Finance trade & loan agreement methods

Barter Trade is not a very viable proposition for the 21st Century as markets, international finances currency valuation take place in commodity exchanges where purchase point of delivery and ultimate consumer might not be in the same lane. 

SOURCES AND INSTRUMENTS FOR FINANCIAL TRADE

1. Sources of trade finance

2. Instruments of trade finance

3. Impediments/Challenges in accessing trade finance

Financing trade is different than regular bank lending. It includes innovative financial products and services that assist importers and exporters fulfill their financing needs. Trade Finance is a source of working capital for many traders in need of credit lines to purchase, process or manufacture products for sale in the future. These financial instruments can be important for individual traders and firms trading internationally, because it can shape competitiveness on their terms of trade contracts. As a market expands so is the need for financing instruments that facilitate transactions across borders.

Any nation that does not have access to financial instruments can be considered blocked from trade. Importers or exporters not having access to trade finance, have limited opportunities to offer competitive terms to their vendors or buyers such as instruments of credit and payment assurance. Exporters will also have difficulties penetrating a market, because importer may prefer to buy on open account, or on deferred terms, the exporter may not be in position to accept/offer such terms if trade finance is unavailable.

Commercial Banks are the main source of trade finance.

1. Provide pre-export financing (Term Loans)

2. Help in the collection process

3. Issue and confirm letters of credit

4. Book acceptance and discounting drafts

5. Offer fee-based services such as credit and country information on buyers.

6. Taking foreign exchange risks (spot, forward, swap and so on)

7. Taking market risks (options, futures)

8. Discounting documents under letters of credit

9. Advance under red clause letters of credit

10. Structured Finance

For example a supplier can offer credit to a buyer by releasing goods against bills of exchange, by which a seller can pay at a specified future date.

Specialized trading institutions purchase from exporters receivables without recourse at a discounted rate to allow them access to financing before maturity of the bill. In this case the receivable becomes a tradable security

Governments and other institutions like World Bank, regional bank, community bank can be good source of trade finance especially in less developed economies where financial markets and money markets are not easily available.

Such financial facilitation include:

1. Establish scheme of guarantees to support exporters

2. Establish floating line of credit to support imports for and exports from specific sectors

3. Establish guarantees schemes for small companies or micro group

4. Support trade facilitation policies, e.g. tax deferral for export/import on extended terms

Sources of Trade Finance: Government and other related institutions

1. Letters of Credit (Documentary Credit)

2. Bank Guarantees

3. Pre and Post shipment finance loan facilities

4. Buyers and Sellers credit

5. Bills Acceptance

6. Structured Finance

7. Leasing

8. Factoring and Forfeiting

9. Counter-trade

A Letter of Credit is a document issued by a bank (issuing bank) stating its commitment to pay a seller (beneficiary) a stated amount of money on behalf of a buyer so long as the seller presents specific documents and conditions.

• Letters of Credit can be issued as “Revocable” or “Irrevocable” form and are either “Unconfirmed” or “Confirmed”, payable at “Sight” or at a deferred period “Use”
• Letters of Credit can also be special types, namely: Revolving letters of credit, Standby Letter of Credit (SBLC), Red Clause letters of credit, Transferable letter of credit, and Back-to-back letters of credit.
• Letters of credit issued against L/C facility allows importer to delay payments to exporter, thus easing cash flow problems and interest expenses. It allows supplier to access credit against presentation of documents at the counters of negotiating bank without waiting for goods to reach the buyer. It allows buyer to obtain credit terms from a seller under active period or differed L/C terms whereby the bank books acceptance for payment of bills to be made at future agreed date (maturity date).
• Supplier can discount documents and obtain credit before due date.
• Red clause Letters of credit allows exporter to obtain pre-export advance payment
• A Letter of guarantee is a written promise issued by the Bank to compensate the beneficiary (third party, local or foreign) in the event that the obligor (customer) fails to honor its obligations in accordance with the terms and conditions of the guarantee/agreement/contract. Types include Bid, Custom, Payment, Performance, Advance payment, Government export guarantees etc.
• Advance payment guarantee allows its beneficiary to access advance payments to facilitate procurement or production of goods for delivery to the intended party
• Custom Bonds allow a buyer or seller to postpone payment of tax until the goods are sold
• Customs Bonds for Temporary Transit facilitates movement of goods on transit or sent abroad for a trade fair, or goods, which are imported with intention of re-exportation without paying related custom duties.
• Structured finance refers to transferring risks in trade financing from parties less able to bear those risks to those better equipped to bear them in a manner that ensures automatic reimbursement of advances from the underlying assets.

