Showing posts with label Exporting Activity. Show all posts
Showing posts with label Exporting Activity. Show all posts

Obama Orders Sanctions, US Reaches Out to Moldova, Georgia as Ukraine Crisis Continues

President Barack Obama issued a broad Executive Order today aimed at any and all parties determined to be “responsible for or complicit in” threatening the sovereignty of Ukraine. The full Order names no entity specifically, blocking “all property and interests in property that are in the US, that hereafter come within the US, or that are or hereafter come within the possession or control of any US person (including any foreign branch)” of any party the Treasury and State Departments determines is contributing to the ongoing situation in Ukraine.

Blocking “all property and interests in property” prohibits US companies from making any contribution or provision of funds, goods or services by, to or for the benefit of any person whose property and interests in property are blocked, pursuant to the Order. Since its stipulations are so broadly drawn, the Order could have serious ramifications for US companies with interests in the area, and these entities should immediately review their dealings with customers in the region to avoid running violating the Order.

The sanctions were the latest step taken by the US as it scrambles, with the European Union, to punish the Kremlin's incursion into Ukraine's Crimean peninsula. "This EO is a flexible tool that will allow us to sanction those who are most directly involved in destabilizing Ukraine, including the military intervention in Crimea," said White House Press Secretary Jay Carney, adding that the Order "does not preclude further steps should the situation deteriorate."

Prior to the Order, the US had previously moved to shore up its other trade ties in the region, as Trade Representative Michael Froman reached out to the heads of two former Soviet satellite states that serve as important strategic buffers between Russia and the West. Just before the end of February, Froman met in Washington with Georgian Prime Minister Irakli Garibashvili to discuss the countries' shared interest in increasing bilateral trade and investment and continuing the US-Georgia High-Level Dialogue on Trade and Investment. Then, earlier this week, Froman and Moldova's Prime Minister Iurie Leanc─â opened the meeting of the US-Moldova Joint Commercial Commission, where officials worked to bolster trade between the US and Moldova as Froman confirmed US support for Moldova's efforts to integrate with Europe.

Russia has attempted in the recent past to bring both Georgia and Moldova further into their economic sphere of influence, most recently using flimsy accusations of impurities to ban imports of Moldovan wine last year to punish the country after it signed a free trade agreement with the EU. The West accommodated Moldova after the ban, with the EU reducing tariffs on the country's wine, which serves as the lynchpin of Moldova's agriculture industry, and Secretary Kerry announcing a US trade mission to help Moldovan exporters enter the American market. Froman's attempts to reach out to two countries previously targeted by Russia for potential buffer-state status are no coincidence, particularly as the Kremlin continues to assert itself in Crimea, and the Order, though broad, aims to isolate Russia without negatively affecting the US' strategially-important trade ties in the region.

- Jacob Barron, CICP, NACM staff writer

Energy "Independence" and Exporting Debate on the Horizon

Talk of whether or not the United States’ natural gas holdings are bringing the nation closer to energy independence hasn’t been a true top-headline-grabber to date. That could change though as the push seems to be growing that is calling for the exporting of liquefied natural gas products in the near future as well as proclamations of some type of energy renaissance. However, some analysts believe talk of “independence” is way off the mark even as steps (perhaps baby steps) have been taken.

A bipartisan group of lawmakers including Sens. James Inhofe and Mary Landrieu addressed U.S. Department of Energy Secretary Steven Chu last week in a public letter highlighting the findings of the NERA Economic Consulting Report on natural gas exporting. The lawmakers attacked critics of increased exporting of natural gas and expansion of production amid report findings that it would be in the best economic welfare of the country to do so. They also note that production is expected to well outpace demand as infrastructure needs catch up, meaning price gouging on domestic turf remains somewhat unlikely.

Days later, the American Petroleum Institute – who noted “an energy revolution is underway in the U.S. – rolled out an increased media campaign talking of the job creation benefits of exporting natural gas. Meanwhile, U.S. Energy Information Administration noted the country’s energy intensity, the amount of energy it takes to produce $1’s worth of economic output, continues to drop for a number of reasons. Part of that stems from changes in U.S. energy production and consumption as well as structural economic changes. However, NACM Economist Chris Kuehl, PhD, is among many suggesting that those talking of energy independence should pump the brakes a bit, so to speak.

Kuehl noted in a recent column for FCIB that all the talk of more energy independence, including the boost in domestic oil production, fails to address that the United States still imports huge amounts of oil. He estimated that of the 20 million barrels per day consumed domestically, about 14 million barrels come from international sources. About 25% of that comes directly from the Middle East. That’s only likely to grow as when the economic recovery, long stalled, actually kicks into a higher gear inevitably.

“The U.S. is not energy independent and may never be given the needs of an expanding economy,” said Kuehl. “When the recession still gripped the country, oil consumption was down. But, as the economy recovers, the gap between energy the U.S. can produce and what it needs will widen.”  In short, he estimated the United States is very unlikely to approach anything that even resembles true energy independence any time in the near future.

-Brian Shappell, CBA, NACM staff writer