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TradeNews Articles

December 2003

Global interest rates remain low
Dec 31, 2003 - On December 17, Norway's central bank cut rates by 25 basis points to a record low of 2.25 percent. As a result, the average rate set by the world's 11 leading central banks - G7 plus six other major banks - fell to 2.47 percent from 2.49 percent.

Average official interest rates in the Group of Seven industrial nations edged up to 1.90 percent from 1.85 percent on November 6 when the Bank of England raised its repo rate by a quarter percentage point to 3.75 percent.

Overall, interest rates remain local in most developed nations as central bankers aim to provide as much fiscal stimulus to their slow growing economies. The outlook for 2004 is much the same, with inflation nearly forgotten, interests rates are expected to remain relatively unchanged.

The average rates shown in the chart below reflect the movement of official policy rates during the economic cycle, rather than specific and/or actual borrowing costs.

Interest Rates	End 2001	End 2002	End 2003
G7 Average	2.25	2.15	1.85
11 Average	3.26	3.20	2.47
US Fed Rate	1.75	1.25	1.00
Europe	3.25	3.00	2.75
Japan	0.0	0.0	0.0
England	4.00	4.00	3.75
Canada	2.25	2.75	2.75
Major Central Banks
Switzerland	1.75	0.75	0.25
Australia	4.25	4.75	5.25
New Zealand	4.75	5.75	5.00
Sweden	3.75	3.75	2.75
Norway	6.50	6.50	2.25
Denmark	3.60	2.95	2.15
Eastern Europe
Poland	11.50	6.75	5.25
Hungary	9.75	9.00	12.50
Czecheslovakia	4.75	2.75	2.00
Latin America
Brazil	19.0	25.0	16.5
Mexico	6.3	6.9	6.1
Columbia	6.50	3.00	2.25
Chile	7.50	4.25	6.25
Venezuala	37.0	40.0	28.5
Asia
Korea	4.00	4.25	3.75
Taiwan	2.125	1.625	1.375
Philippines	7.75	7.00	6.75
Thailand	2.25	1.75	1.25
Indonesia	17.6	12.9	8.3
Middle East/Africa
Saudi Arabia	9.5	13.5	8.0
Israel	3.8	8.9	4.8
Turkey	59	44	26

Peru cuts import tariffs on capital goods
Dec 31, 2003 - In a move aimed at boosting industry ahead of a proposed free trade pact with the United States, Peru has lowered its tariffs on imports of machinery and other capital goods, the Economy Ministry said.

In a statement made today, the ministry said it had reduced taxes on 1,113 goods to give companies cheaper access to production technology and make industry more efficient. The import duties will fall by an average of 0.5% to 10.4% the ministry said, without giving more details.

The tariff relief is expected to cost Peru some $25 million a year in lost taxes, but the government said the cuts are part of plan to help Peru increase exports, create more jobs and lift economic growth to around 7% a year.

"In line with economic policy, the objective is to encourage efficiency and competitiveness of production and increase the country's exports," the government said in an official decree also published on Wednesday.

Peru is a major exporter of asparagus, textiles and minerals but also hopes to develop other significant export sectors, such as furniture and jewelry, in advance of talks with the U.S. in April.

Peru, which expects gross domestic product growth of 4.1% in 2003, hopes to seal its free trade pact with the United States by the end of 2004.

Vietnam and US headed for shrimp fight
Dec 30, 2003 - Just a few months after its confrontation with the United States over catfish exports, Vietnam is gearing up for an even more important trade dispute with American shrimp farmers. Last August, officials from eight US shrimp-producing states met in Washington to prepare an anti-dumping case against countries they claimed were selling shrimp in the United States at below-market prices.

"We urge shrimpers, processors, suppliers, lenders, communities, government officials, and everyone else that is interested in the economic health and continued vitality of this industry to join with us in a common effort to stop unfair trade," said Southern Shrimp Alliance president Eddie Gordon at the time.

They initially targeted 16 Asian and Latin American countries, including Vietnam, China and Thailand, the world's biggest producer. No date has been fixed for the lodging of the complaint, but sources indicate the case could open in the coming weeks.

The Vietnam Association of Seafood Exporters and Producers (VASEP) is currently selecting a team of international legal advisers and has launched an appeal for funds to finance the battle. Aquaculture is a major source of foreign earnings for the country, the second after crude oil, and brings substantial revenue to certain rural areas.

"According to our latest information, the Americans could bring their case against us at the beginning of January and we want to have a group of lawyers ready to defend us", said the head of VASEP shrimp department, Nguyen Van Kich.

The catfish spat was the first big quarrel between the two countries since their landmark, tariff-cutting bilateral trade agreement came into effect two years ago. The US catfish producers filed an anti-dumping petition against their Vietnamese counterparts in 2002, eager to protect a sector with 18,000 employees and $590 million in annual revenue.

In June last year, the US Trade Department took their side, saying Vietnam had "made sales to US customers at less than fair value". The US International Trade Commission consequently imposed duties of up to 64% on imported Vietnamese catfish fillets. That trade dispute taught Hanoi a lot about how the international trade game is played, but the shrimp case will be more complicated.

"The shrimp case is more complex, especially concerning biological controls, the fixing of prices, quality control and the list of US taxes", said Kich. The stakes are also different: Vietnamese catfish exports to the United States are worth over $60 million a year, while shrimp business is worth about $500 million.

Vietnam says its method of raising shrimp in ponds enables it to keep costs down and denies any violation of international rules. And, "on the American market, the price of Vietnamese shrimps is similar to that of American ones", Kich asserted. "There is no question of dumping".

Several international observers agree, adding the US complaints on catfish and shrimp are both unjustified. American courts however did not feel the same way towards a country they classify as a "non-market economy".

US courts "do not really take into account how much it actually costs in Vietnam to produce a kilo of catfish or shrimp. The way the anti-dumping law is written is not exactly fair. But it's the law", said an American expert. "The case will go forward, and it's going to be difficult for Vietnam to win it".

China publishes its first international market reports
Dec 30, 2003 - The China Council for the Promotion of International Trade (CCPIT) launched its first international market reports in Beijing Monday.

The reports consist of three volumes on Australia, Canada and the Republic of Korea (ROK) respectively, with four parts in each volume, including: macroeconomic data, trade statistics, data on production and distribution, and foreign direct investment. The reports are distributed free of charge and will be published annually.

Wan Jifei, president of the CCPIT, said the three nations were important trade partners. Wan said he hoped the reports would enhance commercial exchanges and cooperation between China and the three nations.

Alan Thomas, Australian ambassador to China, said the commercial relationship between China and Australia continued to show great vitality. Trade is now valued at over US $12 billion and growing at an annual rate of 13.5%. Similarly, investment linkages continue to expand vigorously and Australia remains the leading overseas investment destination for China, said Thomas. He said the strength and good prospects of the Chinese economy are widely appreciated in Australia and the Australian people have shown great interest in seeking Chinese business partners.

Kim Ha Joong, the South Korean ambassador to China, said China has become the leading investment destination for the ROK. In the first 10 months this year, ROK investment in China reached US $19 billion, while China's investment in the ROK was only US$400-500 million.

He appealed to the Chinese government to solve the problem of unbalanced investment and to encourage more Chinese entrepreneurs to invest in the ROK. He hoped the reports would provide Chinese enterprises with more information to seek cooperative opportunities with the ROK and to develop the ROK market.

Yu Xiaodong, head of the economic information department of the CCPIT and deputy editor-in-chief of the report projects, said the reports were based on data from foreign institutions of China's target markets, with a focus on commodities.

The CCPIT will compile reports for the year of 2004 on other countries, including: the United Arab Emirates, Hong Kong, Japan, Germany, France, the United States, Mexico, Britain, Italy, Australia, Canada, the ROK, Russia, Belgium, Singapore and India, Yu said.

Up to 146 nations may fight U.S. trade amendments
Dec 29, 2003 - The European Union (EU) and other trade powers are considering whether to gear up to fight U.S. imports over a Congressional amendment. It would be a move that adds further strains to the global trading system, diplomats said.

At issue is a Congressional amendment providing for diverting the duty payments from U.S. government coffers - where they would normally go - to private firms. It was drawn up by Democratic Senator Robert Byrd nearly four years ago and is commonly called the Byrd amendment.

Critics say the Byrd amendment encourages U.S. manufacturers to launch self-serving anti-dumping cases against imports of competing goods. In global trade practice, goods are deemed dumped if it can be shown that they are being exported at artificially low prices. In the United States, anti-dumping complaints from domestic companies are heard in the New York-based International Trade Court - a purely U.S. body despite its name.

Under the Byrd amendment, critics say U.S. firms stand to gain twice - getting the price of foreign rivals' goods forced higher and receiving the extra duties the importers pay.

Foreign anger sparked by the measure was reflected in the breadth of the coalition within the 146-nation WTO that quickly built up against it. Apart from the 15-nation EU, this includes Canada, Mexico, Australia, Japan, South Korea, India, Indonesia, Thailand, Brazil and Chile.

WTO judges agreed that these payments amounted to illegal subsidies and said the practice should be abandoned. They gave Washington until December 27 to do this. But there has been little sign that anything is happening on this front as payments still flow, Congress - which would have to repeal the measure - is in recess, and most senators are insisting that the amendment must be kept.

Trade specialists outside the Geneva-based WTO said that feelings against the practice are strongly negative. "It seems that the EU at least is determined to act in the face of what it views as blatant delays by Washington since the Americans finally lost the WTO case early this year," said one Geneva envoy who preferred not to be named.

Trade retaliation could happen any time, as this past Saturday was the deadline for the United States to conform to a World Trade Organization (WTO) ruling that it must drop a practice widely supported in Congress, they say. However, final decisions are unlikely to emerge in Brussels, Tokyo, Ottawa and other capitals until sometime in the New Year.

The crucial moment comes as the WTO is struggling to revive the stymied Doha Round talks for a new world trade treaty, and as the EU prepares to slap top-up tariffs totaling about $4 billion a year on U.S. goods in another extended row.

The Byrd amendment went through Congress despite warnings from top trade officials in the previous Clinton administration that it was in clear violation of WTO rules. The trade team then appointed by new President George W. Bush initially defended it stoutly, apparently seizing on a chance to prove the administration's dedication to defending "the interests of the American people".

Turkish law creates hurdles for exporters
Dec 29, 2003 - Turkey has imposed legislation that makes a health certification necessary for all appliances intended to be used by humans - even an electric switch or a washing machine will soon require a health certification for exports, official sources said.

As per the new law, all exporters are required to furnish a health clearance certificate for exports of food, human and veterinary drugs, medical equipment and all appliances intended to be used by humans.

Questioning the logic behind such a certification, exporters say this move was nothing but another non-tariff barrier aimed at creating hurdles for exports. They say such a certification will not just consume time but also lead to increase in costs which will be detrimental for small exporters in a highly competitive environment.

Exporters said while such a certification is understandable for food items, medicines and medical equipment, its extension to appliances which are intended for human use is difficult to understand.

US retailers disappointed but Internet sales soar
Dec 26, 2003 - Preliminary data shows US retailers had mixed results for the critical holiday season, with some specialty and online retailers showing a big surge, but many traditional stores posting disappointing sales. Meanwhile, many online vendors have enjoyed record-breaking sales.

When all the sales figures are in, year-to-year holiday retail sales are expected to have grown by just 4 to 5% compared to last year. Internet stores are expected to post their best-ever holiday season, with online sales up 45-50% over 2002.

A day after Christmas, some retailers were announcing strong holiday sales, while others were licking their wounds for the season, which can represent as much as half of profits and as much as 33% of annual sales for many stores. The biggest retailer, Wal-Mart, said it saw a late pickup in holiday purchases, but probably not enough to boost same-store sales in December above the low end of the company's prior monthly target of between three and five percent growth.

