years for submitting export license applications involving proposed shipments of test systems to India. These test systems that are manufactured by MTS Systems Corp have been determined to be involved in activities related to unregulated nuclear activities in India.

The United States imposed economic sanctions on India after the nation had conducted a series of nuclear weaponry tests. These sanctions prohibit any American company from exporting certain types of goods and/or services to India without first having an export license.

Corporate documents indicate that MTS Systems Corp had received an inquiry from the Electrical Research and Development Association located in India to purchase equipment. Initially, MTS Systems Corp employees had determined that the purchase of equipment could possibly lead to MTS Systems Corp having to file for an export license as the equipment could be utilized in an end-use that is not approved by the United States Department of Commerce.

MTS Systems Corp representatives located in India had in fact confirmed that the Electrical Research and Development Association would be utilizing the equipment to test nuclear power plant equipment and components. However, an end-use statement later provided by the Electrical Research and Development Association stated that the equipment would not be utilized for any nuclear testing purpose and was to be utilized for seismic vibration testing on motors and other electrical components under earthquake conditions.

Subsequently, MTS Systems Corp had filed an application with the United States Department of Commerce indicating that the end-user of the equipment would be for seismic vibration testing on motors and other electrical components under earthquake conditions. The fact that MTS Systems Corp did not include their internal corporate knowledge of potential nuclear testing usage by the Electrical Research and Development Association in India made the export license application false.

The United States Department of Commerce viewed the export license application submitted by MTS Systems Corp to contain false information, as not all information known by MTS Systems Corp had been disclosed to the United States Department of Commerce.

We can all learn a valuable lesson from MTS Systems Corp! When you are completing an export license application, it is imperative that any and all information is disclosed otherwise your company could be subject to monetary penalty or even closure of the business. In the event that you need further information or have specific questions pertaining to the acquisition of an export license, you may always contact the U.S. Department of Commerce, Bureau of Industry and Security at 202-482-4811.

Shipping Solutions is now taking registrations for its User Conference on September 25-26, 2008, in Bloomington, Minnesota, at the Minneapolis Airport Marriott located right next to the Mall of America.

Intended for people currently using the Shipping Solutions export software and potential customers interested in learning how the software will save their company time and money, the conference will include government officials, industry experts and company personnel presenting on current export documentation and compliance issues as well as on the Shipping Solutions software itself.

Among the government agencies that will present at the conference are:

The Foreign Trade Division of the U.S. Census Bureau discussing the current status of mandatory filing through the Automated Export System (AES);
The Office of Export Enforcement discussing current export regulations, export enforcement, and the recent, dramatic increase in export penalties; and
The U.S. Commercial Service detailing the programs they have in place to help and encourage U.S. companies to export.

In addition, industry experts will be presenting on topics such as:

Understanding the Export Documentation Process;
NAFTA and the Other Modern Free Trade Agreements;
Properly Classifying Your Products for Export;
Restricted Party Screening Lists You Should be Checking; and
How to Determine if Your Product Requires an Export License.

All attendees will also have the opportunity to attend small-group or one-on-one sessions with Shipping Solutions staff to learn more about the software, see demonstrations of new features, and get their specific questions answered. More information including a complete agenda for the two-day conference is available at the Shipping Solutions website.

Registration for this two-day user conference is only $595. Two or more attendees from the same company will save $50 each. Shipping Solutions Annual Maintenance Program (AMP) subscribers will save an additional $100 off each registration.

Shipping Solutions has arranged for a discounted room rate of $139 per night at the Minneapolis Airport Marriott. To receive this special discount room rate, attendees can contact the Marriott at 800-228-9290 or 952-854-7441 before Sept. 3, 2008, and mention “Shipping Solutions.”

Because of the nature of the event, Shipping Solutions is limiting the size of the conference on a first come, first served basis. For more information about the Shipping Solutions User Conference or to register for a guaranteed spot at the conference, visit the Shipping Solutions website or call Shipping Solutions at 888-890-7447.

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By Prema Nakra, Ph.D. email | bio

In 1994, Mexico joined a North American Free Trade Area. The underlying agreement commonly referred to as the North American Free Trade Agreement (NAFTA) was signed by the United States, Mexico and Canada amid heated controversy in all three countries. Looking back it can be argued that ultimately the free trade agreement has brought economic benefits to all three countries.

In this second of three articles on Mexico, I will discuss the complexities and challenges for marketing success in Mexico.

MARKETING COMPLEXITIES AND CHALLENGES

Despite its many advantages, Mexico presents considerable challenges as a market for exports. Global companies are finding out that marketing and brand promotion strategies that work in developed mature markets do not always work in developing regions. Challenges identified in this article include infrastructure barriers, restricted competition, competition from fake and counterfeit products, and the prevalence of informal street vendors.

