CANADA	Ms. Nancy Ward, Director Mr. Gary Daley, Trade Specialist Ms. Monica Ospina, Trade Specialist Council of Great Lakes Governors Trade Office 121 Richmond St. West, #301 Toronto, ON M5H 2K1  CANADA Tel: (416) 368-6956 Fax: (416) 368-2547 E-mail: trade@cglg-canada.com Website: http://www.cglg-canada.com*

Canada is the United States' most important trade partner with 23% of U.S. merchandise exports going to Canada and 18% of the goods the U.S. imports coming from Canada. Each day over $U.S. 1billion in goods and services cross the border. The Ambassador Bridge border crossing alone sees more trade volume than the total trade between the United States and Japan.

Emphasis on the North American Free Trade agreement, border issues, and revised procedures and funding will continue to open the Canadian market to the United States at an accelerated pace. Since 1998, there has been an overall increase of 29% in exports from Wisconsin to Canada. The extensive relationship between the United States and Canada has helped to maintain a large number of jobs on both sides of the border and illustrates the fact that these two countries have the largest bilateral exchange in the world. Since September 11th, increased cooperation on border and security issues has drawn the U.S. and Canadian markets even closer.

In 2001, Canada was the 5th largest trader in the world, having been replaced by China at 4th place. One out of every three jobs in Canada is linked to international trade.

Provincial economies experienced widespread improvements in 2004. Alberta, due mainly to its booming energy sector, lead the country with a 4% growth rate. The province is also the first to be completely debt free as of 2004. Echoing the strength of the province is the growth in demand for oil extraction equipment. Other industry sectors that enjoy co Clarkesmith Partnersntinued growth are plastics and chemicals, medical equipment and pharmaceutical products, general industrial equipment and broadcasting and audio visual equipment. Economic Development Canada expects the national economy to expand by 3.3% in 2005.

As for the Canadian dollar, it was expected to stabilize around 85 U.S. cents with further sustained appreciation unlikely. However, in the third quarter of 2004, the dollar experienced another round of appreciation. It is currently trading at 81 US cents. Over the next few years, Canadian productivity growth is expected to pick up relative to the United States, introducing a slow and gradual long-term uptrend in the Canadian dollar. At present the stronger dollar is squeezing the profit margins of Canada's exporters. In order to reduce costs and restore margins, Canadian companies will have to invest in labour-saving machinery and equipment designed to boost productivity. It is this type of defensive investment that will raise overall productivity levels in Canada, and subsequently contribute to sustaining the dollar's value over the long term.

A stronger Canadian dollar makes this easier to accomplish given that Canadian firms purchase a large share of machinery and equipment from the United States. Moreover, the Canadian government is proposing a new tax law that would allow companies to depreciate capital equipment much more aggressively. Such a move would encourage businesses to spend more on machinery and equipment and, consequently, provide a boost to productivity. In the first two quarters of 2004, spending on capital equipment rose 6.5% with a large percentage of that equipment coming from the United States.

Canadian firms are also showing great interest in strategic partnerships with allies within the NAFTA region. Canada's business practices, attitudes, and conditions are closer to those in the Midwest than are the business practices of any other country in the world. The geographical proximity reduces time and expense travelling to the market. NAFTA also offers tariff-free benefits. Add the advantages of congruent time zones, a straightforward regulatory regime, and a common language in much of Canada, and doing business in Canada simply makes good sense.

The Canadian Trade Office was opened in 1990, and is jointly funded by the states of Wisconsin, Indiana and Pennsylvania. Our office offers the best possible assistance to new and established companies wishing to pursue export opportunities in the Canadian market. Director Nancy Ward has worked with the Canadian Trade Office in various roles for the last sevenyears. She is heavily involved in the local trade community, holding board positions for the International Trade Club of Toronto and the Organization of Women in International Trade-Toronto. Prior to working with the office, Nancy held positions in education and sales & marketing. Nancy completed an honors degree in Political Science and a postgraduate designation in International Business. 

MEXICO

Mr. Vince Lencioni, Director Mr. Marcos Hernandez Rivas, Sub Director Ms. Norma Lopez, Senior Trade Specialist Ms. Maria Fernanda Ortega, Trade Specialist Mr. Juan Carlos Vazquez, Trade Specialist Ms. Celeste Santiesteban, Office Administrator Mr. Mauricio Reynoso, Receptionist/Administrative Assistant LGA Consulting/Wisconsin Trade Office-Mexico Cerro de los Campanas #3, Suite 102 Col. San Andres Atenco Tlalnepantla, Estado de Mexico 54040 MEXICO Tel: (52) (555) 378-3840 or 378-3890 Fax: (52) (555) 370-9048 E-mail: vlencioni@lgaconsulting.com Website: www.lgaconsulting.com*

The economic slowdown that has affected the US and the world since the beginning of the 21st century seems to be truly turning around in 2004. Mexican industry, which has strong ties with American industry, has shown clear signs of recovery in the first quarter of this year. The Mexican GDP is expected to increase by 2.9% this year and 3.6% next year. While these figures are low relative to the high growth rates experienced in the mid 1990s, the '90s reflected a rebound after several bad years. Current figures are more accurate absolute growth indicators.