But Internet leader Amazon.com said it wrapped up its busiest holiday season ever and set a single-day record with more than 2.1 million items ordered, or 24 items per second, worldwide. On the day before Christmas, Amazon said 70,000 gift certificates were ordered. And on December 15, a record 630,000 people visited the site during one 60-minute period, the company said.

Most retailers will report their December sales around January 8. The bright spot for retail is with several specialty retailers saying they expect to show strong year-end sales.

The Sharper Image, an upscale seller of electronics and other items, boosted its fourth-quarter profit forecast on the back of a strong season. "We are very pleased by our robust holiday sales," said Richard Thalheimer, the company's founder, chairman and chief executive officer. "While sales were very strong in all retail sales channels - stores, Internet and direct marketing, including catalog and television infomercial - our stores sales especially benefited from last minute shoppers and the December 20 beginning of Hanukkah."

Amazon and other companies noted much higher sales of gift cards, meaning that many people won't make purchases until after the Christmas holiday. Since most post-holiday items are on sale - some deeply discounted - profit margins can be squeezed. For retailers, that means they must sell a lot more merchandise after Christmas to make up for the shortfall of full-price purchases ahead of time.

The National Retail Federation had projected that holiday sales would increase 5.7% this year to $217.4 billion, which would be the largest increase since 1999. But just 1 week ago, the retail group said shoppers still had 30% of their shopping left.

A survey by the International Council of Shopping Centers (ICSC) and UBS Warburg suggested 4% year-over-year sales growth for the season.

The Internet was expected to show strong gains this year. A report last week by Goldman, Sachs, Harris Interactive and Nielsen NetRatings showed that online shoppers spent $2.95 billion dollars during the second week in December, an increase of 48% from 2002. The latest weekly report brings the total spent online - excluding travel - to $13 billion this holiday season, an increase of 46% over last year, the report said.

German entrepreneur to bring Internet to North Korea
Dec 26, 2003 - A Berlin entrepreneur said today that he had signed a deal with North Korean officials to bring Internet access to the country beginning in mid-February, a date chosen to coincide with leader Kim Jong-Il's birthday.

Jan Holtermann, a former banker and one-time employee of the North Korean embassy in Berlin, said that the project would involve the use of content filtering software similar to that in place in Chinese and Cuban networks.

"We started from the assumption that the North Korean government would be very selective in granting access to the Internet," he said. A select group of handpicked users will be allowed to send email, and only a few will be able to view information on the web.

Holtermann said that the company he founded for the project, KCC Europe, had signed a contract on January 17, 2003 after negotiating with North Korean officials. He said he had invested one million euros in the network's infrastructure, although he initially expects slim profit margins due to the limited number of users.

"This type of business," he said, "requires an entirely Asian sense of patience." Holtermann said he won the contract, despite Chinese competition, "thanks to his close contacts with North Korea.

US retail sales lower than expectations
Dec 25, 2003 - With Christmas finally upon us, stores are counting on big after-Christmas crowds and piles of gift certificate cards to prop up disappointing sales. But that may be too late for earnings because shoppers will be looking for steep, profit-slashing discounts, analysts said.

Many analysts have already downgraded their profit forecasts, particularly for lower-end department stores and discounters - holiday sales have not met expectations. The companies themselves may give gloomy profit outlooks when they report December sales early next month.

Merrill Lynch analyst Dan Barry trimmed his earnings estimates for Kohl's, J.C. Penney, Sears and Target. Barry was among the more bullish analysts at the start of the holiday shopping season. "The low-end consumer is spending much less than expected," Barry said in a research note.

According to Reuters Research, 24 analysts have trimmed fourth-quarter earnings forecasts for mid-priced department store Kohl's recently. J.C. Penney's estimates have been cut by 13 analysts.

Retailers have blamed disappointing holiday sales on back-to-back weekend snowstorms, gift certificate cards that don't immediately count as revenue, bargain-hungry last-minute shoppers and the heightened security situation. A J.C. Penney spokeswoman said the company had not announced any changes to the earnings forecast it gave in November, when it reported third-quarter results.

Luxury chains have faired rather nicely by comparison, with analysts expecting strong sales and profit performance from Nordstrom, Saks and Neiman Marcus. Reuters Research shows that 17 analysts have raised their fourth-quarter profit estimates for Nordstrom recently, and 11 have nudged up their forecasts for Saks.

Analysts have said a recovering economy was helping wealthier households more than it was aiding lower-income families. Stock market gains also tend to spur high-end spending.

With no time left for a last-minute sales surge, the remaining wild card was plastic, gift certificate cards. Trade groups report that demand has doubled for gift cards, which can skew retailers' sales because they don't count toward revenues until they are redeemed for merchandise.

Deutsche Bank analyst Bill Dreher said the gift cards could affect same-store sales results by as much as 2 percentage points. "We believe this bonus sets up retailers to dramatically outperform through the remainder of the year and even into the first quarter," Dreher said, adding that a recent sell-off in retail stocks has created a good buying opportunity.

Dreher estimated that 15% of gift cards would be redeemed in the first weekend after Christmas, which would count toward retailers' December sales. He predicted that 80% of gift cards would be redeemed in the two weeks after Christmas, which would benefit fourth-quarter results. Most retailers operate on a fiscal year ending Jan. 31.

US companies moving more tech jobs overseas
Dec 25, 2003 - U.S. corporations are picking up the pace in shifting well-paid technology jobs to India, China and other low-cost centers, but they are keeping quiet for fear of a backlash, industry professionals said.

Morgan Stanley estimates the number of U.S. jobs outsourced to India will double to about 150,000 in the next 3 years. Analysts predict as many as 2 million U.S. white-collar jobs such as programmers, software engineers and applications designers will shift to low cost centers by 2014.

The biggest companies actively "offshoring" to cut costs - Microsoft, IBM and AT&T - are reluctant to attract attention for political reasons, observers said this week. "The problem is that companies aren't sure if it's politically correct to talk about it," said Jack Trout, a principal of Trout & Partners, a marketing and strategy firm.

"Nobody has come up with a way to spin it in a positive way." This causes a problem for publicly traded companies, which would ordinarily brag about cost savings to investors. Instead, they send vague signals that they are opening up operations in India and China, but often decline to elaborate.

Moreover, on the threshold of a U.S. presidential election year, job losses are a hot button issue. A company that highlighted a major job transfer could wind up in the campaign debate.

Multinationals have found that when they trumpet expansion overseas, they cause problems at home. When Accenture executives in India this month announced plans to double their staff to 10,000 next year, they triggered a flood of calls to the company's U.S. offices about U.S. job losses.

Offshoring companies "are paying Chinese wages and selling at U.S. prices," said Alan Tonelson, of the U.S. Business and Industrial Council, a trade group for small business. "They're not creating better living standards for America."

The U.S. sales director for one of India's top computer services providers said his company has won business from customers such as Walt Disney, Time Warner's CNN and the Fox division of News Corp. - none of which want public disclosure.

In India, some technology companies have recently adopted lower profiles. Microsoft, for example, has been removing its name from mini-buses used to ferry engineers on overnight shifts. Major Indian beneficiaries of U.S. business such as Infosys Technologies, Wipro, and Satyam Computer Services have stopped identifying new customers.

While there have been reports that IBM intends to ship 4700 high-end jobs to India and China next year, they mark a rare instance when figures "have been reported in black and white," said Linda Guyer, president of Alliance@IBM, a union that has tried to organize IBM employees. Those numbers were not released by IBM, but rather disclosed by the Wall Street Journal, which had obtained an internal memo. The company has declined to comment.

Guyer believes as many as 40,000 of IBM's 160,000 U.S. jobs will be transferred overseas by 2005, a figure she says was gathered from phone calls by IBM employees. Previously, IBM has tried to justify "offshoring" by pointing to a report by McKinsey Global Institute which concludes that the U.S. economy will ultimately benefit.

The report was commissioned by Nasscom, a group made up of Indian tech companies as well as IBM's Indian services unit. More than anything, it shows corporate efforts to sway public opinion by those invested in offshoring.

Recently, AT&T Wireless told the U.S. Securities & Exchange Commission that it would lay off 1,900 employees this year. Communications Workers of America members obtained an internal memo prepared by Tata Consultancy Services of India that discussed how it would assume those U.S. jobs. Subsequently, AT&T Wireless officials acknowledged it was exploring the job shifts but didn't offer details.

While some companies, such as Electronic Data Systems, CAP Gemini Ernst & Young, and Sapient, acknowledge they shift jobs abroad to exploit cost advantages and around-the-clock work, IBM asserts that it is not moving jobs but creating new ones.

"It's a business strategy, period. You cut costs. You revamp. You look at what your mission statement says and try to turn a profit," said Sylvia Thomas, who was laid off by chipmaker Agere Systems after declining offers to relocate to headquarters in Allentown, Pennsylvania - or to Singapore.

Mad Cow disease halts U.S. beef exports
Dec 24, 2003 - Tuesday, the U.S. Agriculture Department announced the first case of Mad Cow disease discovered in the USA. In Washington state, a Holstein dairy cow tested positive for bovine spongiform encephalopathy - the formal name for mad cow disease.

It was an announcement that U.S. cattle producers had feared for years. In Nebraska, Kansas, Oklahoma, and Texas, which produce the majority of U.S. beef cattle, production will likely slow as producers await the fallout.

Market reaction was immediate. Cattle futures traded at the Chicago Mercantile Exchange dropped the daily limit of 1.5 cents per pound as traders rushed to sell. Continuous declines are expected this week and next. The CME and other financial markets will be closed on Thursday for Christmas.

"It's a scary situation because we saw what happened in Canada this past spring and the substantial drain in equity that occurred in the Canadian beef industry this year," said Chuck Levitt, senior livestock analyst at Alaron Trading Corp. Exports of Canadian beef and cattle prices plummeted earlier this year, after a single case of Canadian mad cow disease was discovered. The Canadian beef industry lost billions of dollars, almost over night.

"In the export markets, the doors will all slam shut - they already have," said Paul Hitch, president of Hitch Enterprises, a Guymon, Oklahoma, business that operates three cattle feedyards.

Countries that have already announced a ban on U.S. beef imports include: Japan, South Korea, Chile, Mexico, Russia, South Africa, Hong Kong, Singapore, Taiwan, Ukraine, and Malaysia. U.S. beef exports totaled $3.2 billion last year.

U.S. Beef Imports and Exports (2001)

Top 5 Export Markets		Top 5 Import Sources
Japan	$1 billion	Canada	$1 billion
Mexico	$542 million	Australia	$848 million
Korea	$360 million	New Zealand	$479 million
Canada	$217 million	Nicaragua	$29 million
Hong Kong	$42 million	Costa Rica	$25 million

Europe, whose herds were devastated by the brain-wasting disorder in the 1990s, said it was keeping a close eye on the case, but it was not considering tightening protective measures already in place for years. The 15-nation European Union has long banned the import of most U.S. beef because of health concerns over cattle treated with growth hormones, allowing in a limited quantity of the meat from the United States.

The U.S. cattle industry had enjoyed a rare year, with cattle prices high and profits huge, but all that may change as a single case of mad cow disease in Washington state is expected to shut off exports and drive consumers to pork and chicken.

"Domestic demand, to me, is the huge, huge wild card," said Hitch. "I think it is going to be an isolated incident. If they find another half dozen, we are in terrible shape for years." Domestic beef consumption may fall but lower prices and beef promotion efforts could minimize that decline. Hitch said beef consumption actually increased in Canada after that country's mad cow case in May, because beef prices dropped.

"I don't think the American consumer has lost any confidence in the beef supply," said Jim Gill, marketing director at the Texas Cattle Feeders Association.

Bangladesh GDP growth to hit 5.7 percent
Dec 24, 2003 - The Asian Development Bank (ADB), one of Bangladesh's major development financiers, said on Wednesday that the country would probably achieve 5.7% GDP growth for the year to end-June 2004. "The growth of gross domestic product (GDP) is expected to rise to 5.7% in fiscal 2003/04 from 5.3% in the previous year," the ADB's Bangladesh country director, Toru Shibuichi, told a news conference.

