Purchasing and Supply Chain Management by W.C. Benton Chapter Ten Global Sourcing
Nov 15, 2014
Purchasing and Supply Chain Managementby W.C. Benton
Chapter TenGlobal Sourcing
10-2
Learning Objectives
1. To learn what factors/forces increase foreign trade
2. To learn the basics of global sourcing.
3. To learn how total costs are determined.
4. To understand the hidden costs of global sourcing.
10-3
Learning Objectives
5. To understand the quantitative and qualitative aspects of global sourcing.
6. To learn how to critically analyze various globalsourcing alternatives.
7. To learn how to effectively use foreign trade zones.
8. To learn how to negotiate in different countries.
10-4
Global Outsourcing• As an example, outsourcing is currently perceived as
key to automotive suppliers’ survival, and is being driven by consumers in the price-pressured global market.
• Even as different cohorts take different positions on the overall merit of global outsourcing, the reports and discussions nevertheless have one theme in common.
10-5
Global Outsourcing• The focus has been on a single aspect of outsourcing:
the migration of jobs, and, in particular, the outsourcing of white-collar jobs.
• A few countries, notably India and China, are often targeted as the ones that are displacing American workers by offering cheap labor.
• The intense attention on the outflow of work to overseas locations has generated fear about which jobs or professions will be outsourced next
10-6
Costs of Global Sourcing• The costs of global sourcing include some of the same
costs found in domestic sourcing; there are also costs that are different.
• These costs are grouped into the following categories: administrative, foreign, and common.
• Exclusively foreign costs are those that would not be incurred if a domestic source were found.
• Examples of these costs are duty charges, customs fees, import fees, and currency exchange costs.
10-7
Costs of Global Sourcing
• Ocean and air freight could be mentioned, but these are part of the transportation costs of a good that would be incurred from any source.
• Many of these exclusively foreign costs are established by governments and are very difficult to avoid.
• Finally, there are those costs that are common to both global and domestic sourcing.
10-8
Common Costs
• Direct labor and materials costs, lead-time costs, transportation costs, and inventory costs are a part of both domestic and offshore sourcing.
• Transportation costs, inventory costs, and lead-time costs tend to be higher when sourcing globally.
• On the other hand, labor and materials costs are often lower for firms in developing countries.
10-9
Currency Exchange Rates• One of the most important variables to consider is the
exchange rate of currencies.• Since predicting the fluctuation in currency markets is
extremely difficult, foreign purchases may actually cost more or less than expected depending on the length of the contract.
10-10
Exchange Rates• Depending on the performance and strength of the
dollar, goods can cost American firms different amounts from what’s expected.
• When the dollar is weak, the final cost of goods tends to be relatively more than originally agreed upon.
• When the dollar has a strong performance over the life of a contract, a firm can realize savings through the exchange rates.
10-11
Organizational and Behavioral Issues
• Firms can run into problems when global sourcing is introduced into their organizations.
• The resistance of the firm’s buyers to learn to evaluate global sources is the reason for most of the problems. An attitude of “if it can’ be bought here in the U.S.A., it can’t be bought anywhere” can be seen with some purchasing departments.
10-12
Organizational and Behavioral Issues
• Many buyers simply do not want to learn about the other countries with whom they will be dealing.
• There are many ethical considerations that you must learn in order to be successful. Many companies hire brokers to do their sourcing.
• Lead times and delivery times can create problems also. Longer times can increase inventory needs and drive up carrying costs.
• The extended lead time also might push back the date at which a firm is able to introduce new products to the market.
10-13
Global Sourcing Issues• A third problem companies face in global sourcing is
communication. Many times there are delays and confusion in translations.
• Sending documents via couriers or the postal service is often time consuming and creates problems of obsolescence, more confusion, and late or even lost deliveries.
• There has been an increase in the use of the Internet to eliminate the time delay and confusion.
10-14
Global Sourcing Issues• Global sourcing is the trend of the future.
• Supply management is becoming very important to the survival of both American and offshore firms.
• In certain industries, using foreign suppliers can reduce total costs.
• Firms in the apparel and electronics industries that do not use global sourcing could find themselves out of business when competing with firms that source globally.
• Global sourcing is by no way expanded to completely replace domestic sources; however, it is a way to meet a competitor’s challenge and achieve better value for goods all over the world.
10-15
Global Sourcing as a Strategic Sourcing Option
• Global sourcing is extremely complicated from a quantitative and qualitative viewpoint. The total cost of sourcing is perhaps the most important variable.