In 2004, the Construction sector is expected to expand dynamically, by 4% this year and 5% next year. Maquiladora and automotive sectors experienced their highest export figures in three years, demonstrating that these sectors are dynamic once again. Industrial Manufacturing, Agriculture, and Service growth will be strong as well, growing from 2 to 3% this year and 3 to 4% next year. While Maquiladora, General Manufacturing, and Electricity/Gas Infrastructure growth are not at the forefront of GDP growth this year, they will grow by more than 2% this year and 2.5% next year. During the last few years, Mexican consumer spending and an increase in consumer lending fueled the Mexican economy. However, Mexican intermediary good imports grew by 10% and capital goods grew for the first time in three years, by 3%, in the first quarter of 2004. In general and across the board, 2004 will represent a reactivation of the Mexican economy after several years of low or no growth thanks mostly to global economic factors and conditions.

While Mexican export figures for both oil and manufactured products are up significantly, Mexican imports also grew by 7% during the first quarter of 2004 and should continue to expand. Likewise, while US exports to Mexico remained the same in 2003, in the first quarter of 2004 they were up in every important manufacturing sector and overall by 10%. Different from the US average, Wisconsin exports were up 10% in 2003. In the first quarter of 2004, Wisconsin exports were even more dynamic than the US average, growing at 21% and close to matching Wisconsin export growth to China (24%) during this same period. Wisconsin Year end 2003 export figures indicate that Mexico was the #3 market for Wisconsin exports (almost $800 million US) behind Canada and Japan. In the first quarter of 2004, Mexico passed Japan and China as the #2 destination for Wisconsin and US exports respectively. While exports to China continue to be very dynamic, it is important to note that they still represent less than 2/3 of the total Wisconsin exports to Mexico. Likewise, exports to the other top five countries in Latin America represent less than 1/3 of Wisconsin's total exports to Mexico.

During the slow growth years of the beginning of this century, Mexico avoided the populist temptation to artificially stimulate the domestic economy with inflationary spending and tactics and as a result, it is in a great position to take advantage of the growth that is now here and on the horizon. The Mexican peso stayed stable through out the slow down, having devalued less than 14% against the dollar during the last four years. The peso is currently at 11.2 pesos to 1 US dollar. During the first decade of this century, Inflation in Mexico has been and will continue to be between 4.5 and 5.5% while interest rates have fallen and continue to fall significantly. Meanwhile, Mexico's international reserves are at record levels, above $60 billion dollars. If not in 2004, then by 2005, considerable lending to Mexican business should begin as well as a direct result of these macroeconomic indicators, strong growth in the economy, and a newly reformed banking sector, which is now 90% foreign, owned and managed. Even though Mexico now has a free trade agreement with Europe, it is Asia rather than Europe that is the United States' major competitor in Mexico. While US exports to Mexico fell 7.25% in 2001, Wisconsin exports to Mexico grew modestly (up 1.4%). Even with this modest growth, five of the top ten Wisconsin export sectors showed double digit growth in Mexico (3rd Quarter 2001 figures): Paper Products (#3 sector, up 17%), Vehicles (#4 sector, up 23%), Base Metal Products (up 24%), Starches (up 33%), and Beverages (up 75%). During the second half of 2002, it is hoped that US exports to Mexico will begin to grow dynamically once again.

Governor Doyle led a trade mission to Mexico City and Guadalajara in March 2005.  Click here to view photos from the mission.

The Wisconsin Department of Commerce has been represented in Mexico by Mr. Vincent Lencioni since it opened in 1994. Previously, he was sub-Director of International Commerce and Investment for the American Chamber of Commerce of Mexico, the largest foreign American Chamber of Commerce in the World. Mr. Lencioni is also a Mexican attorney.

BRAZIL	Ms. Magda Völker, Director & Chief Contact Ms. Claudia Tomaselli, Director Ms. Vânia Zulatto, Director  Council of Great Lakes Governors Trade Office Alameda dos Arapanés, 725 - 172 A 04524-001 - São Paulo, SP BRAZIL Phone: (55) (11) 3061-2127 or 5549-9430 Fax: (55) (11) 3061-2127 E-mail: tvz@tvzinternational.com.br Website: www.tvzinternational.com.br or www.tvzinternational.com

Brazil is the world’s fifth largest country, extending over half the surface area of South America (8.5 million square kilometers). The country comprises 40% of all of Latin America and has the largest GDP in the region - approximately U$ 605.6 billion.  Brazil is slightly larger than the continental United States. With the largest population in Latin America (approximately 186 million inhabitants), it reflects a unique blend of African, European, Asian, and indigenous heritages. Brazil has built one of the most diverse societies on earth, in which many cultures and creeds coexist in harmony. Despite its vast size, Brazil is predominantly an urban nation, with 81% of the total population living in urban areas. It boasts a diversified, modern industrial infrastructure employing sophisticated technology to produce top-quality goods that are exported all over the world.

