Here are initial comments by Knoll followed by Bayoubuzz’s e-mailed questions and Kroll’s response:
The World Trade Center of New Orleans wishes to express its sincere condolences for the people of Japan as they reconstruct their lives in the wake of last week’s devastating series of earthquakes and tsunamis. We will continue to use all of our resources to provide assistance to Japan during this difficult time.
Q: How are the events in Japan impacting international trade?
A: Understanding that Japan is the world’s third-largest economy, there are numerous ways, in both the short and long term, that the earthquake, tsunami, and nuclear energy crises will impact international trade and economic development.
The first has already been seen in the price of oil. Japan is the world’s third-largest consumer of oil, behind the U.S. and China, and the second-largest net importer of crude oil, according to the U.S. Department of Energy. Crude oil futures are trading lower, indicating that concerns about the Middle East are being trumped by the belief that demand in Japan will shrink in the coming months. If oil prices continue to drop or remain relatively stable, this will make it less costly to move goods around the globe. It may also improve the purchasing power of U.S. consumers.
However, there could be a long-term impact on energy prices if there is a shift away from the use of nuclear power worldwide, which could spell higher costs for oil.
Looking at Japan’s economy, exports are likely to slow for a time. Automobiles are Japan’s number one export to the United States, so consumers could expect longer delivery times or unavailability of vehicles such as the Toyota Prius.
There is also likely to be upward pressure on the prices of consumer electronics in the U.S. due to shortages of components made in Japan, such as flash memory. There may also be disruptions in the supply of parts for devices like the Apple iPhone and iPad.
Q: How do you believe it will affect Louisiana’s trade position?
A: Japan was Louisiana’s number two export destination last year, behind only China. Exports to Japan totaled $3.1 billion. On the surface, this would seem to be cause for concern if there is a significant slowing of Japanese economic growth. However, Louisiana’s chief exports to Japan are agricultural products ($2.68 billion in 2010), and primarily grain.
The U.S. Grains Council received initial reports that the earthquake and subsequent tsunami may have caused significant damage to many of Japan’s agricultural facilities and production areas.
While the extent of the damage is not yet known, it will likely impact grain trade. The initial expectation is that Japanese demand for grain will rise, which would benefit the Louisiana and U.S. economies. Again, there should be awareness that increased demand will also cause upward pressure on consumer prices.
Q: For those involved in international trade, what advice do you have as it relates to the Japanese situation?
A: The World Trade Center, the U.S. Export Assistance Center in New Orleans, the Southeastern U.S. Trade Association, and our partner companies such as freight forwarders and customs brokers can all provide help to Louisiana businesses who are involved in importing and exporting with Japan. The U.S. Commercial Service in Japan can also assist companies who would like to do business in Japan, such as supplying rebuilding or clean-up materials.
WTCNO will continue to monitor events in Japan. We encourage you to visit our website and contact us with your questions. We can be reached via e-mail at [email protected], or via telephone at (504) 529-1601.