Some examples of structured finance include:

1. 1. Inventory/Ware house financing
2. 2. Receivable financing
3. Leasing
4. Factoring and forfeiting are both forms of receivables discounting
5. A specialized financial firm pays up-front for the amounts due to them by their customers.
6. While forfeiting is mostly used for international transactions, factoring is mostly used for domestic trade. Factoring is the assignment to a third party receivables from its customers for a discounted factor (fee) in different ways:
7. Advance-based factoring
8. Maturity-based factoring
9. Collection-based factoring

• Forfeiting is a term generally used to denote the purchase of obligations falling due at some future date, from deliveries of goods and services-mostly export transactions-without recourse to any previous holder of the obligation.
• In a forfeiting transaction, an exporter/seller remits guaranteed debt, which results from a sale on credit, to a forfeiting company.
• The forfeiting company pays a seller up-front for the face value of the debt minus a discounted factor.
• The debt has to be enhanced through guarantee from a bank or other financially strong institution.
• Once the debt has been accepted by the forfeit er, the exporter is no longer liable for a failure of the buyer to pay-the forfeit er, except where there was fraudulent transaction.
• Counter-trade involves the exchange of goods and/or services as a condition of purchase, or as financing of purchases as in bartering.
• Under such arrangements valued goods are exchanged at an agreed value without cash or credit terms.

This method of trade is particularly valuable in markets where there is a shortage of foreign exchange reserves, where the currency is not freely convertible, or where there is difficulty in obtaining export credit. It is method for a range of reciprocal or compensatory trade mechanisms including barter, compensation, counter-purchase, buyback- offset, switch trading and tolling.

What are the Components Particulars of Freight Transportation                                                    Technology?

Transport assets fall into one of three basic types; land-- road, rail, -- water—shipping and air. Enabling economic prosperity by efficient movement of goods is at the apex of any comprehensive transportation system.

Each mode of transportation provides certain benefits when compared one to the other, however those benefits is usually a trade-off for some other factors.  Road transportation conveys speed and flexibility features. Rail service advantage is safety and energy efficiency per unit of weight transported. Air is the fastest but most expensive mode and waterborne can move massive amounts of freight cheaply but at a much slower pace.

“The U.S. and Canadian networks of inland waterways are based on the great navigable rivers of the continent linked by several major canals. The Gulf Intracoastal Waterway comprises large sheltered channels running along the coast and intersected by many rivers giving access to ports a short distance inland. The total inland U.S. system, including protected coastal routes, approximates 25,000 miles, of which well over half has a minimum depth of nine feet. The largest system is based on the Mississippi, which is navigable for about 1,800 miles from New Orleans to Minneapolis, and its vast system of tributaries. This system connects with the St. Lawrence Seaway via Lake Michigan, the Chicago Sanitary and Ship Canal, and the Illinois River and with the Atlantic coast via the New York State Barge Canal (Erie Canal) and the Hudson River. The two intra-coastal waterways are the Atlantic and the Gulf, the former extending from Boston, Mass., to Key West, Fla., with many sections in tidal water or in open sea.“

“In Europe the Danube waterway connects the Rhine with the Black Sea which completed in 1992 provides a route for traffic between eastern and western Europe through Germany, accommodating craft of 1,350 tons throughout its length. Following the Main River to Bamberg in Germany, France’s waterway network of nearly 5,000 miles is based primarily on its rivers, but many of the low-capacity canals are being raised to the 1,350-ton standard. A major development planned in the 1970s in cooperation with West Germany was the construction to this standard of the North Sea–Mediterranean waterway via the canalized Rhône and Rhine.  In the Netherlands the extensive canal system based on large natural rivers and serving the ports of Rotterdam and Amsterdam has required comparatively little modernization while In Scandinavia there are two major commercial artificial waterways: the first, the Trollhätte Canal, connects the Götaälv (river) upward from Göteborg with Lake Vänern and with the Finnish lakes and connecting canals; the second, the Saimaa Canal, in southeast Finland, connecting the vast Saimaa Lake system to the sea. In the former Soviet Union, water navigation played a major role in the country’s economy; and after World War I its great rivers—the Dnepr, Dvina, Don, Vistula, and Volga—were linked to form an extensive network, making through navigation possible from the Baltic to both the Black Sea and the Caspian.”