The economy is largely driven by agriculture, which accounts for more than 33% of the total economy, and much depends on the success of the two harvests, the Aus in autumn and the Aman in winter."We expect better economic growth this year as the Aus crop was good and prospect of the Aman is promising", Toru said.

The ADB was "increasing assistance to Bangladesh to see the country's poverty level come down significantly," he said. Half of the country's 130 million people live in poverty, according to official estimates.

Toru said that for Bangladesh the ADB's "annual average lending level has been raised to $402 million over the next three (calender) years from 2004 to 2006." For the past three years, ADB lending averaged $391 million a year.

In 2003, the bank focused on livestock development, the power sector, primary education and roads to reduce poverty in a short time. Toru said inflation had risen to 5.6% in September from 5.1% in July, mainly due to higher food prices. Inflation was 3.6 percent in July 2002.

Bangladesh expects food grain production will rise to 28.1 million tons in 2004, compared to 26.7 million tons this year.

Pakistan textile exporters to fight EU anti-dumping proposal
Dec 23, 2003 - Pakistani textile exporters will be taking a strong delegation to Europe early in January next year in an effort to persuade the European ministers to withdraw proposed anti-dumping duty on Pakistani bed linen.

A group of leading manufacturers and exporters of bed linen, headed by Pakistan Textile Mills Association (APTMA) and the Pakistan Bed-wear Exporters Association, met over the weekend to discuss the proposed duties.

Five textile associations have developed a three-pronged strategy to handle the anti-dumping issue. They said that all sectors affected by the proposed anti-dumping duty - including cotton growers, spinners, weavers and bed-linen exporters - will be part of the delegation.

They urged high authorities in the Pakistani government to use their influence to convince European heads of states to stop anti-dumping proceedings against Pakistan. "It will be a joint effort of private sector and the government to avoid imposition of anti-dumping duty", they added.

"We will also use diplomatic channels and launch an aggressive campaign to approach and convince European Ambassadors in Pakistan to explain the actual position and our point of view on anti-dumping", textile exporters said. They pointed out that bed-linen exporters had already approached the suppliers of textile machinery, dyes and chemicals in the EU to pressure their governments to withdraw proposed anti-dumping duty.

"The agents of textile machinery manufacturers, dyes and chemicals and importers of Pakistani bed-linen had already held a meeting with us and conveyed their support in this regard," the exporters said. The Commerce Minister has quickly formed a task force for lobbying EU states on the issue of anti-dumping.

Textile exporters complained about the attitude of the EU investigation team, and said that they misbehaved and insulted the officers of Pakistani bed linen exporting companies during investigations. "They came with pre-determined ideas that we had something to hide and therefore treated our people very badly', exporters said and added that such practices could not be tolerated.

The exporters urged the government to take the anti-dumping case to the WTO where Pakistan can obtain a decision in its favour. Responding to a reporter's question, they said that once the anti-dumping duty is imposed, it would be in place for 5 years - until 2009.

World Bank & IMF urge developed countries to reduce subsidies
Dec 23, 2003 - World Bank president James Wolfensohn and International Monetary Fund (IMF) managing director Horst Kohler are imploring developed countries to move towards lowering trade barriers and reduce trade-distorting subsidies.

In a joint statement on the World Trade Organization (WTO) meeting that was held in Geneva, Switzerland last week, the duo stated that the developed world could lead the way by lowering trade barriers and abandoning subsidies on cotton, sugar, and other agricultural products.

"Electorates must be told that the losses would be far outweighed by gains that would be shared more broadly," they suggested. However, they noted that such a move required political courage because such actions would impinge on powerful domestic constituencies. They stated that taking these actions should not be seen as "concessions" but steps to promote opportunity and productivity in one's own economy.

"If all governments take these steps together they get the twin benefits of higher productivity at home and greater market opportunities abroad. The sooner they do so, the better".

They also called on developing countries to do their part. "Tackling domestic trade barriers and embracing trade should be an integral part of development strategies," they advised. "And these strategies also need to emphasize good governance, sound economic policies and investment in infrastructure, education and health."

The World Bank and IMF pair noted that the world had reached a critical juncture in efforts to create a more open and equitable global trading system. They stated that trade liberalization would have the largest impact in reducing global poverty if countries acted together to implement it.

They warned that the risk of the Doha Development Agenda being put off indefinitely looms larger with each month of inaction. "The coalitions seem as far apart as ever on the main issues," they observed. "Any delay in this trade round would be a lost opportunity to spur global growth, make decisive progress in the fight against poverty and keep the United Nations' Millennium Development Goals within reach," they stated.

"It could also accelerate the trend towards bilateral or regional arrangements, leaving many countries isolated from major markets and vulnerable to more powerful trading nations." They concluded that the onus was now on developed countries to make early, concrete and ambitious commitments to reduce barriers and trade-distorting subsidies in agriculture and to be flexible about new regulatory obligations.

"Expanding trade by collectively reducing barriers is the most powerful tool that countries, working together, can deploy to reduce poverty and raise living standards." They argued that there was growing evidence which shows that countries that are more open to trade grow faster over the long run than those that remain closed.

"And growth directly benefits the world's poor," they added. "A one percentage point increase in growth on average reduces poverty by more than 1.5 per cent each year." They reminded the world's nations that a successful Doha round could lift 140 million people out of poverty by 2015.

They further stated that increased trade also benefits consumers and efficient producers, through lower prices and access to a wider variety of goods.

Japanese exports decline, but economic activity rises
Dec 22, 2003 - Japan's exports dipped lower in November, but good news in other key measures of economic activity eased concern over the strength of the country's economic rebound. Exports were down 2% from a year ago, the first year-on-year decline in five months, government data showed.

Exports have been the driving force behind Japan's recovery while domestic conditions remain slow. November's exports rose 2.3% from a month earlier, but the year-on-year drop raised concern that the U.S. economic recovery had yet to translate into bigger flows from Japan to its largest trading partner.

"It seems the recovery in the U.S. economy has yet to be reflected in the export figures," said Mamoru Yamazaki, chief economist at Barclays Capital. "But exports to Asia remain strong and both exports and imports should show robust growth going into next year."

Imports also fell, with the result that Japan's trade surplus was up 11.3% in November from a year earlier at $9.18 billion, the Ministry of Finance said. The surplus was up for the fifth straight month and was higher than the median forecast by a number of analysts.

The economic results reflect continuing changes in Japan's trading patterns, with more products being made by Japanese firms in their target markets, saving on costs. The ministry said that a shift by Japanese car makers to producing some medium-sized vehicles in U.S. plants was one of the main reasons behind November's decline in exports.

Car exports to the United States were down 31% from a year earlier, it said, contributing to a 21% drop in overall Japanese exports. Overseas production of Japanese cars is expected to top 10 million units by 2005, overtaking domestic output, the Nihon Keizai Shimbun business daily reported on Monday.

The surplus with the United States - the destination for almost 30% of Japan's exports - was down 29.8% from a year earlier at 548.3 billion yen, the 11th straight month of decline. "I wouldn't read too much into November's figures if the cause was from a change in production sites. The recovery in the U.S. economy is picking up and Japanese exports should follow," said Yasuo Goto, an economist at Mitsubishi Research Institute.

A 5.2% year-on-year decline in imports, the first such drop in 15 months, may also prove temporary, with the main reason being the steepest year-on-year drop in crude oil imports since March 2002 - due to milder than usual winter weather.

In a sign that the economy was still on a recovery track, the Ministry of Economy, Trade and Industry said the all-industries index, regarded as a proxy of gross domestic product (GDP), rose 0.8% in October from the previous month. The tertiary sector index, a core component of the all-industries index covering mainly service industries, rose 1.1% to a record high of 110.2, led by sectors including transport, freight, mobile communications and retail.

Last week the government forecast that GDP would likely grow 1.8% in real terms in fiscal 2004/05 after a projected 2.0% expansion this year. It said that private-sector consumption was likely to gather pace as growing corporate earnings filtered through to personal income. Tokyo's benchmark stock index was helped by the industrial data, closing up 0.86% at 10,372.51. The yen rose slightly to around 107.53 to the dollar.

China to buy US genetically modified soybeans
Dec 22, 2003 - China has told U.S. officials that it will grant permanent approval for the import of American genetically modified soybeans, a U.S. Department of Agriculture official said today.

Over the past few years, U.S. soybean exports to the important Chinese market have been put in jeopardy by Beijing's shifting policies toward genetically modified foods. More than two-thirds of U.S. soybeans are grown from biotech seeds that can withstand herbicides such as Roundup Ready made by Monsanto Corp.

"The interim certifications remain in effect until April 20. They (Chinese officials) expect to have final approval for Roundup Ready soybeans completed two months before that," said David Hegwood, USDA's special trade advisor. Hegwood said he received the assurances when he met with Chinese officials Dec. 11-12 in Beijing to discuss biotech concerns. "Right now ... for soybeans, it looks like we're in very good shape," Hegwood said.

China, normally the largest importer of U.S. soybeans at a pace of about $1 billion annually, has significantly increased its purchases this year. In the past 3 months, China has bought more than 7.4 million tons of U.S. soybeans, totaling about $2 billion.

The U.S. soybean crop comes to harvest around September and shippers actively export the new crop through April or May. Beijing's latest assurances that it will continue to accept biotech soybeans will eliminate import uncertainties that could have arisen early next year, Hegwood said.

Freedom Tower to replace World Trade Center
Dec 19, 2003 - The Freedom Tower, designed to be the centerpiece of a rebuilding plan for the World Trade Center site, will rise 1,776 feet - an enduring tribute to the year the United States declared its independence.

Proposed to restore Lower Manhattan's skyline, the tower will be the world's tallest building, according to the architects, who unveiled a revised model today. The height stays as originally proposed a year ago by architect Daniel Libeskind, the site's master planner.

The downed 110-story twin towers of the World Trade Center site were once the world's tallest structures but ranked about fifth before the attacks. The intentional crashes of hijacked passenger jets destroyed the Twin Towers and five smaller buildings, killing 2,752 people.

Larry Silverstein, the trade center leaseholder and real estate developer, hopes to replace all 10 million square feet of commercial space destroyed by the September 11 terrorist attack. The tower's angular shape and appearance has been altered as a result of Libeskind's work with David Childs, Silverstein's architect.

Libeskind and Childs, forced to work together by rebuilding officials, were asked to submit a final design this week by New York Gov. George Pataki, who wants to break ground on the building before the Republican National Convention next August.

The new building design, unveiled at Federal Hall, the site of President George Washington's first inaugural, includes 70 floors topped by a column of energy-generating wind turbines. The tower is encased from top to bottom in a steel cabled netting that designers likened to cables on a suspension bridge like the Brooklyn Bridge.

A broadcast antenna brings the structure's total height above 2,000 feet. The building will include 2.6 million square feet of commercial space. There will be 63 floors of office space capped by an indoor observation deck, a restaurant above that, and a vent space on top. The glass tower has a twisted shape which designers say is meant to echo the Statue of Liberty in New York Harbor.

EU needs to accelerate grain imports in 2004
Dec 19, 2003 - The European Union needs to boost grain imports to fill its huge shortage, but cereal prices are currently high and are unlikely to fall, analysts and traders said on Friday.

Europe's wheat, maize and barley supplies are dwindling after spring droughts and a blistering hot summer shriveled harvests across the continent. Millions of tons of grain will need to be imported by the end of the season in June.

Prices in Europe have risen about 50% since the season's start, despite the suspension of export tenders. French wheat is now above $200 a ton FOB Rouen, which is about $40 above U.S. prices.

Last season the EU was swamped with cheap grain from Russia and Ukraine and rushed through import quota restrictions to curb the flow. This year east European states have cut exports to cap domestic prices. Traders said prices would remain supported by internal demand and tight world supplies.

