WTO Trade On Hold Till Incumbent Leaves
As if being responsible for the Iraq war isn't enough, George Bush gets another kick in the groin.
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World trade talks aimed at lifting millions out of poverty and dismantling tariffs across the globe are unlikely to be revived until a new president is in the White House, experts said.
A failure by the US and India to agree on how developing countries can raise tariffs on agricultural imports was at the heart of the breakdown of nine days of emergency talks at the World Trade Organisation (WTO) late on Tuesday.
Pascal Lamy, the director general of the WTO, admitted yesterday that the "dust will need to settle" and urged members to come up with new solutions that will breathe new life into the talks.
However, with no date yet set for another meeting, many of the key negotiators are likely to have left the top table by the time the US - a key player in the talks - has a new leader. America's own trade representative, Susan Schwab, is set to leave in January, Peter Mandelson's time as European Trade Commissioner ends in November and Kamal Nath, India's commerce minister, departs in May.
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Stephen Lewis, an economist at Monument Securities, said that "some WTO members are indicating that discussions will resume, but it seems unrealistic to expect much progress ahead of the inauguration of the new US President".
While those involved in the intense negotiations reacted with dismay and alarm to the collapse, many economists were sceptical that the breakdown would have any immediate impact on the level of trade and the health of the world economy.
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The WTO already expects that the growth in the volume of world trade will ease to 4.5pc this year from an average of 6pc a year over the past decade but pinned the blame on the crisis in financial markets rather than the world's existing tariff system.
As the talks headed into their final sessions, agreement had been reached on 18 items of a 20-point agenda, but the stumbling block came when the US could not agree with India and China on 'safeguard clauses'. They were mechanisms that would have allowed poorer nations to slap emergency tariffs on imports if they suddenly jumped to unmanageable levels. The US accused India and China of trying to shield their markets from foreign competition.
And while Keith Rockwell, a spokesman for the WTO, said that all the organisation's members yesterday had expressed a willingness to build on the progress, the blame game among the key negotiators suggests they may not be reassembling soon.
China's Commerce Minister, Chen Deming, claimed that failure would add to "a world economic downturn, serious inflation and imminent financial risks".
Ms Schwab argued that the US was not prepared to sign up to a mechanism that "could be abused and set back the trading system for decades".
CBI director-general Richard Lambert put the blame at India's door and described it as "a lost opportunity for the global economy".
"The deal that was on the table offered promise for developing and developed countries alike," he said.
The crumbling of the talks after seven years may spur a wave of bilateral negotiations between countries. Since the Uruguay round of talks finished in 1994, the number of bilateral free-trade acts has more than doubled from 84 and the WTO expects it to hit 400 within two years.
"If Doha doesn't work, bilateral deals matter even more," said Jagdish Bhagwati of the Council on Foreign Relations.
Labels: Collapse, US, WTO
McCain says Russia should be booted from G8, rebukes China
The US kept quiet on China's handling of the Tibetian Protesters. Everyone has been fine and dandy with the emerging China power due mostly to economic reasons, the French aside. I'm surprised that McCain has actually spoken out against them.
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Arizona Sen. John McCain called for free trade throughout the Western Hemisphere, accusing China of trying to exclude the U.S. from foreign markets.
During a foreign policy and international economics speech in Los Angeles, he also said Russia should be booted from the G8, the group of eight largest industrialized and democratic economies, while India and Brazil should be added. Other G8 members are the U.S., Japan, United Kingdom, France, Germany, Italy and Canada
The Arizona senator cited Russia's purported cyber attacks against businesses and others in the Baltic state of Estonia.
McCain said China should take part in international boycotts of the Sudan and Burma and criticized the Asian country for sometimes looking to exclude the U.S. from foreign markets.
"China could bolster its claim that it is peacefully rising by being more transparent about its significant military buildup, by working with the world to isolate pariah states such as Burma, Sudan and Zimbabwe, and by ceasing its efforts to establish regional forums and economic arrangements designed to exclude America from Asia," McCain said in his speech.
China, which enjoys a huge trade imbalance with the U.S., is Arizona's third largest export market.
Technorati Tags: G8, China, Russia, McCain and US.
Labels: China, G8, McCain, Russia, US
IMF Admits 'weak' US is Close to Recession
The International Monetary Fund released a most belated and obvious statement citing the already taking place recession. How can we trust the IMF to lift countries out of poverty?
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The International Monetary Fund (IMF) today added to the growing chorus of concern the US is heading for a full-blown slowdown, stating that the world's largest economy "remains very weak, certainly close to a possible recession."
A leaked draft copy of the IMF's world economic outlook, the agency confirmed US growth would reach 1.5 per cent over 2008.
The forecast, which could still be changed before the report is released in April 9, is in contrast to the Organization for Economic Cooperation and Development (OECD) US gross domestic product (GDP) would grow by 0.1 percent in the first three months of this year, and then slow to zero expansion in the second quarter.
Earlier this week, the IMF said the Federal Reserve’s emergency measures to calm turmoil in the credit market, including a three-quarters of a percentage point cut in interest rates, were “appropriate”.
The IMF's outlook report is expected to confirm global growth at 4.2 per cent in 2008, slightly above the IMF’s last forecast in January of 4.1 per cent but well below its 2007 forcecast of 4.9 per cent.
ANSA, an Italian News Agency, states that the IMF study backs the European Central Bank's (ECB) hardline stance in not cutting interest rates.
It said: “The ECB is rightly holding interest rates stable for now,” adding that the ECB “should be ready to respond in a flexible manner if downward risks to growth and inflation growth intensify.”
IMF First Deputy Managing Director, John Lipsky, has said in recent weeks that growth in the US is sluggish but it is not in recession.
