Trade

WTO to Fault China on Raw-Material Exports

WTO to Fault China on Raw-Material Exports- China has no legal right to impose export restrictions on nine raw materials, say trade diplomats and lawyers familiar with the case. "This [case] is a punch against China's trade policy," says Simon Evenett, an economist at the University of St. Gallen in Switzerland. "It means you can't use protectionism as a policy tool on natural resources."

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U.S. files two new trade cases against China with WTO

The Obama administration said Friday that it had launched two new appeals against China to the World Trade Organization as new data showed the trade gap between the two countries rose to a record level last year.

The new appeals to the WTO are part of an evolving administration strategy to press China for better market access while playing down the high-profile dispute over how Chinese authorities manage the value of the country’s currency.

The latest cases attack import duties imposed on certain types of U.S. steel and challenge the virtual monopoly over electronic payment processing granted to a state-owned Chinese company. They come on top of other trade actions filed by the administration, including the tariffs on imported Chinese tires and a high-profile challenge of the subsidies and other support that the country provides to its alternative-energy industries.

“In each of these cases, [the United States] will be pressing to ensure that we obtain the trade benefits provided by the WTO agreement,” U.S. Trade Representative Ron Kirk said in a statement.

Wang Baodong, spokesman for China’s embassy in the United States, said China conducts business “strictly in accordance with its WTO and bilateral commitments.”

“We stand for settling trade disputes with other countries through consultations on an equal footing,” Wang added.

In talks last year, China appealed to the Obama administration to hold off on imposing duties and appealing to the WTO, urging negotiations on trade tensions between the countries.

The WTO and other trade actions come as the Obama administration has become less concerned about China’s management of the value of its currency, the renminbi.

Many economists say the value of the currency is being held at an artificially low level as a way for China to help its exporters, whose goods are comparatively less expensive because of the exchange rate.

The issue has been politically volatile in the United States, and this week members of Congress reintroduced legislation, approved by the House last year, that would impose duties to offset the effects of an undervalued currency.

But Chinese officials have been allowing the renminbi to rise in value, and many longtime critics of China’s currency management say recent signs are encouraging. Including the effect of inflation and a recent drop in the value of the dollar, the Chinese currency is appreciating at a rate of about 10 percent a year.

“We may be on the road” to a renminbi that trades at close to its market value, at least in relation to the dollar, said C. Fred Bergsten, head of the Peterson Institute for International Economics, who has denounced China’s currency management.

There is a similar feeling among U.S. officials that recent changes in how the renminbi can be bought and sold outside China, if sustained and expanded, will lessen central government control over the exchange rate.

China’s central bank controls the exchange rate by actively buying or selling renminbi in exchange for dollars, increasing supply or demand as needed. The more the currency is bought and sold around the world, independent of those transactions, the more difficult it will be for the central bank to manage the rate.

The U.S. trade deficit with China hit a record $273 billion in 2010 as $91 billion worth of U.S. exports to the country were exceeded by Chinese imports.

Read the rest of this article at the Washington Post

WTO urges Japan to reform, free trade

WTO says Japan structural reforms slowing-Trade reform would boost competitiveness
GENEVA, Feb 15 (Reuters) – Japan must liberalise its foreign trade as part of wide-ranging structural reforms to restore competitiveness and boost growth, the World Trade Organization said on Tuesday.

Looser macro-economic policies, albeit offset by the appreciation of the yen that reinforces deflationary pressures and saps export competitiveness, have helped Japan’s economy recover from the global financial crisis, the WTO said.

But these policies do not address long-standing structural problems, including a rapidly aging population, reflected in sluggish growth for a decade in real gross domestic product and productivity, it said in a report prepared for a regular review of Japan’s trade policies.

“These problems can be addressed more effectively by far-reaching structural reforms, of which trade liberalisation (and the resulting stimulus to competition) is an integral part,” the WTO said. “However, structural reforms have, if anything, slowed since 2009.”

The report was prepared in early January and so does not reflect some recent reform initiatives by Prime Minister Naoto Kan.

The report notes that the government has been moving towards income support in agriculture — where productivity is lower than in the rest of the economy — from price support.

But agriculture continues to benefit from substantial government support including higher tariffs than on other sectors, quotas, income support and in some sectors production controls, it said.

In its own report for the review, the Japanese government noted that Japan was the world’s biggest net importer of food and was particularly keen to strengthen international trade rules on export prohibitions and restrictions.