"The tightness in the market will remain," an analyst at Strategie Grains said. "We are entering a period of rising need by the main importers. Globally the market is very badly covered," a trader said. "North Africa is believed to be covered until the end of January, and after that they've got nothing," he said.

According to the EU's latest figures, the bloc has imported just over 2 million tons of soft wheat this season and 1.6 million tons of maize (corn). But much more is needed to make the EU's balance sheet work, analysts say.

Strategie Grains estimates that 4 million tons of wheat - including 3 million from North America - will be needed by the end of the season. In addition, the EU needs more than 5 million tons of maize imports and it will have to sell at least 3 million tons of rye from its intervention stores - sales so far this year have reached almost 900,000 tons.

Imports of maize (corn) from South America have been progressing well with more than 1.6 million tons sold so far this season, Strategie Grains estimated.

"A study of each (grain) balance sheet confirms, even if the price rise potential is limited, that pressure will remain and prices cannot drop sharply from here," it said.

Traders said they believed the market was now entering a stabilization phase, with southern hemisphere harvests in Australia and Latin America becoming available for export. However, even with these supplies coming on stream, there is little room to maneuver and any change in the demand/supply picture would be enough to spark price increases again.

The United States, Australia and Canada have returned to more typical grain production levels following droughts last season. China remains the big question mark. Analysts said that with world grain stocks at their tightest since the 1970s and an increasingly wealthy and liberated market in China running down its own inventories, the stage could be set for a major global grain rally.

"We can only hope that China doesn't surprise us," one said.

US sugar industry fears CAFTA
Dec 18, 2003 - For the Bush administration, the US-Central America Free Trade Agreement (CAFTA) is a win in the trade arena. But many in the US sugar industry fear it could mean the beginning of the end.

The United States and four Central American nations reached agreement Wednesday on a free-trade pact that will cut the barriers to trade and investment among the five nations. "We need investment, we need markets, and this will get things moving in the right direction," said Mario Arana, trade minister of Nicaragua, which joined the agreement along with El Salvador, Guatemala and Honduras.

While the U.S. trade representative's office touted the benefits of the Central American Free Trade Agreement to U.S. agricultural sectors such as beef, pork and poultry, Florida sugar industry officials expressed alarm and shock Wednesday at provisions of the treaty.

CAFTA initially allows an additional 85,000 tons of duty-free sugar into the United States from the four countries, which now export 111,000 tons a year under World Trade Organization rules. In 15 years the countries' imports could reach a total of 236,000 tons and continue to increase 2,000 tons a year after that, a top U.S. trade official said.

With the possibility of increased imports in other trade agreements being negotiated with countries such as Thailand, South Africa and Australia, there's the potential to bring an additional 1 million tons of sugar a year into the U.S. market, said Dalton Yancey, executive vice president of the Florida Sugar Cane League in Washington.

"It means efficient producers in the U.S. are going to have to give up their farming enterprise to make room for Central American sugar producers and others," Yancey said. "If you get the price below our cost of production, then we are real estate."

Florida produces 2 million tons of sugar a year, valued at $800 million, from sugar cane grown on 441,000 acres in Palm Beach, Martin, Hendry and Glades counties.

The four Central American countries have about 31 million residents, close to the population of California, and 80 percent of U.S. manufactured goods and 50 percent of farm products will enter duty-free as soon as the agreement is in effect. Congress must vote on the agreement next year.

"We had hoped they would exclude sugar and negotiate it only at the WTO," said Carolyn Cheney, Washington-based representative of the Sugar Cane Growers Cooperative of Florida in Belle Glade. "This is trading U.S. jobs for foreign jobs and that's all it is."

Sugar prices are already near loan-forfeiture levels, said Van Boyette, a Washington-based vice president of Florida Crystals Corp. in West Palm Beach. More imports would lower prices and lead to forfeitures, he said. "I don't see how they are going to squeeze all this into the toothpaste tube," Boyette said.

US retail sales slower than expected
Dec 18, 2003 - U.S. retailers are becoming nervous about their annual holiday face-off with consumers. Sales have been slower than expected, forcing store owners to offer steep discounts to salvage what remains of a disappointing Christmas shopping season.

Before this year's holiday shopping season began, forecasters said that tight inventories and improved consumer sentiment would help retailers avoid profit-squeezing clearance sales this year. But stores are now slashing prices in the face of sluggish sales, raising concerns about fourth-quarter earnings.

"The idea that this is going to be a year without any markdowns is ludicrous," said Craig Johnson, president of consulting firm Customer Growth Partners. "You go into some of these stores and in every single aisle there's a sign that says `50% off'," he said.

Sears, Roebuck and Co. even issued a press release pointing out that "while some experts speculated that this holiday season might not be as promotional as in the past, the promotions are on and Sears is in the game aggressively."

Retailers are still counting on the last weekend before Christmas to be the busiest shopping period of the year, but Wall Street remained unconvinced and shares of many retailers fell this week. Two of the biggest chains - Wal-Mart Stores Inc. and Target Corp. - said Monday that December sales were not as strong as many analysts had hoped. Pier 1 Imports Inc. said Tuesday that December sales were not as good as expected and it may miss fourth-quarter earnings targets.

"It now seems that only heavy sales in the week before Christmas will rescue the season," said Martin Bukoll, retail analyst with Northern Trust. The holiday shopping season in November and December accounted for nearly a quarter of retailers' annual sales last year, and some stores earn all of their profits in that period.

In 2002, a weak economy and worries about war in Iraq hurt consumer spending, and the holiday season generated the smallest sales gain in more than 30 years. This year was supposed to be different. Stellar third-quarter growth and an improving job market were expected to increase holiday sales by 5% to 7%.

Some industry-watchers say the stock market may be giving up on the holidays too soon, noting that the measures that most analysts use to gauge retail sales can understate demand. "The American consumer is much steadier than a lot of these prognosticators or Wall Street types think," Customer Growth's Johnson said. "Overall sales are still going up."

Asia freight rates nudge higher on China outlook
Dec 17, 2003 - An expected reduction in Chinese coal and corn exports next year has increased timecharter (international ocean shipping) rates as buyers search for other supplies, brokers said on Wednesday.

Modern panamax rates for the benchmark route from the U.S. Gulf to Japan were between $55 and $60 a ton for January and February shipments. This is a price drop from record highs seen since early December on tight tonnage supplies, they said.

"Activity is subdued and spot rates are steady because of year-end holidays," a Seoul broker said, noting seasonal demand for iron ore and coal for heating by China, Japan and Europe. "Firm long-term expectations are propping up period rates," he said.

In the period market, timecharter rates for the U.S. Gulf to Japan were quoted at $34,000 a day plus $570,000 or $575,000 ballast bonus (BB), rising from a minimum $31,500-$32,000 a day plus $500,000 ballast bonus (BB) a week earlier, brokers said.

Timecharter rates in the Pacific market were $40,000 a day versus $39,000 to $40,000 last week, they said. They said China, a major coal exporter, may slash offshore sales to ease tight local supplies. This would cause more freight congestion at ports of other exporters.

"With current Chinese exports, it still takes about 10 to 15 days to ship coal at ports of Indonesia and Australia with almost full operation," said one broker. "Without China, what could the congestion be?"

It was a similar story for corn exports, with South Korea looking to buy U.S. corn amid concern over Chinese corn supplies, brokers said. At the same time, grain markets expect increased Chinese imports of U.S. soybeans, further boosting demand for shipping.

A surging economy, rising power generation and the onset of winter have sent coal demand in China soaring in the fourth quarter. Supplies have been squeezed by limited transportation and the shutdown of hundreds of mines due to safety concerns.

Some brokers said rates might dip during the holiday season over the next two weeks. One deal from the U.S. Gulf to Japan for the end of December was concluded at $54 per ton and another for February has been signed at $54.50, said a Japanese broker.

Voyage rates for the U.S. Gulf to South Korea and Taiwan are normally about $0.50-$1.00 a ton less than for the U.S. Gulf to Japan, reflecting higher charges at Japanese ports.

CAFTA: USA & 4 Central American nations reach trade deal
Dec 17, 2003 - The United States and four Central American nations - El Salvador, Guatemala, Honduras and Nicaragua - have reached agreement on a free-trade deal.

U.S. trade officials hope the U.S.-Central American Free Trade Agreement (CAFTA) will pave the way for the proposed Free Trade Area of the Americas, which would cover every country in the Western Hemisphere except Cuba.

Nicaraguan Minister of Industry and Trade Mario Arana said the countries would hold a news conference at noon on Wednesday to announce details of the pact. The pact finally met with unanimous approval after a final marathon negotiating session late last night.

"We will be informing everyone that we have concluded our negotiations on very favorable terms for the region and also for the U.S.," Arana said after a meeting with U.S. Trade Representative Robert Zoellick and other top trade officials from the region to close the deal.

There is apprehension that the accord will face a tough battle for approval in the U.S. Congress. U.S. labor unions have already said they would work hard to defeat the Central American agreement on the grounds it will lead to more U.S. jobs moving abroad.

Arana said the Bush administration indicated it would push for approval of CAFTA in the first half of 2004. That would get the required vote of approval out of the way well before U.S. presidential and congressional elections in November.

"We understand they will submit it to Congress in March or April and they will try to have it passed by early July," Arana said. The United States had hoped to wrap up an agreement this week with five Central American countries.

The negotiations suffered a setback on Tuesday when Costa Rica said it would need at least one more round of negotiations in January to complete its portion of the pact. U.S. exports to the five Central American countries were projected to reach $11.5 billion in 2003, or about the same as to Russia, India and Indonesia combined.

The United States, which already has a free trade deal with neighbors Canada and Mexico - along with several other bilateral pacts - has been pushing for trade accords around the world as a way to boost economic growth. But critics say the Bush administration's trade policies have been inconsistent and occasionally protectionist because of political pressures from some affected industries at home.

Reflecting current economic sensitivities, CAFTA is expected to include only minimal opportunities for the Central American countries to sell more sugar and textiles to the United States.

EU pig industry welcomes aid, seeks more exports
Dec 16, 2003 - Europe's pig meat industry, struggling with a plunge in prices, welcomed the proposal of new EU subsidies for storage, but some voiced concern that the measure did not tackle the long-term root cause of the massive over-supply.

European exports of pork and pig meat have been hit by the high value of the euro and by the partial disappearance of a key Russian outlet through import curbs there. As a result prices in Europe have fallen dramatically.

Major producers such as Denmark and the Netherlands have had little option but to increase sales to other EU states, piling pressure on farmers in countries such as France and Germany. The European Commission responded on Monday to a request from France for emergency action by re-instating subsidies to finance private storage of pig meat from December 22. It estimated it would affect some 80,000 tons of pig meat.

"This rapid reaction by the Commission is an important step in the recovery of the pork market in Europe," French Farm Minister Herve Gaymard said in a statement. German pig prices initially rose on the news but later fell, with live pigs on the WTB futures market for January delivery in the late afternoon down two cents on the day at 1.135 euros a kg. In early November they had been around 1.25 euros a kg.

The move is designed to give relief to an industry that has also been hit by the rising costs of feed grains after this year's drought and summer heat wave decimated crops.

"The situation is so severe that this decision will save the livelihood of several farmers," said Bendt Claudi Lassen, head of Denmark's Bacon and Meat Council. "We were prepared for prices to fall in December, but we were not expecting such a massive fall. With the EU decision, the price situation will be more balanced, softening any further decrease."

However, some industry officials stressed that storage aid would only give a short-term boost to a market that is in structural surplus and urged the Commission to act immediately to increase exports. "The subsidized storage will contribute to contain losses of producers, but when meat returns to the market, if the market is still in surplus, the situation could be worse," said Giancarlo Cintoli, of the Rome-based Inter-Professional Group of pork farmers and industry.