US Treasury Secretary, Henry Paulson, this week described the country’s economy as being in“sharp decline." This is the closest he has come to conceding an election-year recession.
Technorati Tags: IMF, Recession, America and US.
Labels: America, IMF, Recession, US
Slow down in US affects Southeast Asia Most
Southeast Asia will face stiffer export competition from China and likely bear the brunt of any impact in Asia from a major economic slowdown in the United States, an IMF official said Tuesday.
A recession in the United States, anticipated by some economists as a result of a current housing slump and related credit crunch, will obviously lead to a cutback in exports by Asia's rapidly-growing economies, led by China.
Based on a "rough rule of thumb," for about a one percentage point decline in US economic growth, there could be a "half to a full percent decline in Asian growth, depending upon what the effects are beyond the United States," said Steven Dunaway, deputy director of the International Monetary Fund's Asia and Pacific department.
"There will be much more of an impact in Southeast Asia," which faces direct competition from China in terms of a number of export products, he said.
"Those (Southeast Asian) countries will all face a much tougher time with the slowdown in the United States and probably some extra competition from China," he said at a forum on the Chinese economy at the Woodrow Wilson International Center for Scholars in Washington.
Dunaway said Asia's exporting nations were "going to be competing for a piece of a smaller pie" if US imports shrunk. He raised the possibility of China slashing prices to remain competitive.
"If the Chinese themselves face a more difficult environment, there will be some tendency probably at least to hold prices if not cut prices," he said.
This would "affect profit margins and put some additional competitive pressure on Southeast Asian firms as well as firms in other countries competing with Chinese companies," he said.
Labor-intensive manufacturing already appears to have given a competitive edge to China in trade and investments at the expense of export-driven Southeast Asian countries such as Thailand, Indonesia, Vietnam, and the Philippines, economists say.
But rapid Chinese economic growth in recent years has also resulted in increased imports of raw materials and intermediate inputs from Southeast Asia, helping propel growth in the region, they say.
Amid the competition for exports to the United States, China and Southeast Asia are also opening up their economies to each other through a free trade agreement covering a total of nearly two billion people.
IMF head Dominique Strauss-Kahn warned in Paris Monday that the global economic situation in the wake of a US slowdown was "serious" and could impact the world's emerging economies.
"Fortunately emerging nations continue to have fairly strong growth and to drive growth worldwide. But it is not impossible that even in emerging nations it could have a certain effect, that growth could be weaker than expected."
Dunaway said any decline in growth in Asian economies as a result of a US slowdown would depend on policy responses.
"Most of the countries are in positions where they can ease monetary policy, they can ease fiscal policy, so they can offset some of the decline coming out of the US," he said.
There is one school of thought that a US slowdown would provide a much needed breather for China, which was stepping up efforts to cool inflation to prevent the world's fastest growing major economy from overheating.
"There may also be some impact with respect to FDI (foreign direct investment) that might slow (in China)," Dunaway said.
But Beijing would probably raise government spending, particularly on infrastructure investment, to keep the economy chugging along at a growth rate of nine to 10 percent, he added.
Technorati Tags: IMF, US and SouthEastAsia.
Labels: IMF, South East Asia, US
US Loses Fight in Cotton Subsidies
The US could face billions of dollars in trade sanctions for failing to scrap illegal subsidies paid to American cotton growers.
The World Trade Organisation ruling is a victory for Brazil's cotton industry and for West African states which say the payments harmed their producers.
Brazil hailed the ruling, saying US subsidies had hit world prices, hurting farmers in Brazil and elsewhere.
But US officials believe the payments comply with international trade rules.
Washington is expected to make an appeal against the ruling.
Roberto Azevedo, the Brazilian foreign ministry's trade chief, said that the three-member WTO compliance panel had upheld the findings of its interim report released in July.
"It wasn't changed," he told the Associated Press (AP) news agency just after the ruling was released confidentially to US and Brazilian officials in Geneva.
The office of the US Trade Representative in Washington confirmed the news, saying the US was "very disappointed".
Brazil has reserved the right to impose annual sanctions of up to $4bn on the United States but would probably seek less in retaliatory measures because the US has removed some of the offending subsidies, AP notes.
Oxfam official Gawain Kripke told the BBC that the ruling would also have a beneficial impact on African cotton farmers, if Brazil is successful in reducing American cotton subsidies.
But if they are not then small countries, like Mali or Burkina Faso, wouldn't really hurt American producers very much.
"The truth is that it takes a bigger country to really make the US comply, because the market has to be big enough that the US is worried about it," he said.
Technorati Tags: US, Cotton and Brazil.
Labels: Brazil, Cotton, US
Iran Urges IMF to Probe U.S. Bank Sanction
Iran has reportedly asked the International Monetary Fund (IMF) to determine whether U.S. sanctions against its Bank Saderat violate IMF rules on foreign exchange restrictions. According to Bahrain-based Gulf Daily News, IMF staff and Iranian finance officials discussed the effects of the U.S. action against Bank Saderat during annual economic consultations last November.
IMF documents published on Thursday reportedly detailed the talks, in which Iranian authorities expressed concern that the bank had been unable to issue letters of credit in dollars since the U.S. sanctions took effect.
The bank officials said the measure was also affecting the bank's available deposits.
The Iranian officials complained that several other banks in Europe and Asia with activities in the United States had cut off Saderat from operating in other currencies.
"The [Iranian] authorities have sent a note requesting fund management to ascertain whether the measure adopted by the U.S. Treasury constitutes an exchange restriction subject to fund approval," the IMF said.
Washington has been intensifying its campaign to mount economic pressures on Iran. Last month, the U.S. targeted Iranian state-owned Bank Sepah, which has branches in London, Paris, Rome and Frankfurt.
Technorati Tags: IMF, US and Iran.
Labels: IMF, Iran, US