Since the implementation of the Real Plan in 1994, net flows of direct foreign investment have jumped ten-fold, from US $2.2 billion in 1994 to over $17 billion just from the United States in 2004.  It is estimated that Brazil attracted $15 billion in in investments from the United States in 2005. In the period 1995-97 cumulative GDP growth was 17%, an average of 4% per year, while per capita income average growth was 2.6%. The increase of industrial productivity, which averaged 7% a year in the 1990’s, was very important to ensuring sustained growth.

Brazil has a highly advanced industrial sector that includes automobiles, steel, aircraft (Embraer ranks among the top in world technology), petrochemicals, computers, pulp and paper, food processing, plastic, biotechnology, to name the most important. A special note should be made of Brazil's agribusiness, one of the most developed and dynamic in the world. The agricultural sector is highly advanced with heavy use of state-of-the-art machinery and computer software systems. Brazil ranks #1 globally in the production of coffee, sugar cane, and oranges, passion-fruit, papaya. It is #2 in soybeans, poultry and beef.

Brazil is a world leader in renewable energy technology. A large number of raw materials have been studied, from tallow to over 40 kinds of oleaginous plants like castor plant, soy beans, peanuts, sunflowers, palm and babassu palm to name the most important. President Lula da Silva administration’s mission is to make bio-diesel the second largest energy source in Brazil, following hydroelectric power. The Brazilian bio-diesel program goal is to reduce the country's dependence on light crude oil and diesel imports. The program also aims at reducing pollution in urban centers, and at providing incentives to cooperative family farming.

The United States is Brazil's major trade partner. Brazil ended 2006 ranking as the 13th largest export market for the United States. U.S. exports to Brazil increased approximately 25% and reached approximately $19.23 billion. About one quarter of Brazil's exports are destined to the United Sates. Brazil is constantly investing in technology, innovation, competitiveness and productivity, offering market opportunities for Wisconsin exporters in a variety of sectors.  Brazil is also one of the three major U.S. foreign direct investment destinations.

Brazil is the Latin America's largest economy, and grew 2.3% in 2005 and approximately 5,2 % in 2004, the best level since 1994, and is expected to expand by 3.5 percent in 2006.   Sustained growth, coupled with booming exports, healthy external accounts, moderate inflation, decreasing unemployment, and reductions in the debt-to-GDP ratio. President Lula and his economic team have implemented prudent fiscal and monetary policies and have pursued necessary microeconomic reforms.

The Council of Great Lakes Governors established a trade office in Brazil on July 1, 1997. The office is a cooperative effort of the state governments of Indiana, New York, Ohio, and Wisconsin to promote exports to goods and services. The Council recently hired Tomaselli, Völker & Zulatto Consultoria firm to represent the four states in Brazil. The office is run by three foreign trade experts: Claudia Tomaselli, Magda Völker, and Vânia Zulatto. All three were associated with the US Foreign Commercial Service in São Paulo and have extensive experience working with US exporters. Ms. Völker will be the primary contact for the Wisconsin and Great Lakes companies looking for assistance in Brazil. 

EUROPE	Ms. Kara Smith, Director Ms. Kate Clarke, Director Clarkesmith International Wagenaarweg 2 2597 LN The Hague The NETHERLANDS Tel: (608) 467-1610 or (31) (0) 65157 8037 E-mail: kara@sanddrivers.com or kate@sanddrivers.com

There are several definitions of Europe. Geographically, it is a region of multiple countries and even more languages. Cultural differences, business practices, and consumer traits vary much more from one part of Europe to another than they do among regions within the United States. The 25 current members of the European Union share many governmental institutions and economic features, but only 12 use the same currency, the euro.

The 10 newest member states, that joined the European Union on May 1, 2004 (the eight east European countries Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary and Slovenia and two Mediterranean island States Cyprus and Malta) increased the EU’s population from 380 million to over 450 million, doubled its territory to 2.5 million square miles, and nearly doubled its official languages from 11 to 20. In comparison, the United States has a population of around 290 million with a territory of 3.7 million square miles and English as its common language. EU enlargement has shifted Europe's economic centre of gravity to the east.

Accession negotiations continue with Bulgaria and Romania, which the EU hopes to welcome in 2007. Turkey is also a candidate country. A fourth country, Croatia, was accepted as a candidate by the EU in June 2004. Its entry date will depend on the speed of its membership negotiations. Another western Balkan country, the Former Yugoslav Republic (FYR) of Macedonia submitted an application in March 2004. Applying is the first step towards being accepted as a candidate country.