• Of course, the costs vary from firm to firm since the
appropriate qualitative components of offshore sourcing must be considered.
10-16
Strategic Sourcing• For instance, the associated qualitative risk profiles of (1) the
impact of national interest, (2) the ethical consequences of “sweat shop” labor, and (3) hazardous working conditions in some foreign countries must be evaluated.
• The quantitative costs are (1) exchange rate uncertainties, (2) direct costs of importation (transportation costs, transaction costs), and (3) indirect importation costs (utilization of fixed assets, pipeline inventories, managerial time, engineering support).
• Moreover, the general uncertainty associated with the business cycle makes offshore sourcing a risky proposition.
10-17
10-18
10-19
Risk VS. Reward• The advantages of sourcing offshore must be weighed against
the associated risk.
• This may seem easy enough to accomplish, but there are some not-so-obvious costs that must be considered.
• The decision process is complicated by additional uncertainty associated with offshore sourcing.
• The buying professional who is considering offshore sourcing must be prepared to fully analyze both the qualitative and quantitative factors..
10-20
Global Risk IssuesSome of these issues are distance, communication, time value of money, quality issues, pipeline problems, staffing issues, and competition.
1. Distance. The distance between the buying and selling firm is significant in terms of time zones and physical location. Internet capabilities usually provide a partial solution.
However, face-to-face contact is preferred for some sensitive issues. IBM requires the buyer to visit each supplier on a routine basis. Trips offshore are more expensive and time consuming.
2. Communication. Communication can be described as the glue that holds together a sourcing relationship.
Without effective communication, global transactions between buying and selling firms would be futile. In addition to being absolutely necessary for the completion of the transaction, communication may also reduce or eliminate uncertainty within the relationship.
10-21
Global Risk Issues3. Time value of money. Since most offshore deals require the use of a “letter
of credit,” the buying firm loses the use of funds when the letter is established. Suppose the shipments arrive two weeks after the letter of credit is established. For a $1.5 million purchase, the buying firm bears a $60,000 (.02 × 1.5 million × 2 weeks) opportunity cost expense.
4. Quality issues. The buying firm must spend the necessary time to correctly specify and articulate quality expectations. Then evaluation makes sure that the sample is from a legitimate production run. Prototypes/lab samples should not be analyzed.
Remember, the buying firm is interested in the actual production on the
entire batch. In some cases, the buying firm should inspect statistical process control charts to assess projected defect rates and the inspection methods. The buyer should renegotiate the agreement ultimately if the process is out of control. These quality issues can easily increase costs of offshore sourcing.
10-22
Global Risk Issues5. Pipeline inventory. Pipeline inventory issues will always occur when a third
party (the shipper) is involved. The problems become pronounced when offshore sourcing is used.
Consequently, pipeline inventory problems can sometimes be next to impossible to
resolve. It is almost impossible to put specific costs on problems associated with pipeline inventory. The pipeline inventory costs are truly a hidden cost that must be considered when evaluating offshore quotes.
6. Staffing. If a buying firm is to be effective with an offshore sourcing strategy, it must either hire experts or develop specialists that are assigned to offshore suppliers. Ideally, these individuals must have experience in purchasing management, quality control, and basic accounting. This cost also must be considered in the evaluation process.
7. The impact of increased competition. The above direct and indirect costs tend to add unexpected costs to purchased items. However, the significant benefits associated with offshore sourcing enable the buying firm to gain leverage over domestic suppliers. Domestic firms are well aware that some firms are considering offshore firms in their long-term strategies.
10-23
Protectionism • However, in a
survey of U.S. port operators and carriers, 77 percent said they favored a reduction in U.S. protectionist legislation.
• Figure 10.1 shows a distinct trend of decreasing tariff rates for goods coming into this country.
10-24
There are many industries and products that are currently protected by such legislation. Although the legal aspects of international sourcing are beyond the scope of this chapter, two examples are given below:
1. The EU (European Union) has been limited to a market share of 7 percent of U.S. steel consumption until just recently when 10 years of protectionist legislation expired.
• The U.S. government also has set certain limits on machine tool imports to protect that industry. In the past 12 months, we have seen increased public outcry for further protectionism legislation from within the United States.
2 According to the 1991 Trade Policy Review of the European Communities,
export controls and restrictions may be imposed for a range of specific purposes including national security; protection of life, health, and the environment; and the preservation of national treasures.