Road transportation

Road infrastructures have the lowest level of physical constraints among transportation modes but constraints are significant in road construction when encountered during construction to overcome features such as rivers or rugged terrain. Historically however, road transportation was developed to to be traveled by non-motorized vehicles; therefore, motorization has shaped the most development since the beginning of the 20th century.

Road transportation is mainly linked to light industries where rapid movements of freight in small quantities are the norm.  Nevertheless, with the introduction of containers, road transportation has become a crucial link in freight distribution, specially, in what is known in the industry as door-to-door service.

Less than Truckload (LTL)

“LTL freight includes freight shipments that do not completely occupy an entire truck trailer. Most freight trailers on the road today are 8’ – 8.5’ wide, 12.5’ – 13.5’ high, and 40’ – 53’ long. This allows carriers to load several LTL shipments into a single truck and service multiple customers and destinations. LTL freight shipments typically weigh between 200 and 10,000 lbs.”

 Full Truckload (FTL)

“Truckload freight includes all freight shipments that solely occupy a trailer. These are large volume or weight shipments from point to point many a case as line-haul. Weight limits depend on the weight of the vehicle and local laws, but typically are around 34,000 – 45,000 lbs. in the US. The most typical truckload shipments are transported via dry van, flatbed, and refrigerated trailers. “

Rail transportation

In light of more recent technological developments, rail transportation also includes monorails and maglev. The average level of physical constrains is mainly linked to the types of locomotives and a low gradient is required, particularly for freight. Heavy industries and bulk commodities are traditionally associated with rail transport systems.  Here too containers have improved the flexibility of rail transportation by connecting it with road and maritime modes. Rail is by far the land transportation mode offering the highest capacity. Unit trains with 23,000 tons of coal are the heaviest load ever carried. Although rail gauges, vary around the world, making it a challenge for the integration of rail systems across national boundaries.

Trailer On Flat Car (TOFC) predates inter-modal and Container On Flat Car (COFC) was a system where goods were loaded into a semi-trailer, driven to the railyard and backed onto flatcar. When the train reached the other end another semi-tractor pulled it off the flatcar and took it to the final destination.

The inter-modal transportation concept took it another a step in the supply chain, loading the freight into a container that could itself be transferred from a truck flatbed to a flat car to a container ship and back again without needing to transfer the freight itself as it stays packed and secured in the container for the entire trip regardless of how many transfers there are.

Maritime transportation

Maritime transportation is the most effective mode for moving large quantities of cargo over long distances. Maritime routes are composed of oceans, coasts, seas, lakes, rivers and channels. However, due to the location of economic activities and suitable ports and modern infrastructure maritime circulation takes place on specific parts of the water world, mainly, over the North Atlantic and the North Pacific oceans. Channels, locks and dredging are challenges to maritime trade in order to insure continuity between small and large bodies of water. Presently, there are comprehensive inland waterway systems included in Western Europe, the Volga / Don System and Danube. In Canada the St. Lawrence and Great Lakes system; in the United States the Mississippi and its tributaries. Other major waterways include the Amazon, the Panama / Paraguay and the interior of China. However, maritime transportation has high terminal and port costs, since these infrastructures are the most expensive to build, maintain and modernize. High inventory costs and large capital outlays are other characteristic of maritime transportation as it is also linked more than any other mode, to heavy industries, such as steel, petrochemical, grains and other bulks and liquefied gas with facilities adjacent to port sites and docks with rail tracks.

Sea Freight / Ocean Freight

Ocean freight is freight transported via ship from port to port. Shipments are organized into two primary categories; FCL (full container load) and LCL (less than container load). Containers are typically 20’, 40’, or 53’ in length. Providers often offer expedited and economy options depending on your needs. An obvious limit to sea based freight is the proximity to a serviceable port, but is overcome by using traditional land based transportation to get goods to, and from, ports.

Maritime general cargo classification

Shared Bulk

Break bulk Cargo

Break bulk Hazardous

Reefer Ship

Oversize or Overweight Vehicles MMT >4,500 Kilos or >11 Meters Long

Maritime containerized cargo classification

Reefer Container

Flat-rack Cargo

General Cargo in Container

RORO Vehicles

U.S. River Transportation

The Mississippi River System accounts for 92% of the nation's agricultural exports and 78% of the world's feed grains and soy beans. It also has some of the biggest ports in the U.S. like The Port of South Louisiana and The Port of New Orleans (NOLA).