France's industry body INAPORC (Interprofession Nationale Porcine) said it was disappointment that the Commission had not re-instated export refunds for pig meat. "Such a decision is indispensable to combat the strong market imbalance which has led to the low prices and to allow a significant upturn in trade with non-EU countries ready to import pig meat in anticipation of winter," INAPORC said.

German traders echoed a call for help with exports. "There was a bit of disappointment that the EU had not decided to support exports to achieve major market improvement. I do not see prices rising in the near term," one said. "With the Russian market shut off it, is difficult to see where exports could go. I think the EU will have to accept a small pork mountain in the short term - otherwise farmers are going to go bankrupt," another said.

The British Pig Executive (BPEX), a unit of the MLC, agreed. "The British pig meat supply chain will not be sustainable if feed and pig prices stay where they are. The gap must be closed or we are likely to see a substantial decline in pork production across Europe," chief executive Mick Sloyan said.

Russia to return as major grain exporter
Dec 16, 2003 - The drop in Russia's cereals harvest this season should be seen as temporary and within a few years its massive output could become the world benchmark for grain prices, industry experts said.

Speaking at a seminar in Paris organized by France Export Cereales, experts are convinced Russia will soon regain its position as a major world exporter.

"Will it be two years or five years that Russia harvests 100 million tons? I don't know. What is sure, is that you can't say that it cannot do 100, or even 120 million," said Lorraine Bouvier, former director at major trading house Louis Dreyfus. "That's when it will set the world market price."

After two harvests around 85 to 87 million tons, Russian production dropped 25% in 2003, due to winter frosts and a mix of heavy rains or drought in different growing areas. But despite unpredictable weather, output is expanding as investment in infrastructure and storage facilities cuts costs and previously fallow land is brought into production.

The quality of Russian cereals has often been criticized, but France Export Cereales said grain quality was not an obstacle to increased sales abroad and in fact was improving. "The best wheat is reserved for exports," it said in a report.

Russia's export capacity has in the past been limited by the number of ports and the disheveled state of the main shipping terminal at Novorossiisk. But Kaspi said this did not present an insurmountable problem, noting the country had moved from being an importer to a large exporter in one year, between 2002 and 2003.

Russia's return to the world stage is all the more probable as its livestock industry will not be able to absorb all of its surplus grain, experts said. "One can dread an increase in the exporting capacity of the Russian grain sector, all the more because the poultry sector is booming, which prefers imported soymeal," said Jean-Jacques Herve, ex-agriculture official at the French embassy in Moscow.

He said higher pig and poultry production - a priority for Moscow - would use up less than five million tons of cereals more than at present. "In light of this, any increase in the harvest above 75-80 million tons, would be destined for export," Herve said.

France Cereales Export believes Russia is still far from self-sufficienct in terms of meat products, despite the recent import quotas designed to boost domestic production.

New anti-terrorist rules slow US food imports
Dec 15, 2003 - This weekend, new US government regulations for importing food became effective and food importers needed to comply with requirements or face cargo holdups. Some company officials admitted they're unsure how the new system will work and are unprepared to comply with the deadline.

The Bio-Terrorism Act of 2002, which includes several new food safety provisions under the control of the U.S. Food and Drug Administration (FDA), established new regulations for food being shipped into the United States. The new regulations became effective December 12th

The rules apply to all the fish, produce and processed goods imported into the USA from other countries. Two key additions to the legislation add an additional screening process to the imports. The first is a requirement that there be 24-hour advance notification of any food product being shipped into the United States - to give food inspectors time to look at the shipment. Notification can be made via e-mail to simplify the process.

The second new FDA rule requires that both domestic and foreign businesses handling food and related products for human and animal consumption be registered with the agency.

This means, for example, that if a local importer is bringing in cheese from France, the importer, the cheese maker and processor all need to be registered with the FDA. If there is no registration number, the imported cargo will be held up until the businesses register.

"It's going to be difficult as everything has to change in order to comply," said Mike Bowers, president of M. Bowers & Co., a local customs broker. "Once these regulations go into effect, everybody will get a better sense of what their role is. Until then, shipments will be held up and there will be a break-in period."

FDA estimates that about 100,000 foreign firms have registered and anticipates the number to go up to 400,000 in the next couple of weeks. The registration itself is a simple process that requires a company to fill out an online form with details about its business. However, the second rule, in which FDA requires importers to give prior notice of a shipment's arrival - eight hours ahead for sea cargo and four hours for air cargo - concerns local businesses.

"It will be difficult in certain circumstances, especially from countries that are not too far away," said Tom Kraft, fishmonger at T.J. Kraft Ltd., which brings in 2,000 to 15,000 pounds of fish daily from Asia, South Pacific islands, South America and Canada by air. "It is hard for us to anticipate something as sweeping and encompassing as this new law, the way it will work and be enforced," Kraft said.

Much of the coordination of the paperwork is handled by brokers, said customs broker Bowers. The clients give the paperwork to the broker who inputs it into the system then transfers the records to U.S. Customs and Border Protection electronically.

For its part, the FDA signed a memorandum of understanding with the customs agency last week. Customs and FDA will share information and customs officers in ports across the nation will be permitted to conduct investigations and examine imported food items. This will help FDA meet its personnel requirement to handle the undertaking. The agencies will train customs agents to carry out this new line of work.

"We have taken steps to make sure that food that presents a threat will be detained and all available records will be used to track down significant food risks," said FDA Commissioner Mark McClellan.

Thailand grows 6.5 percent in third quarter
Dec 15, 2003 - Thailand's economy grew 6.5% in the three months to September compared to a year earlier, pushing the forecast for 2003 to 6.3%, the government's economic advisory body said.

The National Economic and Social Development Board (NESDB) raised its full-year forecast from the 5.8-6.2% estimate issued in September. In the first quarter, GDP grew 6.7 percent from the previous year while second quarter GDP was up 5.8 percent.

NESDB secretary-general Chakramon Phasukvanich said that exports in 2003 are expected to grow 16% to $77.6 billion, while imports should be up 14.5% to $72.6 billion. Previously, the NESDB said it expected exports to reach $75 billion this year, up 12.1%, while imports were estimated at $71.3 billion, up 12.4%.

The current account surplus is projected at $7.9 billion, or 5.6% of gross domestic product (GDP). It was previously estimated at $7.6 billion or 5.4% of GDP. Inflation is seen at 1.9%, unchanged from the previous forecast, Chakramon said.

Prime Minister Thaksin Shinawatra has set a target of 8% economic growth for next year and vowed to achieve double digit growth in 2005 as the kingdom continues a strong recovery from the 1997 financial crisis.

India taking steps to promote South Asia trade
Dec 12, 2003 - India decided this week to allow domestic private airlines to fly to neighbouring countries in South Asia and it reflects the government's enthusiasm for pushing free trade with its neighbours.

Countries in the region are trying to forge closer economic ties, despite many deep-seated differences. Tensions between India and Pakistan in particular, have long stunted attempts to improve the economic atmosphere.

India has been the motivating force behind the seven-nation South Asia Association for Regional Cooperation (SAARC) which was established in 1985. SAARC set up a preferential trade agreement in 1993. It had planned to set up a free trade zone by 2001, but mutual suspicion between India and Pakistan has prevented that from happening.

In the absence of regional trade agreements, individual countries have been setting up separate trade pacts among themselves, with India taking the lead. In recent weeks, Indian officials have visited Bangladesh, Nepal and Sri Lanka to bolster trade ties.

As south Asia's biggest economy and trading partner, India has free trade agreements (FTAs) with Nepal, Bhutan and Sri Lanka. India has a trade surplus with all countries of the region - its exports to them exceed its imports. India wants the success of its FTA with Sri Lanka to be replicated with other countries like Bangladesh and the Maldives - but not Pakistan.

Smaller countries have benefited tangibly from the FTAs. In the last three years, Sri Lanka's exports to India rose by 40 per cent. This has caught the imagination of other nations. Now there is talk of allowing the Indian currency to be used in Sri Lanka. At present, only Nepal allows Indian currency to be used freely.

Professor Charan Wadhwa, of the Delhi-based Centre of Policy Studies, argues that India has decided not to wait for Pakistan to understand the changing economic realities in the region.

In 1993, India gave the most favoured nation (MFN) status to Pakistan - ensuring a large number of Pakistan's exports have been duty free. Pakistan has not reciprocated the gesture and with the SAARC summit scheduled for January in Pakistan, India has increased its demands for economic concessions. But Pakistan's Government remains adamant that it cannot grant India the status of a preferred trading partner under current circumstances.

The Pakistani Government's perception is not shared by its business community. Pakistan's business community wants "politics and economic relations to be separated", says S M Muneer, the former president of the Federation of Pakistan Chambers of Commerce and Industry.

Mr Muneer says Pakistan's exports to India have increased in the last few months and India offers a big market for them. Several Pakistani trade delegations have also visited India in the past few months. For decades, Pakistan chose to import iron-ore, rice and sugar from Australia, Indonesia and Brazil respectively. Instead, it could have been imported these from India, and enjoyed lower transport costs.

This seems to be changing somewhat. For example, after a competitive bid, Pakistan Steel has decided to buy 1.3 million tons of iron-ore from India next year. And, last month a delegation from Pakistan signed a contract to import one million tons of tea.

Many in the government oppose increasing trade ties with India and this led to some protests - politics remains the biggest challenge to easing trade ties in South Asia.

Greenspan declares China currency value a non-factor
December 12, 2003 - The U.S. Federal Reserve Chairman, Alan Greenspan, said Thursday that a rise in the value of China's currency against the dollar probably would have little impact on America's soaring trade deficit or the loss of U.S. manufacturing jobs.

Greenspan's comments were at odds with American manufacturing companies and various government officials who contend that China's currency is undervalued by as much as 40% against the dollar.

The Bush administration, facing Democratic criticism over the soaring trade deficit and a loss of 2.8 million U.S. manufacturing jobs since July 2000, has taken up the currency issue with Chinese leaders. Both Treasury Secretary John Snow and President Bush have urged China to stop the practice of linking the value of the Chinese currency to the U.S. dollar at a fixed rate.

They have complained that the low-value yuan has given Chinese products an enormous price advantage against American goods. They say it has contributed to record trade deficits with China and the loss of thousands of U.S. jobs.

But in a speech to the World Affairs Council of Greater Dallas, Greenspan called the belief that U.S. jobs could be created with a stronger Chinese currency "conventional wisdom" that oversimplified the economic issues involved.

Greenspan - who is arguably the most respected American economist ever - said that if China did allow the value of its currency to float and the currency rose in value, as U.S. manufacturers expect, it might cut Chinese exports of such goods as textiles to the United States. But he said rather than boosting production of textiles in the United States, it was "far more likely" that U.S. imports from other low-wage countries in Asia would simply replace the Chinese textiles.

Greenspan said the rise in the value of China's currency "would be unlikely to have much, if any, effect on aggregate employment in the United States."

In his speech, Greenspan said there is concern that the massive amounts of money China was spending to control the value of its currency could threaten to ignite inflation in that country, given that its money supply was rising more than 20% this year.

Greenspan also used yesterday's address to elaborate on warnings he issued last month about the damage that could be inflicted on the U.S. economy from erecting new barriers to protect domestic industries against foreign competition.

Pound's strength bad news for exporters
Dec 11, 2003 - The British pound rose to a near 11-year high against the dollar yesterday, spelling good news for Britons traveling to the United States but bad news for British transatlantic exporters. Sterling climbed to $1.7408 by mid-morning yesterday, the highest level since September 1992, analysts said.

The US greenback also sank to another new low against the euro and a three-year low against the Japanese yen. The dollar's weakness against the pound could give a much-needed boost to UK airlines and tour operators, who saw travel to the US fall following the September 11, 2001 terrorist attacks and other world events.

The pound's rise is likely to be an unwelcome development for companies that do much of their business in the US, as their products become more expensive for US buyers.

