Trade

US backing for world currency stuns markets, US dollar falls

US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is “quite open” to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.

Amid Discord, WTO Members Explore Compromises on Environmental Goods

Doha Round proposals for expedited liberalisation for trade in environmental goods risk destroying infant green technology industries in developing countries without benefiting the environment, Brazil’s ambassador to the WTO argued recently.

Roberto Azevedo, Brazil’s WTO envoy, argued that negotiations under the Doha mandate for the reduction or elimination of tariff and non-tariff barriers to environmental goods and services (EGS) should include agricultural goods of particular interest to developing countries – not just industrial products.

Arguing that the chief objective of the negotiations was to deliver a ‘triple-win’ of environmental, developmental, and trade benefits, he stressed that the EGS were “not market access negotiations nor should they be turned into super sectoral market access negotiations,” in a reference to the sector-specific liberalisation initiatives that are part of the standard non-agricultural market access (NAMA) talks.

In his intervention in the Committee on Trade and Environment – special (negotiating) session, Azevedo underscored the need for an outcome that offers measurable environmental gains along with improved trade opportunities for developing countries. He criticised discussions in the committee for failing to “shed any light on how the environmental and developmental dimensions of the Doha mandate are to be fulfilled through tariff reductions [and/or] elimination on a list of goods of interest to some members only.”

The crux of Azevedo’s critique is not unique to Brazil. Several other developing countries, such as India, China, Argentina, and South Africa, have been critical of a list of 153 environmental goods submitted for prospective tariff elimination by a group of mostly industrialized countries in 2007. They argue that many of the items on the list have non-environmental purposes, and in general coincide with the export interests of industrial countries more than with any objective environmental measure.

Despite the contentious backdrop, WTO members have been engaging in simulation exercises to see how tariffs on the proposed list of 153 environmental goods might be reduced as part of a Doha Round agreement. China last week presented the results for three major industrialised members – the United States, the EU and Japan – and three major developing countries, China, India and Brazil.

Simulations reveal potential tariff cuts for specific EGs

China’s Wuhan Steel plans listing of overseas mines

SHANGHAI, March 8 (Reuters) – China’s third-largest steelmaker, Wuhan Iron and Steel Group Corp (WISCO), may list its overseas iron ore assets as part of its next five-year plan, the China Securities Journal reported on Tuesday.

Wuhan Steel is focused on developing its recently acquired iron ore mines to bring them to full production over the next three to five years and may package these assets into a holding vehicle for listing, WISCO’s President Deng Qilin told the paper in an interview.

Deng said it was still too early to determine where the assets would be listed, or if they would be injected into its current listed subsidiary, Wuhan Steel and Iron Ore Ltd (600005.SS: Quote), on the Shanghai exchange.

Deng also said he has not ruled out making further acquisitions, but that the firm’s main priority now was to develop mines recently acquired in Canada, Brazil, Australia, Liberia and Madagascar.

The Chinese steelmaker, which stepped up overseas acquisitions during the financial crisis, currently imports more than 85 percent of its iron ore needs, but aims to be able to supply all its demand in three to five years to end its reliance on foreign suppliers such as Rio Tinto (RIO.AX: Quote)(RIO.L: Quote), BHP Billiton (BHP.AX: Quote)(BLT.L: Quote) and Vale (VALE5.SA: Quote).

Deng complained on Saturday that China continued to have no say in setting global iron ore prices despite being the world’s biggest consumer of the key steelmaking ingredient.

China is furiously consuming iron ore and other commodities to meet industrial and export demand as the country grows at a breakneck pace. The demand has sent commodities prices soaring, leading China to play an increasingly strategic role in the acquisition and development of resource projects.
Continue with the Article here at Rueters  (Reporting by Fayen Wong, editing by Jonathan Hopfner)

China Blocks U.S. Call for WTO Rulings on Credit Cards, Steel

China blocked a request by the U.S. for World Trade Organization judges to rule on the legality of Chinese anti-dumping duties on steel products and restrictions on companies that process credit-card payments.

The U.S. made the request today in Geneva, five months after asking for consultations with China aimed at resolving the two disputes. China can’t block a second request, likely to come in March.

The U.S. is protesting limits on payment processing by companies such as Visa Inc. and MasterCard Inc. because China favors a monopoly provider, China UnionPay Data Co. China prohibits foreign companies from issuing their own bank cards denominated in its currency, building networks to support such cards or processing interbank point-of-sale transactions.

Foreign banks must “co-brand” with Chinese operators to supply these services and execute payments through UnionPay. The U.S. Trade Representative’s office says the rules run counter to the pledge China made when it joined the WTO in 2001 to open up its credit- and debit-card markets to foreign processing companies by the end of 2006.