Infrastructure Barriers

One ongoing problem is Mexico's creaky infrastructure, which is ranked worse than that of China and India and is a source of frustration increasing the costs for businesses, big and small. There is an urgent need for more efficient sewage systems; cleaner, more extensive supplies of water; increased flows of gas and electric power; and better roads and bigger airports.

Mexico's crucial competitive advantage in the United States over distant countries such as China is lower transport costs. But that advantage diminishes the further south you go. Most railways and roads were built in a radial pattern with Mexico City as the spider in the centre of the web. Goods from the south bound for the United States must pass through the bottleneck of Mexico City, which climbs to 2,500 meters (8,200 feet) above sea level.

Restricted Competition

Mexico's corporate landscape is dominated by a handful of powerful companies, and economists argue that the resulting absence of competition has kept prices artificially high for consumers and reduced productivity and economic growth. Competition in some key sectors such as postal services, natural gas and electricity is still hampered by unduly restrictive regulations. Moreover, there are sectors where competition-enhancing regulations are not effective or enforceable. Airports, railways and telecommunications are largely defined by oligopolies that are prevalent.

Counterfeit Products

As Mexico's economy continues to open up, the variety and sophistication of pirated goods on Mexican streets has exploded. From border towns like Nogales to the bustling streets of Mexico City, counterfeit electronics, clothing and even liquor are flooding into markets and seeping across borders. Case in point:

In Mexico, shoppers can find knockoff Arizona Cardinals jerseys for $25, less than a third of what an NFL original costs. There are fake Sony televisions, counterfeit Nike shoes, and even phony Johnnie Walker whiskey. Counterfeit medicines are the antithesis of real medicines. Although they might look like legitimate products, counterfeit medicines may contain no active ingredients, incorrect active ingredients, inappropriate dosage or be contaminated. Additionally, the packing materials used in these products are usually improper.

The Business Software Alliance, which includes companies such as Apple Inc., Adobe Systems Inc., Microsoft and Symantec Corp., estimates that about 65% of software programs sold in Mexico are illegal copies. The level of piracy in Mexico robs the industry of $525 million annually.

Of every $10 that U.S. businesses lose through piracy, $5 is lost in four countries: China, Russia, Italy and Mexico, according to the International Intellectual Property Alliance. Mexico accounts for nine percent of those losses.

The International Intellectual Property Alliance estimates that trade losses due to copyright piracy in Mexico totaled $1.3 billion in 2005, with pirated products taking 65% of the total music market, 64% of the business software market, 62% of the motion picture market, and 73% of entertainment software market.

Under NAFTA and the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Mexico is obligated to implement certain standards for the protection of intellectual property and procedures to address infringement such as piracy and counterfeiting. Despite a fairly comprehensive set of IPR laws and an increase in the number of seizures and arrests in 2003 and 2004, the extent of IPR violations in Mexico remains dramatic. Monetary sanctions and penalties are minimal and generally ineffective in deterring these illegal activities.

Competition from Informal Sector

The informal economy is alive and well in Mexico. Vendors who are part of Mexico's fast-growing "informal economy" hawk food, clothing, jewelry, magazines, music CDs, DVDs and other consumer electronics and toiletries on the doorsteps of bricks-and-mortar businesses. While foreign marketers cannot use vendors as a distribution channels, their presence definitely poses a competitive threat and affects the market potential as well as market share for most simple as well as more sophisticated technological products.

In the third article of this series, I will offer some strategies and suggestions for successfully marketing in Mexico.

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Thousands of successful exporters are using Shipping Solutions to complete their export documents faster, easier and less expensively than ever before. Why aren't you?

If you're too busy trying to complete your export documents by hand to spend some time reviewing the Shipping Solutions Professional export documentation and compliance software yourself, let us do it for you! Sign up for one of our free online demos and let us give you a one-hour overview of the software.

We'll take you step-by-step through the process of completing your export forms, filing your SEDs electronically through AES, and checking your exports against the various government restricted parties lists and export regulations to make sure your shipments are in compliance, and you—and your company—stay out of trouble.

These free online demos are available on Tuesdays at 1:00 p.m. and Thursdays at 10:00 a.m. Central Time. All you need is an Internet connection to watch the demo and a phone to listen in and ask questions about the software. It's the perfect opportunity to get your first view of Shipping Solutions or to convince your coworkers and your boss that Shipping Solutions is the perfect solution for your company.

See why Shipping Solutions is America's #1 export software. Sign up for the free online demo today!

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