Data from these two ports account for over 500 million tons of shipped goods per year which is significantly larger tonnage than any other ports in the United States. Some commodities that are shipped include petroleum, iron, steel, grain, rubber, paper, wood, coffee, coal, chemicals, and edible oils.

The standard river barge is 195 feet long, 35 feet wide, usable to a 9-foot draft with a capacity of 1500 tons. Some of the newer barges today are 290 feet by 50 feet, doubling the capacity of earlier barges.

Goods Movement

Commodity Percentage Grains (soy, corn, wheat) 87% Asphalt 4% Potash 3% Misc. 6%

Upriver bound Commodities                         Downriver bound Commodities

Commodity	Percentage
Sand and Gravel	47%
Fertilizer	24%
Salt	9%
Cement	10%
Misc.	10%

Air transportation

Air routes are practically unlimited, but they are denser over the North Atlantic, inside North America and Europe and over the North Pacific. Air transport constraints are multidimensional and including facilities such as about 3,300 meters of runway for landing and takeoff and cargo handling, the terminals.  Air transportation has been accommodating growing quantities of high value freight and is playing a growing role in global logistics.

Air freight is the fastest method of delivering goods between two destinations but also one of the costliest. Air freight can transport items from one port to another in a matter of hours rather than days or weeks for sea freight. There are some limitations to air freight, such as hazardous materials heavy materials and other restricted cargo.

Food Stuff L1 Container

Food Stuff L8 Container

Fresh Cargo Dry Ice

Frozen Cargo Dry Ice

Live Animals Fish

Live Animals Mammals

Inter-modal Freight

“Inter-modal freight is any combination of transportation modes; specifically truck, train, ship, and plane. Inter-modal allows shipments to maximize the benefits of each mode to ensure the most economical and timely outcome. Inter-modal also can take a single origin shipment and deliver it to multiple destinations.  The method reduces cargo handling, improves security, reduces damage and pilferage, and allows freight to be transported faster from origin to destination.”

Feet Length	20' container	40' container	40' high-cube container	45' high-cube container
Net Load Tons	28.2 Metric Tons	26.6 Metric Tons	26.58 Metric Tons	25.6 Metric Tons

 

For a review of how transportation components interact with one another in a network of prices and services go to https://www.worldcommodityfreight.com/

What is Maritime Trade?

Nobel laureate economist Paul Krugman once wrote:  A large part of the costs of international trade was taking the cargo off the ship, sorting it out, and dealing with the pilferage that always took place along the way. So, the first big thing that changed was the introduction of the container.

When we think about technology that changed the world, we envisioned ports were longshoremen loading and unloading ships but for the most part have Transportation economics have long emphasized that the global adoption of intermodal transport was a prerequisite for the distribution of production and the establishment of global supply chains that the container revolution and intermodal transport made possible global trade. In the past far away producers could not enter competitively international trade because they had no chance of reaching far away markets. The need to reduce transportation costs embedded in labor, time and handling, containerization established the links from producers and manufacturers to retailers and the ultimate to consumers from any part of the world.

Efficiencies were gained by eliminating the chain link of handlings freight until containers minimize cargo loss, damage and pilferage in addition to speeding delivery; and reducing overall expenditure to shipping process.

Before containerization, the methods for loading and unloading break bulk general had hardly changed since the ancient Phoenicians traded along the coast of the Mediterranean. The loading of individual items packed in barrels, sacks and wooden crates from a land journey to the port and back again on arrival was slow and tedious labor-intensive and costly enterprise.

Technological advances through the use of cranes, tide downs for bundling timber and the introduction of the unit pallet for stacking and transporting bags and sacks generated some efficiency gains, but the handling of cargo was still labor intensive.  After World War II following the spread of the railways, it became apparent that the bottleneck in freight transport was at the exchange point between land and sea transportation modes.

Historically, the origin of the container revolution goes back to April 26, 1956 when the “Ideal- X”, made its maiden voyage from Port Newark to Houston, Texas. This ship was a converted World War II tanker redesigned with a reinforced deck to sustain the load of 58 containers.  In the history of innovation, the breakthrough of containerized shipping did not come from the maritime industry but someone in the trucking industry who was also looking for short cuts and efficiencies to the supply chain. This entrepreneur was named Malcolm McLean, a trucking entrepreneur from North Carolina.