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Australian Govt will adhere to WTO apple ruling

Australian Prime Minister Julia Gillard has given what appears to be an unequivocable assurance that her Government will not try to get around the World Trade Organisation decision on apple imports.

A WTO disputes panel ruling last year upheld New Zealand’s complaint about the stringent quarantine restrictions that Australia was proposing, after lifting its 90-year ban on apples from this country.

The New Zealand case also survived an appeal from Australia.

Julia Gillard said in Wellington on Wednesday that Australia accepts the decision.

She says in a rules-based trading system it would be expected that appeal rights would be used but the “umpire has now spoken” and Australia will abide by the ruling.

Pipfruit New Zealand chief executive Peter Beaven says it is heartening to get that sort of public assurance from Ms Gillard.

The New Zealand apple industry is hoping it can start exporting fruit to Australia from next year.

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Sharp reversal, U.S. agrees to rebuke Israel in Security Council

The U.S. informed Arab governments Tuesday that it will support a U.N. Security Council statement reaffirming that the 15-nation body “does not accept the legitimacy of continued Israeli settlement activity,” a move aimed at avoiding the prospect of having to veto a stronger Palestinian resolution calling the settlements illegal.

But the Palestinian’s rejected the American offer following a meeting late Wednesdy of Arab representativs and said it is planning to press for a vote on its resolution Friday, according officials familar with the issue. The decision to reject the American offer raised the prospects that the Obama adminstration may cast its first ever veto in the U.N. Security Council.

Still, the U.S. offer signaled a renewed willingness to seek a way out of the current impasse, even if it requires breaking with its key ally and joining others in the council in sending a strong message to Israel to stop its construction of new settlements. The Palestinian delegation, along with the council’s Arab member Lebanon, have asked the council’s president this evening to schedule a meeting on Friday. But it remained unclear whether the Palestinian move today is simply a negotiating tactic aimed at extracting a better deal from the United States.

Susan E. Rice, the U.S. ambassador to the United Nations, outlined the new U.S. offer in a closed door meeting on Tuesday with the Arab Group, a bloc of Arab countries from North Africa and the Middle East. In exchange for scuttling the Palestinian resolution, the United States would support the council statement, consider supporting a U.N. Security Council visit to the Middle East, the first since 1979, and commit to supporting strong language criticizing Israel’s settlement policies in a future statement by the Middle East Quartet.

The U.S.-backed draft statement — which was first reported by Al Hurra — was obtained by Turtle Bay. In it, the Security Council “expresses its strong opposition to any unilateral actions by any party, which cannot prejudge the outcome of negotiations and will not be recognized by the international community, and reaffirms, that it does not accept the legitimacy of continued Israeli settlement activity, which is a serious obstacle to the peace process.” The statement also condemns “all forms of violence, including rocket fire from Gaza, and stresses the need for calm and security for both peoples.”

U.S. officials were not available for comment, but two Security Council diplomats confirmed the proposal. The Arab Group was scheduled to meet this afternoon to formulate a formal response to the American offer. Council diplomats said that the discussions were fluid and that there was still the possibility that the U.S. draft would be subject to further negotiations. They said it was also not yet certain that the U.S. offer would satisfy the Arab Group, and that the U.S. may be forced to veto the Palestinian resolution.

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Trichet reiterates opposition to Irish debt restructuring

EUROPEAN CENTRAL Bank (ECB) chief Jean-Claude Trichet has reiterated his opposition to any debt restructuring by Ireland, saying the terms of the EU-IMF bailout plan for the State have been approved by “the entire world”.

Mr Trichet’s remarks before a committee of the European Parliament come against the backdrop of demands for the renegotiation of key elements of the deal by Fine Gael and Labour, which hope to be in government within weeks.

The ECB president is a powerful figure in the Irish scene in light of the bank’s huge financial support for Ireland’s mostly nationalised banks and for the National Asset Management Agency (Nama).

Responding to an MEP’s question after making a presentation in his capacity as chairman of the newly established European Systemic Risk Board, Mr Trichet said the requirement on the Irish authorities to “apply the programme” as agreed has not changed.

As top ECB officials closely observe the Irish election campaign, this was the second time in five days that Mr Trichet made the case against any restructuring of Ireland’s debt. He relayed the same message last Thursday immediately after the monthly meeting of the bank’s governing council.

In Brussels yesterday, Mr Trichet said the Irish rescue plan and that of Greece did “not comprehend” the notion of bondholders being compelled to take a “haircut” on their investments.

Ireland entered an €85 billion EU-IMF programme last November and Greece was bailed out to the tune of €110 billion last May.