The U.S. also wants WTO judges to rule on the legality of dumping duties China imposed on more than $200 million of American-made steel products. The complaint involves dumping and countervailing duties China has placed on flat-rolled steel, which is produced by companies such as West Chester, Ohio-based AK Steel Holding Corp., the third-largest U.S. steelmaker.

China, the world’s biggest steel market, said in 2009 it would apply anti-dumping and subsidy levies of as much as 25 percent on flat-rolled electrical steel products, used in transformers, reactors and electric machines. China said the duties aim to counter below-cost or “dumped” imports of the goods.

The U.S. says China didn’t follow WTO procedures by failing to disclose the facts underlying its legal conclusions and not explaining its calculations.

Read rest of the article here on Bloomberg

EU trade chief:Russia to cut timber duty when joins WTO

Russia will cut tariffs on timber sales to the European Union by two thirds as soon as it joins the World Trade Organization, which could be by the end of the year, Europe’s trade chief said on Friday.

The 153 members of the global trade body were likely to accept Russia’s accession by the summer, Trade Commissioner Karel De Gucht told reporters.

“If that comes through they could become a member by the end of this year, which means roughly speaking the duty (on timber) will diminish by two thirds,” he said.

“”This will be put into practice at the moment of the entry into WTO,” he said.

Cuts in timber duties will boost margins for European paper and pulp makers such as UPM (UPM1V.HE), Stora Enso (STERV.HE) and M-Real (MRLBV.HE).

De Gucht met Finnish Foreign Minister Paavo Vayrynen in Helsinki after talks in Brussels on Thursday with Russian ministers.

Russia’s export duties on timber are currently set at about 15 percent. Moscow agreed late last year to make cuts to the duties and rail freight fees, prompting the EU to drop its long-standing veto to Russia’s WTO membership.

Russia is the largest economy remaining outside the WTO. The WTO estimates membership will boost Russia’s GDP 11 percent in the long term.

Read the rest of this article at Reuters

Patrick Low:Global Trade Growth May Ease by Half This Year

Global trade growth may decline by as much as half this year compared with 2010 as commerce returns to a “normal trend,” said Patrick Low, chief economist at the World Trade Organization.

“If we have 13.5 percent for last year, this year will be somewhat half of that growth” because trade expanded at such a fast past in 2010 after the slowdown of 2009, Low said in an interview today in Hong Kong. “You may call it a slowdown, but I would say it’s a return to the normal trend.”

The WTO predicted in September that global trade would expand 13.5 percent in 2010, fueled by growth in Asia led by China and India, after falling the most since World War II in 2009 amid the financial crisis.

Global trade growth showed some signs of moderation in the fourth quarter, Low said. Higher oil prices and food costs pose risks to trade because they “tend to slow growth,” he said.

A new food crisis is on our plates

The world has entered a new food crisis. Prices have surged, contributing to unrest in the Arab world. The president of the World Bank, the former US deputy secretary of state Bob Zoellick, last week warned that global food prices are at “dangerous levels.”

It’s part two of the crisis that started in 2007-08, which led to food riots in 18 countries. Prices in 2008 reached their highest since 1845, in inflation-adjusted terms, according to the Economist magazine’s index, before slumping. The crisis seemed to have solved itself.

But last month, global food prices actually broke the record, according to the experts at the UN’s Food and Agriculture Organisation. Over the past year the price of corn has risen 52 per cent, wheat 49 per cent and soybeans 28 per cent.

Advertisement: Story continues below Rising food prices have pushed an extra 44 million people into poverty in the past seven months, according to the World Bank. It’s even being felt in the rich world. In Australia, the opposition hopes to capitalise on it: “The year will begin and end with Australian families facing an ever-rising cost of living,” the Liberal Party’s Joe Hockey said in a speech last week.

Alarmed at spiking food prices, a score of countries, including big food suppliers such as Russia and Ukraine, have banned food exports to make sure they can feed their own people first.

This has provoked further alarm. Britain’s environment minister, Caroline Spelman, argued last month that it should be illegal for countries to halt food exports, even in an emergency.

At the same time, the British government’s chief scientific officer, Sir John Beddington, declared that “the case for urgent action in the global food system is now compelling”.

The Group of Twenty major economic powers, which includes Australia, agreed. But meeting in Paris on the weekend, the G20 finance ministers notably failed to do anything about it.

Thomas Malthus warned in 1798 that growing population would starve humanity. The world population at that time? About 800 million. Two centuries later, it’s about 6.9 billion. The world population is now growing at about 210,000 a day.

After being proved wrong for so long, is Malthus finally about to be vindicated?

Not at all. The world is today already producing enough food to feed 12 billion people, according to the FAO. There are only problems of price, supply and distribution.