US coastwise shipping was widely seen as an unprofitable business; and McLean's main idea was to join in coastwise shipping with his trucking business at a time when trucking and shipping were not integrated industries.  McLean's vision consisted of a transportation system that moved cargo door to door from the producer to the consumer and that became the central idea.  At the port of Houston, McLean's enterprise later became a Sea-Land Service, and it was already taking orders to ship containerized cargo back to Newark. The 1956 container revolution made McLean's fundamental insight ahead of his time, but the success of the container did not rest simply in the idea of putting cargo into a metal box. Many innovations followed in cranes, ships, ports, trucks, trains and storage facilities. Additional savings were through the building of purpose-built container cranes followed by the building of large specialized containerships.

“On January 9, 1959 the world's specific-built container crane started to operate and was capable of loading one 40,000-pound box every three minutes. The productivity gains from using this container crane were staggering, as it could handle 400 tons per hours, more than 40 times the average productivity of a longshore gang. “The snowballing effect then moved to investment in larger shipping capacity now profitable since containerization radically reduced a ship's average turnaround time in ports.

Given the large investment costs, industry experts revealed that a considerable amount of uncertainty- investment was now needed to complement the success of the container technology. However, industry analysts judged container shipping as a specific technology and did not anticipate the dramatic transformations that this technology was about to bring to the entire domestic and international transportation sector. Innovation and investment in container technology remained for a long time as an American affair but from a transportation technology perspective, containerization resulted in the introduction of Inter-modal freight transport. It follows that the shipment of a container in multiple modes of transportation –ship-rail- truck- resulted in not having to handle the freight when changing modes.  Since containerization caused in a reduction of the total costs of shipping a good from the manufacturer to the distribution center,  its impact was not adequately captured, nonetheless,  until globalization took hold and more efficiencies reduced port to port and freight costs in general that can be summarized as follows:

• Productivity of dock labor went from 1.7 tons/hour to 30 tons/hour
• Ship size increased from 8.4 Gross Registered Tonnage to 19.7 (GRT)
• Insurance costs decreased from $0.24 per ton to $0.04 per ton

According to the Shipping Council, each year roughly 10 billion tons commodities are carried across the oceans.  

In our current global economy, maritime trade is essential. Daily, thousands of ships sail the seas moving large amounts of cargo in a safe and cost effective manner across continents.

Is Trump naïve about grain trade or just misinformed?

For at least 100 years grain trade has been controlled by the “five sisters” Continental Grain, Archer Daniels Midland, Louis Dreyfus, Cargill and Bunge Corporations that have monopolized international grain trade markets until recently when the Chinese dragon COFCO International (CIL) made its stumbling entrance in 2014-17 paying its entrance fee with billions in loses while everybody was laughing but no one is laughing now as the dragon eats its way into the market.

The five sisters developed a sophisticated network of farmers’ relationships, silos, ports, grain carriers controlling shipping and grain trade markets all over the world over a period of decades. Their balloon is about to get a hole from a Chinese dragon nail as it throws a 21^st century monkey wrench into the works.

When Trump placed tariffs on Chinese goods the Chinese responded with tariffs of its own on American soy beans injecting pain in the growing areas that must rigorously supports Trump’s policies and authoritarian governing style. But the Chinese are now position to take away his blow horn and serve him humble pie as negotiations on tariffs of manufactured Chinese goods are linked to grain trade.

It seems that whoever convinced Trump of following this route was not aware of the Chinese inroads in the grain markets or perhaps Trump believe the Chinese would beg him not to impose tariffs and thus hurt its economy. However, it is public knowledge that Trump does not read his intelligence briefings and was caught off guard by the Chinese.

Lacking arable land China is investing heavily overseas in the breadbaskets of the world including Russia, Argentina, and North America and is making aggressive moves into the established grain trade markets which will probably include swallowing the weakest links in the market like Bunge and Dreyfus.

CIL’s pockets seem to be pretty deep. Aside from the fact that most of its shares are owned by the Chinese state other shareholders include Singapore’s Temasek, the World Bank private investment sector and Standard Chartered a British bank as reported by the Economist on its first of February edition.

Going public with an IPO might be in the cards for this new “sister” regardless of the scrutiny it will bring to it. Nonetheless, planners might also be considering the a long term game venturing into shipping and information technology to learn what the market is doing ahead of the competition. However, in this regard China has the advantage of its enormous consumer market and therefore can set new rules for grain traders.