Average GDP growth rate for the EU-25 in 2005 is projected at 2.3% and 2.4% in 2006. Inflation is expected to fall to 2.1% in 2005 (1.9% in 2006). Employment growth in the EU-25 is expected to accelerate to 0.7% in 2005 and 0.8% in 2006 (in the euro zone to 0.9%). The unemployment rate is expected to remain stable at the level 9.1% in 2005 and decline to 8.8% in 2006. Annual percentage change in export of goods and services in 2005 is expected to be 6.5% and import of goods and services 6.6%.

The EU and the US share a thriving and mutually beneficial economic partnership. Their trade and investment relationship is the largest in the world defining the shape of the global economy as a whole. With the enlargement the EU market has become an even more important source and destination of transatlantic trade and investment for the US and has boosted cross-border business, creating economies of scale, increasing Europe’s competitiveness and leverage on world markets, and providing new opportunities for US exporters and investors.

Since the new member states have joined the EU’s trade policy regime, a single set of trade rules and of administrative and customs procedures applies right across the enlarged Union. External tariffs in the new member states have come down, so that, in most cases, US exporters benefit from lower tariffs in their trade with the new Member States. All this provides enhanced access to the markets of the new member states. Conditions for investment and trade were improved.

In 2003, exports of EU goods to the US amounted to € 220 billion (22.6% of total EU exports), while imports from the US amounted to € 151 billion (15.3% of total EU imports). In services, EU imports from the US were € 109 billion (35.45 % of world flows) and EU exports to the US amounted to €115 (35.08 % of world flows) in 2003. Wisconsin's exports to EU25 were USD 2.51 billion representing 21.8% of total exports in 2003.

While Europe is Wisconsin's largest international sales and investment market after Canada, it is becoming a more and more challenging market. More than 450 million people live within the current borders of the European Union. European markets, the Western countries in particular, have well developed distribution systems and sophisticated consumers. Some of the toughest competitors for Wisconsin manufactured goods are European. However, the continuous rise in the value of the euro in the last year has created a huge competitive advantage for US exporters. The euro has gained about 6 percent against the dollar in 2003. The drop in the dollar can mean higher revenues for US exporters as European sales translate into more dollars back home.

Kara Smith and Kate Clarke are the Managing Directors of Clarkesmith International, based in The Hague, The Netherlands, with affiliate offices in Germany, the UK, France, Belgium, Switzerland, Spain, Italy, and Denmark. Kara is American and has worked in international trade and business development for 15 years. Kate, an Irish citizen, has worked in local economic development and marketing in both Europe and South America, helping companies to enter and navigate European markets.

China became a member of the WTO in 2001 and is currently in the process of completing a seven-year transitional period. In those five years the Chinese economy has shown exceptional economic growth and increased its integration with the global economy. Many American companies have benefited from Chinese economic growth, as evidenced by rapid and sustained increases in U.S. exports to China.  Shipments by U.S. firms to China grew by 20 percent in 2005.  Last year, China surpassed the U.K. to become America’s fourth largest export market.  It had been #9 in 2001.

China’s domestic economy has continued its robust growth. According to China’s National Bureau of Statistics, the country’s economy grew by 9.8 percent in 2005. Total retail sales rose 13 percent last year and are expected to continue to rise rapidly in 2006 as a result of increased consumer credit, expansion of the retail sector, and rising incomes in rural areas.  Foreign currency reserves exceeded US$800 billion by yearend. Partially due to a bumper harvest, inflation in China fell to an estimated 1.3 percent at the end of 2005. China is a country of many regional markets from the wealthy coastal provinces to the poorer inland provinces. The coastal provinces consume the bulk of China's imports.  Wealthy entrepreneurs from this region are frequently the developers of Western China’s infrastructure and real estate development.  These valuable coastal contacts are valuable allies in creating opportunities for Wisconsin exporters in Western China as well.  China is currently planning 22 airports in the Western China region alone.

From Chinese statistics, associations, and office enquiries we have seen growing demand in the following product categories; environmental technologies, airport technologies, emergency equipment, mining equipment, mine safety equipment, and water treatment products.  There is also continuing strong growth in medical equipment, building materials, lumber, and telecommunications products and components.  We anticipate that with China's increasing compliance with international trade practices and an improving legal environment that it will become easier to enter and become successful in a number of sectors previously restricted.

The Council of Great Lakes Governors China Trade Office was opened in October 2003. The Trade Office is managed by Paul Swenson, a native of Hudson, Wisconsin. Paul has over fifteen years of business experience in China and was a member of the U.S. Commercial Service in Shanghai where he assisted U.S. exporters to China.