The latest rise was widely seen as a reaction to speculation that the American Federal Reserve will keep interest rates on hold when it announces its latest decision. The Fed cut rates to 1% in June and has said it could keep them low for a while. Higher interest rates generally help currencies by offering investors better returns on deposits.

Alex Scott, senior research analyst at Seven Investment Management, said the Federal budget deficit as a percentage of gross domestic product "is high and rising". That means Washington is borrowing more by issuing government bonds, which adversely affects the dollar.

Mr Scott said anything priced in dollars and paid for in sterling gets cheaper as the dollar weakens, so UK tourists and businesses whose costs are in dollars could benefit. But it could also mean less US tourists coming to the UK, Mr Scott said.

"For those UK businesses exporting goods or services to US buyers, or those trading in dollars, it becomes tougher to get into the US market," he said. Mr Scott added, however, that British exporters to the eurozone were getting some relief from sterling's relative weakening against the euro in the last year or so.

Strong Aussie dollar hurting exporters' wallets
Dec 11, 2003 - The Australian dollar surged to a 6-year high on Tuesday, reaching US74.30¢. The soaring dollar has started to bite deeper with two more mining companies yesterday sounding profit alarms and a major industry group warning of pain to come for manufacturers.

Rio Tinto-controlled Coal & Allied has flagged a $20 million loss for 2003 because of the rampaging currency and Perth-based iron ore miner Portman said its profit would be at the lower end of analysts' forecasts of $17 million to $23 million.

The profit warnings came as the Australian Industry Group warned that exporters should learn to live with the higher dollar. While current and medium-term exchange rates would come off at some point, the AIG warned in a report that the dollar would never retreat to the US50¢ levels exporters were enjoying just a year ago.

"For most of the past 40 years, the Aussie has been traveling on a one-way downward ticket. That journey has now ended," the report said. "The two principal forces creating the downward trend, declining terms of trade and excess inflation, have disappeared."

AIG chief executive Bob Herbert said there was unlikely to be a return to exchange rate levels of US50¢. "That episode appears more clearly as an aberration created by a greenback bubble that is now deflating," he said. "The present equilibrium, or normal level for the Aussie, is in the range of US65¢ to US75¢, most probably not far from US70."

The comments follow a 28% surge in the Australian dollar this year, climaxing with a six-year high of US74.30¢ overnight on Tuesday. The higher dollar spells bad news for exporters, which have been enjoying low exchange rates below US60¢.

At the start of this year an exporter earning $US1 million revenue would have pocketed nearly $1.8 million once converted to Australian dollars. That same revenue now would equate to just $1.3 million, highlighting the pain being felt by mining companies and other exporters.

Craig O'Brien, head of BankWest's foreign exchange and commodities trading, said there appeared to be little relief in sight for exporters. "The overall view is for the Australian dollar to continue higher," he said.

Coal & Allied's forecasted $20 million loss compares with a $159.7 million profit for 2002 and a $7.2 million profit for the half year to June 30. Managing director Gary Goldberg said revenues continued to be adversely affected by the extremely strong Australian dollar and increasing demurrage costs - or late loading fees.

"(In the) year to date, the Australian dollar has averaged US64.1¢ compared with US54.3¢ for 2002 and has been above US74¢ today," he said. "This, together with lower average realized coal prices for 2003 and demurrage costs averaging $US1 per ton over the year, will adversely affect our results."

Portman's profit comments resulted in a 4¢ drop in its share price to $1.39. "The appreciating Australian dollar is having an impact and that's despite Portman being reasonably well hedged," managing director Barry Eldridge said.

Portman has about 70% of 2004 revenue hedged at US56¢ and has $US26 million of 2005 revenue hedged at US60¢. Eldridge said the iron ore majors, Rio Tinto and BHP Billiton, were expected to push for "robust" price increases to help relieve some of the currency pain.

Brazil rallies G20 countries in pre-WTO meeting
Dec 10, 2003 - The Group of 20 countries that were instrumental in halting World Trade Organization (WTO) talks last September are gathering this week in Brazil. Negotiations in Mexico collapsed when poor nations fought for access to rich nations' markets and it became clear that no "middle-ground" could be reached.

The gathering will be the first encounter between the G20 nations. The meeting will be led by Brazil, India and China, but top WTO and EU officials will also be in attendance.

The bloc represents over half the world's population and two thirds of its farmers. They will resolve to set a minimum agenda for the next WTO meeting in Geneva on December 15th. It is unlikely to break an impasse in world trade talks, but it could prevent them from unraveling when the G20 bloc meets its main opponent, the United States.

"The idea is to show the G20 still exists, that it wants to break the impasse," said Soraya Rosar, a foreign relations expert for Brazil's biggest industry lobby, the National Confederation of Industries.

The two-day meeting begins on Thursday and will test the strength of the loose G20 political alliance which has a common commitment against the $300 billion a year rich nations give their farmers in subsidies. Poor nations say that the aid distorts commodity prices and blocks their exports.

However, the bloc has as many divisive issues as those that unite it. The G20 nations have radically different economic aims and their differences could lead to a split. For example, while Brazil wants to break down all tariff barriers to aid its cheap farm exports, India wants to continue to protect its 640 million small farmers with subsidies.

Some analysts believe agriculture will not even be discussed in Brazil because it is such a sensitive subject. Instead, proposed rules on investment and competition - the issues that ultimately led to the collapse of September's WTO talks - could become the focus of talks with EU External Trade Commissioner Pascal Lamy and WTO chief Supachai Panitchpakdi.

The Cancun meeting was said to be close to agreement on farm policy before the so-called "Singapore issues" emerged and consensus became impossible to find. Brazil may try to move the G20 closer to the European Union to see if it can reach a modest agreement to cut farm market barriers. The United States has promised to cut its domestic farm subsidies if the European Union does the same.

Many Asian and African countries are opposed to "Singapore issues" while Brazil and others are less worried. These divisions, and U.S. opposition to what it sees as intransigence by the G20, have already made some Latin American nations leave the grouping formed ahead of the Cancun talks.

"Avoiding this drain is a big challenge for the Brazilian leadership," said Amancio Jorge, director of Sao Paulo's Prospectiva consultancy on international relations. If the Geneva meeting, or a larger February WTO summit, reaches a basic accord on agriculture, analysts believe Brazil and other G20 members could start to go their separate ways.

"This could all unravel, these groupings have a tendency to do so," said Mario Marconini, head of the Brazilian Centre for International Relations, and a former WTO official.

India may reverse palm oil duty reduction
Dec 10, 2003 - India may change import duties on palm oils in the federal budget which will be presented to parliament in February, according to Rajnath Singh, the Indian Farm Minister.

The Agriculture Ministry has proposed raising the duty on refined palm olein to 85% from 70% to protect farmers, but the Finance Ministry has yet to take a decision. In early 2003, the Ministry lowered duties on RBD palm olein to 70% from 85%, to give consumers some relief from high vegetable oil prices in the domestic market.

"We had written to the Finance Ministry on raising the duties nearly three months back. The ministry has not taken any decision," Singh told reporters. "Maybe they may take a final decision on this in the budget. This matter is under the consideration of the Finance Ministry," Singh said.

India is the world's largest edible oil importer, bringing in palm oils mainly from Malaysia and Indonesia, and soy oil from Argentina and Brazil.

China blames US exports for trade imbalance
Dec 9, 2003 - Senior Chinese economic and trade officials encouraged the United States to export more electro-machinery products to China in order to better balance the bilateral trade situation.

Ma Kai, minister of the National Development and Reform Commission, and Ma Xiuhong, vice-minister of commerce, told a press conference in New York yesterday that while China has become one of the fastest-growing export markets for the US, the structure of US exports to China is imbalanced.

For example, in the first 9 months this year, US exports of textiles to China increased by a surprising 138%, followed by farm produce at 97%. However, US exports of electro-machinery products to China increased by only 10%, Ma Xiuhong said. Meanwhile, China's overall imports of electro-machinery products from the international market have increased by 46% since January and have accounted for 60% of total imports.

"So, we must find the right point to solve the trade deficit problem in China-US trade relations," she said. The two ministers are members of the official delegation to the United States led by Premier Wen Jiabao.

Ma Xiuhong said China's exports to US are not the major reason for job losses of US workers. "I agree with views of many economists that the main factor influencing employment (in the US) is not imports, but its exports," said Ma Xiuhong. "The facts show China has become a major factor pushing US exports," she concluded.

Last year, overall exports by USA decreased by nearly 5%, but its exports to China increased by 15%. And in the first nine months of this year, overall US exports increased by 2%, while its exports to China went up by 18.5%.

Ma Kai told reporters that the overall situation of China's international trade is balanced, as its trade surplus decreased remarkably.

Oil prices climb in China to help ease shortage
Dec 9, 2003 - Recent prices increases on oil products in China are expected to help stabilize the market there industry watchers said. China has been suffering through a supply shortage for more than one month.

On December 6, China's National Development and Reform Commission increased the benchmark ex-factory price for gasoline by 6.6%, to 3210 yuan (US$388.10) a ton. Diesel prices rose by 6.8%, to 2820 yuan (US$341.00) a ton. Benchmark retail prices increased by the same margin.

The adjustment helps to align domestic prices to match international oil prices and encourages wholesalers to release gas stocks, easing the supply shortfall, experts said.

China generally sets its benchmark prices for oil products in accordance with average rates in the Rotterdam, New York and Singapore markets. But in an effort to support and stabilize the economy, China has held domestic oil prices steady since July, despite price increases in international markets.

Lower domestic prices have encouraged wholesalers to hold on to their supply in the hopes that prices would rise. Supplier speculation, along with the rapid increase in market demand, have forced thousands of filling stations in East, Central and West China to ration the supply of diesel oil since last month.

An official with Sinopec, Asia's largest refiner, said the price increase was expected since domestic prices are lagging behind world markets. "The price hike, together with many other efforts by oil companies, will ease the market shortage,'' said the official.

Sinopec and PetroChina, the nation's two largest oil companies, have increased refinery runs and crude imports since last month. The companies have also reduced the export of gasoline and diesel oil this month to satisfy domestic demand.

"The effort seemed to have paid off as the supply in the East China area is recovering,'' said an industry watcher in Beijing. "The South China market is the next target area for the two companies to step up their efforts to ensure the supply. And the oil market is likely to return to normal by the end of this month,'' he added.

But experts also caution that demand will pick up next month as millions of people will drive home for the Spring Festival, which falls on January 22. They also warn that heavy traffic will likely slow the transportation of oil products from refineries to targeted markets.

China premier in USA to ease trade tension
Dec 8, 2003 - Chinese Premier Wen Jiabao was at the New York Stock Exchange Monday morning, ringing the opening bell and trying to ease trade tensions between the world's largest and the world's fastest growing economies.

The Chinese premier is on his second day of a tour that seeks to reduce tensions between the trading giants. The US has incurred a massive trade deficit with and in November imposed trade tariffs on various textile products and televisions from China.

The four-day visit takes place with a backdrop of political tension over U.S. ally Taiwan, which Beijing fears is creeping towards independence under President Chen Shui-bian, and moves to resolve international concerns over North Korea's nuclear program.

The Taiwanese parliament last month passed a law allowing referendums, and Wen said after his arrival in New York on Sunday that "separatist forces" in Taiwan were trying to "use democracy only as a cover to split Taiwan away from China."

Wen is also expected to stop by the site where the World Trade Center was demolished in attacks on Sept. 11, 2001. China swiftly backed the U.S.-led war on terror and the Sino-U.S. relationship has improved steadily since.

Chinese state media sought to play down trade differences. "It is important for China-U.S. economic relations to remain on track despite recent trade spats between the two countries," the official China Daily said.

Wen was to visit offices of General Electric, one of the world's most profitable companies which makes products from light bulbs to jet engines, and sign deals later in Washington to buy 5 Boeing 737 airplanes. Both U.S. firms were winners in symbolic Chinese buying sprees in November aimed at addressing U.S. complaints about the Chinese trade surplus, which Washington estimates will top $120 billion this year.