On the other hand, China cannot control the weather or the planting seasons, yields, storage facilities like grain elevators near production fields, port facilities and the bulk carrier fleet needed to transport the grain along the trade lanes of the world. Moreover, in the age of the Internet and satellite communications and observation of our planets behavior others can play a new role in coming years as big data is collected and analyze for the benefit of being the most inform in the playground.

Will the oil rich countries eventually collapse after their oil runs out? Are they diversifying their economy?

Rich Gulf countries must start factoring in an economy without oil. It is incumbent upon them to make the needed structural changes to their systems of government before they have to face smaller budgets not oil dependent. All the warning signs are there and the future can be bleak unless their economies are diversified and become less dependent on oil.

The International Monetary Fund has made clear warnings to the countries in the Gulf: Diversify, diversify and diversify starting now as the oil that made many Gulf countries extremely wealthy is a diminishing resource. The IMF’s 2017 report predicts the worst growth rate for the region since the global financial collapse in 2008.

Unless the people in the Gulf countries plan to go back to a simpler nomadic life in the dessert or return to shepherding like their ancestors. A good example of wealth mismanagement is Saudi Arabia which has been the largest oil producer in the region but has had a perennial issue with unemployment.

According to recent studies Saudi Arabia might run out of oil to export by 2030. Many Saudis feel that they wasted oil wealth in luxury and opulence and didn't make use of it in scientific advances that will benefit the country in the coming generations.

A “half oil plan” was introduced by scientist studying the effects of not oil dependent economies of the future. They continue, If we do nothing for efficiency or to invest in alternatives to oil the United States alone will consume 22 million barrels of oil every day by 2035. If the half oil plans is implemented the USA will be using 11 million fewer barrels of oil every single day by 2035. Moreover, this plan will help prevent the worst effects of climate change; it will save to the tune of $1.5 billion per day that would otherwise be spent on oil, and cut toxic air pollution to save the planet. The half oil plan can be expanded to include implementing higher efficiencies in “our buildings, and our planes, trains, and ships can save some 2.5 million barrels of oil per day.”

Also, an economic argument can be made that relies on a carbon tax. This tax can correct market failures and make the economy more efficient. One study from Tufts University, economist Gilbert Metcalf estimated that a “$15 per ton tax on CO2 emissions that rises over time would reduce greenhouse gas emissions by 14 percent,”

Although a carbon tax is not a welcome idea to US energy companies and new concept for the U.S. government, it already has been implemented in several European countries, Australia and three Canadian provinces. “California recently initiated a cap-and-trade system, which auctions carbon permits to companies and functions much like a tax.” Many carbon tax proponents admit that a carbon tax isn’t perfect but when considering the alternatives, it has an enormous amount of benefits to offer.

What is the Definition of Fair Trade?

Fair trade is one of the most burning issues dragging economic integration in the world. Achieving fair trade requires that nation agree and enforce what is taking too long to incorporate into the current WTO framework.

· Regional trade blocs like MERCOSUR , ASEAN, OATUU and others need to embrace international standards. UNCATAD is the international agency leading the way for collecting trade data on imposed tariff measures that cover most countries and can be freely disseminated.

· A burning issue in the markets today, is the lack of transparency on trade regulations by country. “Drawer” regulations that are made on the fly at border crossings impose a hidden cost on trade specially, in underdeveloped countries.

· In Africa, many exporters lose sometimes half of their potential export earnings because European Union regulations are different from the international standards set by the International Organization for Standardization. By adopting international standards of global best practices in trade should result in the promotion of sustainable development while decreasing negative impact on the environment.

· Adopting standard rules avoids the burden of red tape imposed by each country’s regulatory regime. The rules and guidelines are already available on the issue and embedded in WTO and OECD rules but the overall application of these set principles is in many cases missing.

· Procedural requirements at border crossing need to have technical assistance and training of law enforcers so that countries join together and accepted the rules of trade in order to streamline each country’s regulatory regimes and thus, reduce procedural obstacles.

Trust issues

Public health and environmental protection, has been the backlash against globalization and a growing influence of elites protecting their own turf to the detriment of everyone else. Moreover, just by simply reducing barriers or reducing restrictions to trade does not have linear correlation specially, when the mix includes influential politicians or well-connected elites. At the end of the day countries must evaluate if non-tariff measures to trade like subsidies are legitimate or be used as trade offs to bring about trade fairness and efficiency. Only then adopting these complementary policies, can individuals and the markets have credibility and fairness and become the vibrant drivers of jobs and incomes.