“We have plans. The plans have to be executed, have to be implemented in the best fashion possible as has been the case the world over and it is very, very important in my opinion not to confuse things,” he said.

“Those plans have been approved. They have to be implemented and I expect that the working assumption of the international community, not only the European, according to which they will demonstrate their capacity to adjust, after having behaved in a very improper manner, will be progressively convincing.”

Mr Trichet said it would take time for both countries to restore their credibility on the markets and added that investors who make bets against the euro zone should not be rewarded.

“Modern markets are made of investors that are long and investors that are short. The investors that are long, private sector investors, are losing money when you practice this haircut you have mentioned. Those investors that are short are making money, so this is also something that one must have in mind when reflecting on this very, very important issue.”

It was for both countries to prove, quarter after quarter, that they were executing their commitments.

“The message is very simple: apply the programme, as is being done all over the world in many, many, many numerous cases. It is the message we have for the Greek government. In Ireland, it’s exactly the same,” he said.

“We have a programme, approved by the international community, approved by the IMF board, the entire world, approved by the European [Union], approved and financed by the IMF and the European [Union].

US:‘Silliness’ in tanker debate: Alabama still fighting for jobs

The Star, like most newspapers in Alabama, has closely watched the contest between Boeing and EADS to land the $40 billion-plus contract to build the much-needed and long-overdue fleet of U.S. Air Force tankers.

If EADS wins, Alabama will assemble the planes in a multi-million-dollar facility near Mobile. It will employ thousands. If Boeing wins, that facility and those jobs will go elsewhere.

This is no small matter.

That is why, even though there are analysts who feel EADS’ Airbus is the better plane and will submit the winning bid, Boeing is trying one more time to shift attention from the quality of the product and give itself a competitive advantage.

Because Airbus is a unit of the European Aeronautic Defence and Space Company, Boeing supporters are claiming that awarding the contract to Airbus will favor a company that gets European subsidies and will not give American workers a fair shake. But where do they think workers in Mobile will come from?

So Boeing supporters in Congress have proposed a bill with a catchy (and misleading) name — the “Defense Level Playing Field Act” — that will require the Air Force to factor in the European subsidies in deciding which bid comes in the cheapest.

Much of this controversy revolves around a World Trade Organization decision that ruled Airbus received subsidies it should not have received. However, the WTO also ruled that Boeing got illegal subsidies from the United States, though not for the same plane.

The question is, how much of an advantage would those factors give Boeing?

An analysis of the costs of the Boeing plane and the Airbus plane, even with the alleged subsidies, reveals that the advantage Airbus received was so small as to be insignificant even in the closest competition.

“All it does,” analyst Scott Hamilton told the Mobile Press-Register, is underscore “the entire silliness of the WTO complaints, with respect to the tanker issue.” His conclusion, “who cares?”

Alabama Sen. Richard Shelby, R-Tuscaloosa, described the Boeing strategy as a “Hail Mary pass” — a desperate attempt to turn things around.

More to the point, Sen. Jeff Sessions, R-Mobile, called the Boeing supporters’ bill “inappropriate and unnecessary,” and he indicated that he would put it on hold until there was a full Senate debate. Since most of the Senate is uninterested in the controversy and would just as soon the Air Force settle the matter, Sessions added, “I don’t think it’s going to move.”

This page hopes not.

The Air Force needs a new tanker fleet. Boeing and Airbus should submit their bids and let the Air Force decide.

Read more: Anniston Star – ‘Silliness’ in tanker debate Alabama still fighting for jobs

Main conclusions of WTO panel on Airbus aid

(Reuters) – The World Trade Organization handed a report to the United States and European Union on Monday which found that U.S. plane maker Boeing received unfair subsidies from the U.S. government for large passenger aircraft.

The confidential report will not be published for several weeks or months.

Following are the main conclusions of another WTO panel that ruled in a related complaint brought by the United States against the European Union over aid for Airbus civil aircraft.

The report, of more than 1,000 pages, was published on June 30 last year after being issued confidentially to the United States and the EU on March 23. The panel, which was chaired by Uruguay’s former ambassador to the WTO, Carlos Perez de Castillo, was formed in 2005.

Both the EU and the United States have appealed against the findings of that report.

The United States had complained that the development and marketing of Airbus airliners was only possible thanks to a program of “launch aid” and other financial support by the EU and some of its member states on non-commercial terms.

It said this aid comprised illegal subsidies, which hurt the U.S. civil aircraft industry by depriving it of market share.