Treasury Secretary John Snow said on Friday the administration would press China to make the yuan more flexible. Analysts said Wen would likely stand firm against any swift move on the yuan, which has been fixed at 8.28 to the dollar since the mid-1990s.

Over the last several weeks Wen has stated that the value of the yaun has little to do with the American trade deficit and explained the domestic reasons for China's fiscal policy. China argues its debt-laden banking system is not ready to handle a currency regime change, and points out the country has its own problems with tens of millions of unemployed.

The United States will also push China to live up to World Trade Organization (WTO) commitments to open its markets, Snow said. China points to a mass of WTO-related laws it has already approved and says it is trying to fight piracy.

Wen was expected to seek reassurances from President George W. Bush on Tuesday that Washington would "oppose" the island seeking independence, a subtle but significant shift in the U.S. line it "does not support" such moves.

In Washington, U.S. transportation officials said in a statement the two sides would sign a maritime trade agreement that would expand bilateral trade and boost U.S. market access in China.

EU files WTO complaint over Indian dumping duties
Dec 8, 2003 - The European Union filed a formal complaint today with the World Trade Organization (WTO) over 27 antidumping duties imposed by India on EU imports.

"This move comes after growing frustration amid EU exporters not only at the escalation in the number of measures imposed by India, which has now become the world's largest user of antidumping practices, but also at the very low standards applied," the EU said in a statement.

EU statements also criticized New Delhi's "lack of transparency in its investigations, the poor justification for the imposition of measures and the lack of evidence linking EU exports to the harm caused to the Indian domestic industry". It said it had formally requested consultations with India over the issue - the required procedure before the case can be taken to dispute settlement proceedings.

Most of the duties are on imports of chemicals, pharmaceuticals, textiles or steel. Under WTO rules, countries have the right to impose additional duties on imports if they believe the goods are being "dumped" at below market price, either because of government subsidies or in an attempt to corner the market.

The EU says India has failed to abide by the strict WTO rules on how to determine whether goods are really being dumped. "EU exporters have lost exports of more than euro50million ($60.5 million) due to these measures," the EU said in a statement.

The parties have 60 days to try to reach a mutually agreed solution. If they fail, the EU can then ask for a legal ruling. India is famously protectionist in matters of international trade and tops the world's list by having initiated 241 anti-dumping measures since 1995.

Monday's news comes a week after India took first blood at the WTO when Geneva ruled in its favour against the EU's system of trade preferences to developing nations, concluding that they discriminated against other countries.

Both sides will have a chance to lock horns again when they meet in Geneva next week to kick-start the ill-fated trade liberalization talks known as the Doha Development Agenda.

The current dispute, however, is just in its infancy. Consultations will take place between the two sides in Geneva and will most likely lead to the establishment of a WTO panel early next year to oversee the dispute.

Bush finally scraps illegal steel tariffs
Dec 5, 2003 - President George W. Bush announced yesterday the end to protectionist steel tariffs, which the World Trade Organization had ruled illegal. Japan, China and Europe immediately canceled threats of trade retaliation and despite potential political damage ahead of next year's presidential election, Bush today is being credited in Western media for averting a global trade war.

Bush offered little to cushion the blow to U.S. steel makers and workers, some of whom accused the Republican president of "capitulating to European blackmail". Bush did say that he would keep in place an existing system to license and track steel imports so the government could "quickly respond to future import surges that could unfairly damage the industry".

Minutes after Bush's about-face, the European Union suspended plans for retaliatory sanctions against $2.2 billion in U.S. goods, including politically sensitive products such as citrus fruits from Florida.

Japan also said it would drop a threat to impose retaliatory tariffs on $458 million of U.S. goods, but added that it wanted to make sure the U.S. tracking system did not impair trade. "We hope that the United States will continue to abide by World Trade Organization rules and play a leading role in maintaining free trade," Japanese Chief Cabinet Secretary Yasuo Fukuda told a news conference.

China, whose steel industry is booming, said it would not impose threatened tariffs on some U.S. goods "if the United States makes good on its promises" but did not say if it would roll back retaliatory tariffs on steel set in November 2002.

The U.S. tariffs, which Bush imposed in March 2002, officially ended at midnight Thursday (0500 GMT), instead of March 2005 as initially intended when the tariffs were launched. Bush praised the success of the tariffs, claiming U.S. steel companies were once again well-positioned to compete both at home and globally.

Eliminating the tariffs could help allay market concerns that Bush was relying on protectionism to shore up the U.S. job market as he seeks re-election. Critics said it would have been inconsistent for Bush, who ran as a champion of free trade, to flout the WTO decision while chiding China to meet its WTO obligations.

"The system has shown it can be respected," a visibly delighted EU Trade Commissioner Pascal Lamy said in Brussels. The reversal could, however, spark a backlash against Bush in the battleground steel-producing states of Ohio, Pennsylvania and West Virginia as he seeks re-election in 2004.

The United Steelworkers of America union, representing nearly one million active and retired steelworkers, derided Bush's "complete lack of mettle in calling the WTO's bluff" and said it would appeal to Congress for protection. The decision came less than a month after the WTO ruled that the tariffs violated global trade laws.

"Our trading partners obviously engaged the administration in a game of guts poker," said Steelworkers President Leo Gerard. "Instead of telling them to 'bring it on', the president blinked."

In an attempt to appease the steel industry, the government pledged to enforce anti-dumping laws and said it would press U.S. trading partners to cut subsidies for steel producers. Although unhappy with the decision, several U.S. steel executives said they would make do without the tariffs.

In Tokyo, analysts said removing the tariffs would have a mildly positive impact on Japan's steel makers, whose profits have started to pick up thanks to cost cuts from restructuring and price rises sparked by booming demand from China.

JFE Holdings, the world's biggest steel maker by market value, said the move was a plus for the world economy but expressed concern about protectionism in China and elsewhere. "Global steel executives should cooperate with wisdom and courage to abolish protectionism in each country for the sake of creating a healthier management environment," JFE said.

In China, companies including industry leader Baosteel said the decision would make it easier to sell into the U.S. market. "Consequently there will be less supply on the Chinese market and that will push up prices here," a Baosteel executive said. However, some analysts said it could prove a double-edged sword if Beijing dropped its own retaliatory tariffs, inviting a flood of imports and undercutting prices.

Romania, Bulgaria receive $75 million export loans from USDA
Dec 5, 2003 - The U.S. Department of Agriculture (USDA) has approved $75 million in supplier credit loan guarantees for export sales of U.S. agricultural commodities to the southeast Balkans, including Romania and Bulgaria, the U.S. embassy said today.

An embassy statement said the credit guarantees - for the fiscal year 2004 - were authorized under the Supplier Credit Guarantee program (SCGP), which helps countries finance purchases of farm goods. It said traders may apply for credit guarantees on a first-come, first-serve basis.

Romania, hit hard by a long drought which slashed its wheat crop to a meager 2.47 million tons this year, had scrapped limits on duty-free wheat imports to cover acute shortages until the 2004 harvest.

It has imported some 900,000 tons of duty-free wheat from France, Russia, Hungary and Ukraine. But officials said the country might shift its interest to the United States and Canada as the European-origin wheat was already in short supply.

Last month, private U.S. exporters reported the sale of 110,000 tons of hard red winter wheat to Romania for the 2003/04 marketing year, according to the USDA.

Microsoft’s 'Longhorn' being sold by Asian pirates
Dec 4, 2003 - Bold software pirates in Malaysia are selling the next version of Microsoft's Windows operating system, 18 months before it is supposed to be released.

Underscoring the scale of piracy that software makers face in Asia, CDs containing software Microsoft has code named "Longhorn" are now on sale for 6 ringgit (US $1.58) in Malaysia. Microsoft expects to release Longhorn in 2005.

In the United States, Europe and Asia, licensed (legal) versions of Microsoft's Windows XP - its current operating system software - sells for over $100.

Chairman Bill Gates has said Longhorn would rank as Microsoft's largest software launch this decade. The pirated software on sale in Malaysia is an early version of Longhorn which was demonstrated and distributed at a conference for Microsoft programmers in Los Angeles in October, said Microsoft Corporate Attorney Jonathan Selvasegaram.

"It's not a ready product," he said from Malaysia. "Even if it works for a while, I think it's very risky to install on a home computer," he said.

Pirated copies of Longhorn are on sale in the largest shopping complex in Johor Bahru, the Malaysian city that borders Singapore. It is sold alongside thousands of pirated programs, music CDs and DVDs. Despite the shopping plaza having its own police station, pirated discs in plastic covers hang from racks in more than a dozen stores.

Such piracy is rampant Malaysia and in fact, throughout Asia. In May this year, the United States praised Malaysia for seizing thousands of illegal discs. According to sources, U.S. trade losses due to piracy in Malaysia fell to $242 million last year from $316 million in 2001.

Selvasegaram said pirates would shut their shops whenever Malaysian authorities launched a clampdown, but would quickly reopen within days or even hours. He said software companies were working with the authorities on the problem, but the police were more concerned about controlling pornography.

According to Microsoft press releases, Longhorn promises new methods of storing files, tighter links to the Internet, greater security and fewer annoying reboots.

China forced to ration gas at the pumps
Dec 4, 2003 - Gas stations in Eastern China have been rationing the supply of "gas oil" (diesel fuel) as refineries struggle to keep up with demand. The rationing started in early November and is expected to be in place until the end of the year, China-based industry sources said oil officials said.

The financial hub of Shanghai and the provinces of Jiangsu, Zhejiang and Fujian, with a combined population of some 170 million, are affected. The rationing has mostly been applied in stations on busy traffic routes.

"We are seeing an increasing supply/demand imbalance. Refineries are having difficulty pumping oil fast enough to meet demand, while stocks remain very thin," said a sales executive with China's largest refiner, Sinopec Corp.

The sources said that some petrol stations are restricting customers, mostly truck drivers, to a maximum of 100 liters (26 gallons) of gas oil per visit, while other stations are limiting purchases to a maximum of 150 yuan worth of fuel.

Diesel fuel is selling for 2.87-2.97 yuan per litre (USD $0.35-.36 per litre) in gas stations, which is around the government-set ceiling. Prices varied somewhat in different provinces.

The rationing has so far only applied to diesel fuel but not gasoline, a product also experiencing a boom in demand because of the rapid increase in cars on China's roads. Sources said that although Sinopec and PetroChina aimed for record quarterly refining output in the fourth quarter, following near-record runs since August, the pick-up in supply has lagged the tremendous rise in demand.

"When firms realized fourth-quarter demand was much stronger than earlier expected and decided to boost the throughput further, it was too late as it takes time to replenish crude supply," said a source with China's largest refinery Zhenhai Refining & Chemical Co Ltd.

China raised crude imports in the fourth quarter from top supplier Saudi Arabia and also from West Africa, but most of the incremental supply is not scheduled to hit Chinese shores until the middle of December or later.

The tight supply is partly the result of a power shortage, rising demand from the fishing sector and a seasonal pick-up in oil use in transportation, which experiences an increase in truck traffic between provinces in the winter.

"Our drivers are complaining that it's getting more and more difficult to get their tanks refilled," said a manager with a private logistics firm in the eastern city of Ningbo. The firm has more than 30 trucks shuffling between Fujian and Zhejiang provinces.

The rationing illustrates how China's booming oil demand is literally fuelling the booming economy. Now the world's sixth-largest economy, China's GDP growth is expected to exceed 8% this year.

The International Energy Agency has projected that China's oil demand would gain 8.9% in 2003 and rise to 5.39 million barrels per day. It also forecast that China will soon replace Japan as the world's second largest oil consumer after the United States. For more information, see yesterday's story "China's oil consumption reshaping world market"

China's oil consumption reshaping world market
Dec 3, 2003 - China's economy is booming and along with it China is developing a world-class thirst for oil. Securing steady crude supplies into China is reshaping the global energy scene.