“The World Economic Forum’s E15 Initiative has emphasized the importance of efficient global trade in fostering economic growth. The scale and complexity of the modern, globalized, system is made clear by visualizations such as these, of global shipping.”

TTIP is a trade agreement currently being negotiated by the US and EU that would bring tariffs and regulatory barriers to minimum levels to transatlantic trade and investment. The goal is that each side of the Atlantic seaboard will give access to their companies to each other markets with standardized regulations and procedures.

It has been reported that the US and EU countries together represent $1 trillion in trade every year. This agreement would cover 45% of global GDP, making the TTIP the world’s largest trade agreement which would include pharmaceuticals, automotive, energy, finance, chemicals, clothing and food and drink among others.

The Internet is taking trade to a new dimension into what is now becoming push button trade in a fast pace environment which requires factories close to the markets and new distribution cyber platforms. The trend is provoking changes in the market and corporations are adapting by using multi-layer global platforms and supply chains. The age of digital transactions is here to stay in a fast economy that in the past tended to centralize for better management and quality control. But cloud computing is changing all that generating new level of cooperation between producers the supply chain and the ultimate consumer.

Big data management is surging not only as a new field in science but in commerce as well as giants like Alibaba, eBay, Amazon and the such apply this new technology not only as a point of sale but also to determine consumer preferences and tastes as new “learning” algorithms enter the market like autonomous driving cars.

This expanding global markets has been aided by the lowering cost of shipping transportation for long distance given new markets access to otherwise unreachable opportunity for smaller manufacturers and cottage industries providing consumers with more choices and prices.

Adapting and retooling is the new rule of global markets, re-engineering the supply chain, big data analysis and Internet cloud platforms are bringing new realities to trade beyond Bretton Woods and WTO. As a result, uninformed politicians like Trump should smell the coffee and bring the US to the new dawn of reality as international trade evolves without the intervention of hard headed and ignorant politicians.

What is meant by data management life cycle in the context of enterprise IT and value chain 

The life cycle of data varies with the needs of a particular enterprise: For instance the analysis of a flight data recorder’s life cycle ends with the one flight. But if a comparative analysis needs to be completed among several flights over a period of time the life cycle becomes flexible. In general, data life cycle management (DLM) is a policy-based for a particular enterprise as it manages the flow of an information system goes through its life cycle starting with recording the data points, classification, analysis and storage for its usefulness until time dictates the data has become obsolete and is deleted.

How is data integrated into the IT value chain is again particular to each enterprise’s needs. In general it can be defined as a series of activities that an enterprise performs in order to deliver its product or service. Either a product or a service must move through a chain of events before is delivered adding value at each step of the process. The value chain framework is designed for each activity in particular but in general is divided in two main categories:

1- Primary actions for production or delivery of goods or services for a business to be and function in a socio-economic environment

2- Supporting activities like logistics or financial needs which assist in providing efficiency of the primary activities as the they move through the value chain.

Quality control over data is increasingly important for organizations that make data driven decisions. However, several measures are essential for these activities as the expansion and management of data flow become challenging.

Presently, many organizations have an increasing demand for high quality data as the bar rises for analysis techniques and the availability of quality data, is demanded in order to comply with new regulations and legislation. However, this demand for quality data also implies quality sourcing not limited to the data residing in the organization’s IT system

High data quality is also demanded for the improvement of organizational performance, logistics support, growth, competitive advantage and compliance with the growing need of data collection regulations.

Various sectors of the economy are subject to stricter regulations like medical devices, financial services, telecommunication, pharmaceutical, consumer markets and others that collect personal information that are the subject of privacy legislation.

Data complexity and growth is also a challenge for an organization where it is unclear the understanding of data quality and that data management is an IT department responsibility rather than a business side responsibility.

Unfamiliarity with collection methods within the organization such as robotic operated processes, especially if data is transported and transformed as it moves through the chain. Particularly when transformations are complex, it can require an IT specialist to determine which data elements belong to one another.

The inherited complexity of tracking data increases in companies with multipolar IT environments caused by many legacy systems that need improvement or replacement from its existing reporting flow. A known factor is that the more computing is required within a flow, the more complicated it is to capture and interpret its meaning