Humanity managed to cheat Malthus through ingenuity and good policy. Improved farming techniques and developments in fertilisers, transport and plant genetics revolutionised food production.

In the so-called Green Revolution of the mid-20th century, India introduced high-yielding rice varieties that trebled the volume of rice produced per acre of land while halving its cost.

If there is so much food available, why are prices soaring and why is one-sixth of humanity permanently hungry?

There are old and new problems. The most glaring of the old include protectionism in the richest countries. The European Union spends about $365 billion every year subsidising uneconomic farmers and shutting out food exports. The US and Japan are almost as bad.

This tactic, which has distorted the world food system, would be ruled illegal in any other area of global trade, except that the rich countries, while successfully dismantling barriers to trade in manufactures and services, have kept the corrupt farm trade system off the agenda of the World Trade Organisation.

Then there is poverty: 1 billion people who subsist on $1 a day cannot afford to buy food.

There are three new problems. One is the “financialisation” of food. Big investors have come to treat the major traded commodities – including food – as instruments of portfolio investment and speculation.

Read the rest of this article at the Brisbane Times website

Canada seeks WTO review of EU ban on seal products

(Reuters) – Canada asked the World Trade Organization Friday to set up a panel to resolve its dispute with the European Union over the EU’s ban on trade in seal products, Fisheries Minister Gail Shea said.

The European Union closed its borders to seal products last year, when an EU court allowed the ban to proceed even though a Canadian legal challenge was still in progress.

“By moving ahead with this World Trade Organization challenge, we stand behind the thousands of Canadians in coastal and northern communities who depend on the seal harvest to provide a livelihood for their families,” Shea said.

Shea said the challenge would not have a bearing on ongoing negotiations on a Canada-EU free trade agreement, which is expected to affect billions of dollars worth of trade.

Canada’s seal trade with Europe was worth only several millions of dollars a year.

“Both sides have agreed that this issue will be resolved outside the free-trade agreement process, and will be resolved at the WTO,” Shea told reporters outside the House of Commons.

“What Gail Shea is not taking into account is the fact that the European Parliament has to ratify any free-trade agreement,” reacted Rebecca Aldworth, activist at Human Society International Canada.

Aldworth said the European Parliament passed the ban in the first place and takes it very seriously.

EU trade spokesman John Clancy said the European Commission would vigorously defend the law.

“This particular legislation has been carefully crafted to ensure respect for all of our international obligations, while at the same time responding to the concerns expressed by EU citizens in respect of seal products from certain hunts,” he said in Brussels.

Dispute panels normally take 12 to 18 months to deliberate. The request for a panel comes after the failure of two sets of formal consultations to resolve the issue.

Shea said the panel would help take the emotion out of a ban that she said had “no basis in fact or in science.” Animals rights activists said the harvest, which involves shooting or clubbing the animals to death, is inhumane.

“Europeans have made it clear they don’t want seal products. Even if Canada wins, it’s not like Europeans are going to go on a stampede to buy seal pelts,” said Adrian Hiel, spokesman in Brussels for the International Fund for Animal Welfare.

But the issue is a live one in Canadian domestic politics in the Atlantic regions where sealing takes place, and Shea said regardless of the cost of the challenge it was a matter of principle.

Her announcement came as Conservative Prime Minister Stephen Harper was touring Newfoundland and Labrador, where many sealers live. The Conservatives won no seats in that province in the last election in 2009 and are hoping to break through next time.

WTO: Chinese commodity export restrictions are unfair

The WTO is to issue a preliminary report on Friday that concludes China has no right to impose export restrictions on nine raw materials, the Wall Street Journal reported. Many of the industrial ingredients concerned are vital in the production of steel. The restrictions, in the form of quotas, license requirements and other measures, have caused increasing friction in China’s trade relations. The case is not directly related to the sensitive rare earths’ export issue, but a victory in this raw-materials filing could lead to a new US complaint on rare earths, trade analysts said. This is because the ruling will indicate whether the WTO agrees with China’s general assertion that export restrictions are necessary to protect the environment. The final report will be released in April, at which point China can appeal. Should that the appeal fail, the country must remove the restrictions or potentially face sanctions

US:Doha trade talks finally dealing with substance

Feb 17 – An intensive week of talks among key trading powers was constructive and the long-running Doha negotiations have finally started to deal with matters of substance, the U.S. ambassador to the World Trade Organization said on Thursday.

“My sense is that we’re finally starting to do the things we need to do, which is grapple with the really hard issues,” U.S. envoy Michael Punke told Reuters after a week of meetings among 11 major WTO members including the United States.

“We’re in a mode right now where we’re talking about substance.”
Original article on Reuters
(Reporting by Jonathan Lynn; Editing by Stephanie Nebehay)