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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


GLOBAL TRADE

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5 carolinas connection global trade v3 (1)