• The community also readily regulates the importation and exportation of dangerous chemicals. The governing regulation is CR Number 1734/88. Authorizations for the import and export of chemicals are still administered by the individual member states.
10-25
Importance of Negotiations
• When negotiating a purchase agreement, there are certain general attributes in dealing with various offshore suppliers.
• An attempt will be made to explain the nuances of negotiating with the people of various Western European countries and China.
10-26
United KingdomUnited Kingdom
• Typical trading partners include the United States, Germany, and other countries in the European Union (EU). Exports include machinery, transportation equipment, petroleum, and other manufactured goods.
• We can’t assume that the English and American businesses operate in the same manner.
• English executives may appear polite and friendly, but they can be tough and ruthless when appropriate.
Negotiations
10-27
• Most of the executives you encounter will have attended a university, and 50 percent hold doctorates. The title “Dr.” commands instant respect. Germans tend to be specialists in one industry with multiple company experiences.
• Due to technical expertise, German negotiators are extremely cautious. The opponent should be well prepared on technical details.
The Federal The Federal Republic Republic
of Germanyof GermanyNegotiations
10-28
• When doing business in France, you will often go through an intermediary contact whose credentials are impeccable. Your choice of intermediary is important.
• The best contacts are French people who have ties with the person you want to contact—through family status, money, or schooling.
• Schooling is the most important aspect because the elite of French management are linked by having attended prestigious schools.
FranceFrance Negotiations
10-29
• China is now a major player in the world economy and accounts for more than 6 percent of world trade. This is remarkable for a developing economy. There has been strong import growth, both for processing trade and for domestic consumption.
• The major problems when doing business in China are the language barrier, business practices, and a fluid and diverse legal system.
• A well-specified procurement strategy is a basic requirement when buying from China.
ChinaChina Negotiations
10-30
U.S. Export Administration Regulations
Any business or individual wanting to import goods into the United States will have to work with the Export Administration (EA) of the U.S. Department of Commerce. For complete details, consult the U.S. Export
Administration Regulations (EAR). Several steps that you will need to be aware of the following:
1. Determine whether the item (s) in question is subject to the exclusive jurisdiction of another Federal agency.
2. Determine if the technology or software is publicly available.
3. For an item in a foreign country, the origin of the item must be determined.
4. For items made in a foreign country, determine whether it is a controlled item in the US.
5. Determine whether the foreign made item is subject to general prohibition.
10-31
Foreign Trade Zones• The FTC Act of 1934 created
trade zones to encourage exports from foreign countries.
• The act allowed for the storage
of goods within the U.S. boundaries without payment until the goods passed to the buying company
• The foreign trade zones (FTZs) are operated by the U.S. customs service. When goods enter an FTZ, the goods are classified, inspected, and placed in storage.
10-32
The European Union (EU): Overview and What It Means To Purchasing
• The creation of a unified European Union will result in both advantages and problems for the purchasing professional.
• The proposed changes must be considered for future transactions with any of the 14 nations that could be adopting the rules proposed by the EU White Paper to the Council of Ministers.
• Today the EU consists of 25 member countries. Since the Single European Act (SEA) in 1987, 279 proposals have been brought forth to eliminate most trade barriers; approximately 90 percent of the 279 proposals are now law.
10-33
The EU• The formulation of the European Union will lead to the elimination of
customs formalities between countries. There also will be tariff reductions in 4,000 categories of manufactured goods as well as other schedules for reducing trade barriers.
• In the past, a great deal of cost has been added to products and components sourced in Europe to cover these multiple custom costs and tariff fees. The lowering of these costs will once again result in lower prices offered to purchasers.
• The formation of one European Economic Community has resulted in a single standard for buying goods. This single market also will result in a single value-added tax (VAT), not a different one for each country in which the part is produced.
• Currently, these VAT taxes fluctuate from a low level of 12 percent to some as high as 25 percent.
10-34
Countertrade • Countertrade is the exchange of goods for goods in full or
partial payment of a sales transaction. Progressive companies must participate in countertrade or risk of losing market share.
• Counter trade appears to be flourishing in the current climate, largely because of the recent changes that have occurred in the international arms market since the end of the Cold War.