“LAUNCH AID”

* The panel agreed that support for the Airbus A300, A310, A320, A330, A340, A380 airliners constituted launch aid.

* It did not agree that support for the A350 was launch aid, as it did not examine the A350 program, launched after the complaint was filed.

* It found that the United States had not proved there was a coherent, systematic launch aid program.

SUBSIDIES

* The panel found that German, British and Spanish funding for the A380 airliner amounted to de facto export subsidies.

* It disagreed that French aid for the A330, A340 and A380 and Spanish aid for the A340 were export subsidies.

* It did not agree that the export subsidies were legal — i.e. that funding was formally conditional on achieving exports.

* It disagreed that loans by the European Investment Bank (EIB) to the Airbus program amounted to specific subsidies under WTO rules.

* It found that some but not all infrastructure spending by member states was a specific subsidy to Airbus.

* It found that the transfer of the German government’s 20 percent stake in Deutsche Airbus to KfW, a state-owned bank, and then to MBB, subsequently acquired by Daimler, was a specific subsidy. In particular, KfW’s sale of the stake in 1992 to MBB was below market rates.

* It disagreed that debt forgiveness by the German government was a specific subsidy.

* It agreed that equity infusions by the French government and Credit Lyonnais were specific subsidies.

* It agreed that the 1998 transfer of the French state’s 46 percent state in Dassault Aviation to Aerospatiale was a specific subsidy.

* It agreed that some but not all research and development spending on the Airbus program was a specific subsidy. (The panel estimated the total value of R&D spending at about 750 million euros, against a U.S. claim of 2 billion euros and an EU estimate of 381 million euros.)

MARKET IMPACT

* The panel found that Boeing’s share of sales of large civil aircraft to the EU market declined while Airbus’s increased over the period under review (2001-2006)

* It found that Boeing imports to the EU were displaced by Airbus.

* It found that Airbus displaced Boeing sales in Australia, China, and India, and to a lesser extent in Brazil, Mexico, Singapore, South Korea and Taiwan.

* It found that the United States did not prove that Airbus had undercut prices.

* It agreed the Airbus program had led to the suppression or depression of prices for Boeing 737, 767 and 747 airliners but not the Boeing 777. (Suppression is when prices are prevented from rising, depression when they are pushed down.)

* It agreed with the United States that launch aid shifted the risk of launching aircraft to the government from the manufacturer through non-commercial funding.

…Read the rest of this Reuters article here

Lamy wants to accelerate Doha talks

World Trade Organisation (WTO) DG Pascal Lamy told WTO ambassadors that bilateral and small group discussions on resolving key differences, needed to catch up with work among the full membership on refining texts required for the Doha round of negotiations.

“Acceleration, texts, convergence is now the name of the game,” he said in an informal meeting of the committee, which oversees the Doha Round negotiations in all subjects.

He noted that the mood had improved for producing revised drafts by late April.

There was a high level of activity planned in the various negotiating groups, and Lamy said that the weeks ahead would be intense and challenging.

“We urgently need to build on the good atmospherics to accelerate negotiations at all levels if we are to record substantial progress across the board by the summer break,” he reiterated.

He said he told Ministers that while the negotiations had to be “multilateral” and among the full membership, possible breakthroughs had to be tested either ‘plurilaterally’ or in bilateral discussions among small groups or pairs of members.

“This leg also has to move faster and deeper to transfer the required energy onto the multilateral leg. And this needs to happen now. Not tomorrow or the day after tomorrow. Now,” he said.

Reflecting their shared sense of urgency, said the WTO, delegations reiterated the issues that concerned them on substance, how the talks were organised, and ensuring that all members were included, particularly when decisions were taken.

Several members cautioned that the talks should not unravel provisions in drafts that were more or less agreed or stable.

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By: Christy van der Merwe

WSJ: Egypt Protests Continue as Military Stands By

Egypt was engulfed in a fifth day of protests on Saturday but an attempt by President Hosni Mubarak to salvage his 30-year rule by firing his cabinet and calling out the army appeared to backfire as troops and demonstrators fraternized and called for the president himself to resign. While some protesters clashed with police, army tanks expected to disperse the crowds in central Cairo and in the northern city of Alexandria instead became rest points and even, on occasion, part of the protests as anti-Mubarak graffiti were scrawled on them without interference from soldiers. “Leave Hosni, you, your son and your corrupted party!” declared the graffiti on one tank as soldiers invited demonstrators to climb aboard and have their photographs taken with them. “This is the revolution of all the people,”

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