Robert Krieger President of

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1 California Meets Panama, the Global Trade Connection Presented by Robert Krieger President of Engineering solutions to your logistics needs.

2 Panama The Hong Kong of South America? How using Panama can help your bottom line. Robert Krieger President

3 Logistics Hub for South America Free Trade Zone Tariff Shift Capability Lower Bottom line Costs

4 Logistics Hub for South America Many South American Countries have restrictions for tariffs on Chinese products. Free Trade Zone Items can be imported as components & assembled as finished products. =

5 Business Alliance for Secure Commerce What is BASC BASC (Business Alliance for Secure Commerce), is a business-customs partnership created to promote safe international trade in cooperation with governments and international organizations. World BASC Organization is constituted as a non-profit organization under the laws of the state of Delaware (USA). WBO is led by the private sector whose mission is to secure and facilitate international trade by the establishment and administration of global security standards and procedures applied to the supply chain of international trade. Global business organization that are committed to working together on common purpose of strengthening international trade through the implementation of internationally recognized security standards and procedures may join this Organization.

6 BASC Member Survey Economic Impact of FTA and Canal Expansion on Country June 20, 2012 Below is a summary of a recent survey of BASC member companies, representing all sectors of the Panamanian economy (brokerage, freight forwarding, warehousing, transportation, free trade zone, maritime and airport terminals, exporters and importer). BASC members overwhelmingly believe, along with 89% of executives of companies such as Walgreens, Target, Nike, Sears, Walmart, that the canal expansion and FTA will add value for their supply chain worldwide; Panama s strategic location as a major shipping route also enhances the importance of the Agreement. Approximately two-thirds of the Panama Canal s annual transits are bound to or from U.S. ports. Therefore, the maritime industry as one of fastest growing sectors in Panama stands to be the greatest beneficiary of FTA. This sector, led by COEL, the industry s umbrella council representing 15 major chambers and associations, and which includes BASC, believes that Panama s location, along with the FTA and canal expansion, create the conditions that add value to containerized cargo and open the possibility of establishing Panama as the undisputed logistics hub in the Americas, and thereby growing manufacturing and distribution opportunities. For example, the Maersk line has established its regional headquarters in Panama and they believe that Panama is developing a comprehensive logistics hub for the Americas;

7 Security is also a major concern of the business and international logistics chain. This requires coordinated action between national customs authority and the private sector, creating the security mechanisms needed to maximize the economic potential of the FTA and the canal expansion. Customs modernization is also needed to provide a "nonintrusive inspection strategy" looking for alternatives to the inspection costs and avoid the economic burden on the private sector, for this would have competitiveness implications. With this in mind, on June 13, Thomas Winkowski, Deputy Commissioner CBP visited BASC companies joined by Gloria Moreno, Panama s Customs Director, to discuss how private sector and customs can work together to address the obstacles to trade facilitation and maximize the benefits of the FTA; U.S. industrial goods currently face an average tariff of 7 percent in Panama, with some tariffs as high as 81 percent. U.S. agricultural goods face an average tariff of 15 percent, with some tariffs as high as 260 percent; The Agreement guarantees access to Panama s $20.6 billion services market, including in priority areas such as financial, telecommunications, computer, distribution, express delivery, energy, environmental, and professional services; Over 87 percent of U.S. exports of consumer and industrial products to Panama will become duty-free immediately, with remaining tariffs phased out over ten years. U.S. products that will gain immediate duty-free access include information technology equipment, agricultural and construction equipment, aircraft and parts, medical and scientific equipment, environmental products, pharmaceuticals, fertilizers, and agrochemicals;

8 FTA will benefit U.S. agricultural exports. Nearly 56 percent of current trade will receive immediate duty-free treatment, with most of the remaining tariffs to be eliminated within 15 years. Panama will immediately eliminate duties on high-quality beef, frozen turkeys, sorghum, soybeans, soybean meal, crude soybean and corn oil, almost all fruit and fruit products, wheat, peanuts, whey, cotton, and many processed products. The Agreement also provides duty-free access for specified volumes of standard grade beef cuts, chicken leg quarters, pork, corn, rice, and dairy products through tariff rate quotas; In addition to the ongoing $5.25 billion Panama Canal expansion project, the Government of Panama has identified almost $10 billion in other significant infrastructure projects. Construction equipment and infrastructure machinery used in such projects accounted for $280 million in U.S. exports to Panama in Tariffs for this sector average 5 percent with almost all being eliminated upon entry into force; Bearing in mind that there are other ports competing in the region with Panama, such as Kingston, Cartagena and Caucedo, among others, that are working to improve competitiveness, the Panama business community, led by BASC and the American Chamber of Commerce and COEL (maritime industry) and government have pledged to work together to strengthen the country s development and growth potential brought about by the FTA as well as the Panama expansion.

9 Two major Sea Ports of Panama are Colon & Balboa Ports

10 Map of China

11 From Panama you can easily ship to North America and South America!

12 Freight Costs to Panama From United States Ocean Freight Rate From Los Angeles to Colon, Panama 40 container General Store Merchandise Based on American President Lines 40 container $ / Pier pass $ Ocean Freight Rate From Long Beach to Balboa, Panama General Cargo 20 container $ container $ Based on Maersk service transit time approx. 15 days. Air Freight Rates From Los Angeles to Panama City, Panama Known shipper per kg rate Min $ $ Starting at $2.60/kg & up Fuel surcharge $1.16 per kg Security.13 per kg Screening.15 per kg Only one customs airport Panama City, Panama Main air carriers IB Iberia Known shipper QO AeroMexico Known shipper FX Fed Ex unknown shipper

13 Thank you for your attention. If you have any questions about international shipping, please feel free to give us a call. Engineering solutions to your logistics needs Tel Fax rkrieger@nkinc.com