• These changes have affected both the volume of the trade and also the means through which it is financed. There are number of countertrade arrangements. Some of the more popular forms of counter trade are given
10-35
Some of the more popular forms of counter trade are:
1. Offsets are commercial compensation practices required as a condition of purchase of goods and services. – Offsets would include specific
forms such as co-production, licensed production, sub-contractor production, and overseas investment or technology transfer.
– Offsets can be direct or indirect. Examples of direct offsets include the manufacture of German designed naval patrol vessels in South Korean.
2. Indirect offsets occur where products or services transferred in an offset arrangement are unrelated to the specific products referred to in the export agreement. – In many developing countries
where the industrial base and infrastructure are poorly developed, offsets are more likely to be of an indirect nature.
– As an example, selling military aircraft to a developing country and making arrangements to provide aerospace education for some of the citizens of the developing country.
10-36
3. Coproduction: This form of agreement involves
the purchaser being given a share in the manufacture of a foreign designed product. – Coproduction is encouraged
by recipients because of the employment and technology transfer implications. An example would be the coproduction of the British Harrier aircraft by McDonnell Douglas in the United States.
– Tier I suppliers gain commercial advantages under this form of arrangement when there is a high degree of technology transfer.
4. Licensed production: Licensed production is when the recipient obtains a share of the production work for its own order. – The agreement may cover the
assembly of an entire product or service. The agreement may be phased so that the local share of production rises over time.
– As an example, the terms of the 1991 South Korean $5.2 billion purchase of F-16 fighter aircraft from General Dynamics 12 aircraft were to be bought from the US plant, a further 36 are to be assembled in South Korea before, in the final phase, South Korea will produce parts and sub-systems for a further 72 aircraft.
10-37
5. Sub-contractor production: In this case a prime contractor substitutes an existing supplier with one located in the buying country. – As an example, Boeing
placed sub-contracts with several British firms in order to sell the E-3 AWACS aircraft to the United Kingdom.
– In some cases this led to the elimination of US sub-contractors from Boeing's network of suppliers.
6. Technology transfer: Technology transfers occur as a result of an offset are research and development agreements conducted in the buying country. – Technology transfer can
also be commitments for foreign direct investment made by the selling firm to establish or expand a subsidiary or joint venture in the buying country.
10-38
7. Barter: The non monetary exchange of goods-for-goods. As an example the so called oil for food program between Iraq and the EU was designed as a barter program. – However, some of the actual
deals involved illegal cash transactions between some United Nation and the Iranian officials.
– Another example is a deal between the UK and Saudi Arabia which included the purchase of military aircraft with associated training and support, civil aircraft, helicopters, naval ships and construction projects is a classic case of barter.
8. Counter-purchase: The seller exchanges products for Compensatory amounts of commodities. – In the context of developing
Countries this normally involves primary commodities.
– Daimler-Chrysler, General Motors and Toyota use counter trade as the method of payment in Argentina.
– They established programs that sell its products in exchange for grain.
– The grain is then traded through an intermediary for dollars and not in the heavily devalued peso.
– It is not as simple as that, the car companies has to negotiate with the intermediaries and the purchaser over not only the quantity of grain, but also its quality, availability and optimum market price on the day of the sale.
Additional Graphics for Chapter 10
10-39
Table 10.1a Top U.S. Trade Partners
Ranked by 2008 U.S. Total Export Value for Goods
10-40
Top U.S.Trade Partners (Exports)
-
50,000
100,000
150,000
200,000
250,000
Can
ada
Mex
ico
Chi
na
Japa
n
Ger
man
y
Uni
ted
King
dom
Net
herlan
ds
Kore
a
Braz
il
Fran
ce
Belg
ium
Sing
apor
e
Taiw
an
Aus
tral
ia
Switz
erla
nd
Hon
g Ko
ng
Indi
a
Uni
ted
Ara
b Em
irat
es
Ital
y
Isra
el
Mal
aysi
a
Ven
ezue
la
Saud
i Ara
bia
Spai
n
Chi
le
Col
ombi
a
Turk
ey
Rus
sia
Thai
land
Irel
and
ASE
AN
EU-2
7
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 - -Country (Rank)
$ m
illio
ns
10-41
Top U.S.Trade Partners (Exports)
- 50,000 100,000 150,000 200,000 250,000
CanadaMexicoChinaJapan
GermanyUnited Kingdom
NetherlandsKoreaBrazil
FranceBelgium
SingaporeTaiwan
AustraliaSwitzerlandHong Kong
IndiaUnited Arab Emirates
ItalyIsrael
MalaysiaVenezuela
Saudi ArabiaSpainChile
ColombiaTurkeyRussia
ThailandIrelandASEANEU-27
12
34
56
78
910
1112
1314
1516
1718
1920
2122
2324
2526
2728
2930
--
Coun
try
(Ran
k)$ millions
2006
2007
2008
10-42
Top U.S.Trade Partners (Exports)
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Can
ada
Mex
ico
Chi
naJa
pan
Ger
man
yU
nite
d Ki
ngdo
mN
ethe
rlan
dsKo
rea
Braz
ilFr
ance
Belg
ium
Sing
apor
eTa
iwan
Aus
tral
iaSw
itzer
land
Hon
g Ko
ngIn
dia
Uni
ted
Ara
b Em
irat
esIt
aly
Isra
elM
alay
sia
Ven
ezue
laSa
udi A
rabi
aSp
ain
Chi
leCol
ombi
aTu
rkey
Rus
sia
Thai
land
Irel
and
ASE
AN
EU-2
7
1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930 - -
% C
hang
e 2006-07 %Change
2007-08 %Change
10-43
Top U.S.Trade Partners (Exports)
-10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
CanadaMexicoChinaJapan
GermanyUnited Kingdom
NetherlandsKoreaBrazil
FranceBelgium
SingaporeTaiwan
AustraliaSwitzerlandHong Kong
IndiaUnited Arab Emirates
ItalyIsrael
MalaysiaVenezuela
Saudi ArabiaSpainChile
ColombiaTurkeyRussia
ThailandIrelandASEANEU-27
12
34
56
78
910
1112
1314
1516
1718
1920
2122
2324
2526
2728
2930
--
% Change
2006-07% Change
2007-08% Change
10-44
Top U.S.Trade Partners (Exports)- 50,000 100,000 150,000 200,000 250,000 300,000 350,000
CanadaMexicoChinaJapan
GermanyUnited Kingdom
NetherlandsKoreaBrazil
FranceBelgium
SingaporeTaiwan
AustraliaSwitzerlandHong Kong
IndiaUnited Arab Emirates
ItalyIsrael
MalaysiaVenezuela
Saudi ArabiaSpainChile
ColombiaTurkeyRussia
ThailandIrelandASEANEU-27
12
34
56
78
910
1112
1314
1516
1718
1920
2122
2324
2526
2728
2930
--
Coun
try
(Ran
k)
$ millions
2006 Exports2007 Exports2008 Exports2006 Imports2007 Imports2008 Imports
10-45
Top U.S.Trade Partners
-10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
CanadaMexicoChinaJapan
GermanyUnited Kingdom
NetherlandsKoreaBrazil
FranceBelgium
SingaporeTaiwan
AustraliaSwitzerlandHong Kong
IndiaUnited Arab Emirates
ItalyIsrael
MalaysiaVenezuela
Saudi ArabiaSpainChile
ColombiaTurkeyRussia
ThailandIrelandASEANEU-27
12
34
56
78
910
1112
1314
1516
1718
1920
2122
2324
2526
2728
2930
--
% Change
2006-07 Export % Change2007-08 Export % Change2006-07 Import % Change2007-08 Import % Change
10-46
Table 10.1b Top U.S. Trade Partners
Ranked by 2008 U.S. Total Import Value for Goods
10-47
Top U.S.Trade Partners (Imports)
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Chi
na
Can
ada
Mex
ico
Japa
n
Ger
man
y
Uni
ted
King
dom
Saud
i Ara
bia
Ven
ezue
la
Kore
a
Fran
ce
Nig
eria
Taiw
an
Ital
y
Irel
and
Mal
aysi
a
Braz
il
Rus
sia
Indi
a
Thai
land
Isra
el
Iraq
Net
herlan
ds
Alg
eria
Ang
ola
Switz
erla
nd
Belg
ium
Sing
apor
e
Indo
nesi
a
Col
ombi
a
Vie
tnam
ASE
AN
EU-2
7
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 - -
Country (Rank)
$ m
illio
ns
2006
2007
2008
10-48
Top U.S.Trade Partners (Imports)
- 50,000 100,000 150,000 200,000 250,000 300,000 350,000
ChinaCanadaMexicoJapan
GermanyUnited Kingdom
Saudi ArabiaVenezuela
KoreaFranceNigeriaTaiwan
ItalyIreland
MalaysiaBrazil
RussiaIndia
ThailandIsraelIraq
NetherlandsAlgeriaAngola
SwitzerlandBelgium
SingaporeIndonesiaColombiaVietnamASEANEU-27
12
34
56
78
910
1112
1314
1516
1718
1920
2122
2324
2526
2728
2930
--
Cou
ntry
(Ran
k)
$ millions
2006
2007
2008
10-49
Top U.S.Trade Partners (Imports)
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Chin
a
Can
ada
Mex
ico
Japan
Ger
man
y
United
Kin
gdom
Sau
di Ara
bia
Ven
ezuel
a
Kore
a
Fran
ce
Nig
eria
Tai
wan
Ital
y
Irel
and
Mal
aysi
a
Bra
zil
Russ
ia
India
Thai
land
Isra
el
Iraq
Net
her
lands
Alg
eria
Angola
Sw
itze
rlan
d
Bel
giu
m
Sin
gap
ore
Indones
ia
Colo
mbia
Vie
tnam
ASEAN
EU
-27
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 - -
% C
hang
e
2006-07 % Change
2007-08 % Change
10-50
Top U.S.Trade Partners (Imports)-20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0%
ChinaCanadaMexicoJapan
GermanyUnited Kingdom
Saudi ArabiaVenezuela
KoreaFranceNigeriaTaiwan
ItalyIreland
MalaysiaBrazil
RussiaIndia
ThailandIsraelIraq
NetherlandsAlgeriaAngola
SwitzerlandBelgium
SingaporeIndonesiaColombiaVietnamASEANEU-27
12
34
56
78
910
1112
1314
1516
1718
1920
2122
2324
2526
2728
2930
--
% Change
2006-07 % Change
2007-08 % Change
10-51
Top U.S.Trade Partners (Imports)- 50,000 100,000 150,000 200,000 250,000 300,000 350,000
China
Canada
Mexico
Japan
Germany
United Kingdom
Saudi Arabia
Venezuela
Korea
France
Nigeria
Taiwan
Italy
Ireland
Malaysia
Brazil
Russia
India
Thailand
Israel
Iraq
Netherlands
Algeria
Angola
Switzerland
Belgium
Singapore
Indonesia
Colombia
Vietnam
ASEAN
EU-27
12
34
56
78
910
1112
1314
1516
1718
1920
2122
2324
2526
2728
2930
--
Coun
try(
Ran
k)
$ millions
2006 Exports
2007 Exports
2008 Exports
2006 Imports
2007 Imports
2008 Imports
10-52
Top U.S.Trade Partners (Imports) -30.0% -10.0% 10.0% 30.0% 50.0% 70.0% 90.0%
ChinaCanadaMexicoJapan
GermanyUnited Kingdom
Saudi ArabiaVenezuela
KoreaFranceNigeriaTaiwan
ItalyIreland
MalaysiaBrazil
RussiaIndia
ThailandIsraelIraq
NetherlandsAlgeriaAngola
SwitzerlandBelgium
SingaporeIndonesiaColombiaVietnamASEANEU-27
12
34
56
78
910
1112
1314
1516
1718
1920
2122
2324
2526
2728
2930
--
% Change
2006-07 Export % Change
2007-08 Export % Change
2006-07 Import % Change
2007-08 Import % Change
10-53
Table 10.2 Exchange Rate Indexes
10-54
0
20
40
60
80
100
120
140
1 USD Inverse (1USD)
1 EUR Inverse (1EUR)
1 GBP
USD
EUR
GBP
JPY
CAD
AUD
CHF
RUB
CNY
ZAR
MXN
10-55
0
20
40
60
80
100
120
140
USD EUR GBP JPY CAD AUD CHF RUB CNY ZAR MXN
1 USD
Inverse (1 USD)
1 EUR
Inverse (1 EUR)
1 GBP
10-56
0
20
40
60
80
100
120
140
USD EUR GBP JPY CAD AUD CHF RUB CNY ZAR MXN
1 USDInverse (1 USD)1 EURInverse (1 EUR)1 GBP
10-57
Table 10.5 Average Tariff Rates for the G-20 Countries and Selected Threshold
Countries
10-58
Average Tariff Rate (%)0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
MoroccoVietnamPakistan
IndiaMalawiMexico
BrazilRepublic of Korea
ArgentinaRussian Federation
TurkeyChina
NorwaySouth Africa
IndonesiaChile
CanadaEuropean Communities
JapanSaudi Arabia
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