China's factories are gobbling up huge amounts of oil. The fuel is the key feed stock for petrochemicals, which the factories use to crank out plastics, mobile phones, toys and computer parts.

"China is having an incredible influence on energy flows, not just in Asia but on a worldwide basis," said Peter Davies, chief economist at BP PLC. "The whole center of gravity of the world energy market is changing."

This year, China surpassed Japan as the No. 2 petroleum user - after the USA. Imports for the first 10 months of 2003 were up 30% from 2002 levels. By 2010, the International Energy Agency predicts China will be importing 4 million barrels a day and by 2030, that figure is expected to grow to 10 million barrels a day.

Meanwhile, domestic oil output is flat. Chinese oil companies - starting decades behind U.S. and European giants - are struggling to win huge oil concessions overseas, with limited success.

This year and next, China is expected to account for about a third of the increase in global oil demand. China's purchases are an important reason the Organization of Petroleum Exporting Countries (OPEC), whose members regulate output to prop up oil prices, has been able to keep the cost of a barrel of oil at or above $30 a barrel for much of this year.

Adding a sense of urgency to economic demand is the fact that China - unlike other major industrial powers - lacks a large strategic reserve of oil to buffer the country during supply shocks. That gap alarmed the industrial world's energy watchdog early this year.

For some time now, Chinese officials have been busy trying to strike oil deals. By 2005, China plans to store 50 to 55 days' worth of oil imports (about 100 million barrels) and 68 to 70 days' worth by 2010 (about 260 million barrels), according to Wu Kang, energy analyst at the East West Center in Hawaii.

China is particularly exposed in the Middle East, the source of half its imports, pointing up a little-noted twist: China's energy lifeline is increasingly dependent on the U.S. fleets that guard the world's shipping lanes. Like Washington, Beijing will increasingly need stability in the Middle East to ensure reliable oil supplies at moderate prices.

New EU states warned against stockpiling sugar
Dec 3, 2003 - The EU is worried new states joining the bloc next year may see a sweet profit in stockpiling sugar to cash in on EU prices, which are three times the world average. The European Commission (EC) is now taking steps to prevent it.

Concerned about everything from speculators filling up warehouses to families packing in extra sugar and selling it after their country joins on May 1, the EU is threatening hefty fines for newcomers whose sugar stocks are deemed unusually high, according to internal documents published today.

"There is a considerable risk of disruption on the markets in the sugar sector by products being introduced into the new member states before their accession for speculative purposes," said the regulation being proposed by the EC.

The documents call for the new member states to remove sugar or isoglucose stocks exceeding volumes that would normally be carried over to the next marketing year. Under the draft rule, expected to be put to a vote by the EU's sugar management committee on December 11, the Commission would use historical trade-flow data for each new member state and assess what would constitute an excessive stock surplus. This would be announced by October 31, 2004 and would include other products with a significant sugar content.

Some EU member states say this timescale is too long and may allow unscrupulous sugar stockpilers to escape detection. "There's a fear these sort of people won't be caught by this as they will have disappeared by November 1," said one official.

"There's a big incentive (to stockpile) - from householders keeping a bag of sugar in the kitchen, to fly-by-night companies setting up a warehouse - buying sugar on the cheap, then waiting until after accession and selling it at three times the price," the official added.

If each new member state did not remove its surplus by May 1, 2005 and proved it had done so by July 31, the Commission would levy a fine based on the highest import duty applying to the product concerned, increased by a small administrative amount, from May 1, 2004 to the same date in 2005.

On current levels, this would amount to a fine of some 550 euros a ton of white sugar - significantly more than the world market price, which now stands at close to $200 a ton.

But the plans face opposition from sugar firms active in the EU's new member states, such as in Poland where at least three foreign or part-foreign-owned companies operate in the local market, who complain that long-term planning will be disrupted.

"Any legitimate company that holds stocks in any of these countries is worried as this affects its business planning. They want to know now how much sugar they ought to sell and how much to keep in store," the member state official said.

US factory output points to global recovery
Dec 2, 2003 - U.S. manufacturing expanded in November at the fastest pace in nearly 20 years, while construction spending posted another record in October, according to reports published yesterday.

The Institute for Supply Management said its index of manufacturing activity - an index computed from the answers that purchasing executives provide about the pace of business activity - jumped to 62.8 from 57 in October.

A reading above 50 signals that factory production is expanding rather than contracting. If it were to continue at the November level, the institute said, the index would correlate with an overall annual economic growth rate of 7.3%.

"All the regional purchasing managers are pretty much in agreement that production is back," said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi.

Improvement was widespread, including higher production, new orders and rising backlogs as factories struggle to keep up with demand. The index offers fresh evidence that the world's largest economy has broad-based growth momentum and U.S. stocks showed their enthusiasm by climbing to their highest level in 18 months.

The institute reported that the manufacturing sector posted its best performance since December 1983 and that employment grew after 37 months of decline. Factories have shed 2.8 million jobs since mid-2000. Looking forward, manufacturers showed a general readiness to hire people after three years of cutting back on factory payrolls.

Much of the economic data in recent weeks have been coming in above market and analyst expectations. The new survey of manufacturing activity came on the heels of other reports showing that the economy increased at a robust annual rate of 8.2% in the third quarter and that the job market has finally begun to revive.

The manufacturing news solidifies what many economists now describe as a sustainable recovery for the US economy, with expectations that the global economy will follow.

"The fourth quarter is well exceeding expectations," says John Ryding of Bear Stearns. "The risks to that growth forecast are on the upside."

EU grain price jump may push up meat prices
Dec 2, 2003 - Sharply higher grain prices may prompt European meat and egg producers to raise prices in the coming weeks, but according to traders, weak demand may deter some from being able to pass along increased costs.

Sharply lower crops due to drought and the summer's heatwave have driven up European grain prices in recent months, forcing animal feed manufacturers and flour millers to compete for supplies.

In France, poultry prices are set to rise to account for a sharp increase in wheat and maize values, which push up feed costs. Wheat prices have risen more than 50% since July and maize prices are up about 45%. This had led to a 12-15% rise in the costs of rearing poultry, and according to industry analysts, "An upward revision of selling prices is under consideration."

In Germany, meat and egg prices appeared to be on hold - at least for now. An analyst said: "I cannot see that German farmers will succeed in pushing through price increases. The price picture for pigs is catastrophic and wholesale prices for slaughter animals have collapsed from about 1.25 euros a kilo in October to about 1.09 euros now."

He added: "A lot of farmers have their backs to the wall but I cannot see price increases being accepted in the near future in such a market, regardless how much their animal feed costs." German meat prices were being held down by the impact of economic slowdown on consumer spending and by the efforts of discount retailers such as Aldi and Lidl to increase fresh meat sales through very low prices.

In Britain, food industry groups said soaring animal feed costs would mean higher pork and poultry prices for consumers. "Grain is a huge component in poultry feed rations and the rises we've seen this year simply cannot be borne by the sector - realistically, we need shop floor prices to increase by at least 20% to keep us going," Peter Bradnock, chairman of the British Poultry Council, said.

UK retail chains Tesco and Sainsbury say they are currently reviewing prices. The summer heatwave had already forced poultry prices higher, with increases in wholesale values of up to 20% registered in August and September after a million chickens died on British and French factory farms.

Spanish industry and agriculture sources said rising grain prices would not affect meat and egg prices. "Grain prices have risen 40% in the past few months, since the heatwave but you go to any market and chicken and rabbit prices have fallen...and a forecast rise in pork prices has not occurred," a source from farmers' union COAG said.

In Italy, some compounders said they had even turned to milling wheat in feed mixes and that meat and egg prices could go up soon on the back of higher costs. Italian maize prices have surged 40% from a year ago as prices of soft wheat, barley and bran rose due to lower crops and farmers' reluctance to sell.

Asian exporters feeding China’s demand
Dec 1, 2003 - This year, China's economy will grow by 9% and that growth is fuelling other Asian economies. China has now become the fastest-growing export market for several Asian countries - including Japan, Singapore, Korea, Hong Kong and Taiwan.

In Japan, exports to China rose 28%in October to a record US$5.7 billion. For the month, Japan's total sales to China and Hong Kong accounted for 63% of its export growth. Japan's two-way trade with China in the first half of this year totaled US$60.4 billion - a 34% increase.

For the first time this year, China also became Singapore's biggest export market, overtaking Malaysia and the United States. In the first nine months, Singapore's exports to China and Hong Kong amounted to S$30.6 billion, compared with exports totaling S$29.3 billion to Malaysia and S$24.8 billion to the US.

From January to September of this year, South Korea exported goods totaling US$23.1 billion to China, overtaking its exports to the US (US$22.8 billion). With this, China became South Korea's largest export market. The Korea International Trade Association predicts that South Korea-China trade will hit US$50 billion next year, not far behind its trade with the US (US$55.8 billion) last year. China is on pace to supplant the US as South Korea's chief trade partner by 2005.

China also overtook the US to become Taiwan's largest export market in 2001. Last year, China absorbed a quarter of Taiwan's total exports. Taiwanese goods worth US$29.4 billion went to the Chinese mainland last year, up 37% from 2001.

Among Asean countries, China has also risen in the export rankings of the Philippines and Malaysia. China's voracious appetite is fuelling Asia's export growth and opening up new business opportunities which its neighbours can exploit. From US$2 billion in 2000, India is projecting its bilateral trade with China to grow to US$7 billion this year and US$10 billion next year.

Chinese and Hong Kong companies are now buying Japanese steel, components for mobile phones, video games and liquid crystal display panels. Japanese companies are expanding their presence in the Chinese market either by building more factories there or selling them more capital goods. Said Mr Hidehiko Mukoyama of the Japan Research Institute, a private think-tank: 'The possibility of China becoming the No. 1 export market for Japan is very real.

'China is already the No. 1 trading partner for South Korea, beating the US. Since China became the world's factory, demand for intermediate products from Japan has increased. Even Korean cell phone plants in China require core circuitry from Japan.' As Chinese consumers become more affluent, he added, Japan may also sell higher-end products such as luxury cars, which could help to close its trade gap with China.

China's phenomenal growth is altering the pattern of global trade. For the first time, Japan's exports to China, Hong Kong and Taiwan have exceeded its exports to the US.

Now that China is complying with WTO rules to open up its economy, its imports are set to rise further. China's total imports rose by 40% this year. A World Bank study notes that between 1985 and 2001, exports from emerging market economies in East Asia to China grew from US$5.9 billion to US$83.5 billion. It was US$160.6 billion last year.

The upshot is that China's US$1.24 trillion economy, the world's sixth largest, is fast reshaping the global economy. Asian economies which are repositioned to ride on the crest of the Chinese wave will profit from it.

Bush to remove most steel import tariffs
Dec 1, 2003 - US President George W. Bush has decided to remove most US steel import tariffs to avoid retaliatory measures threatened by Europe and Japan, according to reports from Washington. Bush aides said the decision is "all but set in stone" and is likely to be announced this week, the report said.

The aides called the decision one of the most challenging political calculations of Bush's presidency thus far, as it is likely to produce a backlash in steel-producing states that will be closely contested in the 2004 elections. But they said they could not run the risk that the European Union would carry out its threat to slap billions of dollars in sanctions on sensitive US goods such as textiles, shoes, fruits and vegetables this month.

"Keeping the tariffs in place would cause more economic disruption and pain for the broader economy than repealing them would for the steel industry," an unnamed source said. The World Trade Organization is set to formalize on December 10 a ruling saying US safeguards on selected steel imports flout international rules and should be amended.

The EU had warned it would slap tariffs worth 2.2 billion dollars (1.9 billion euros) on a range of US imports five days after the formal adoption of the WTO decision. Japan threatened similar retaliatory measures in November.

Washington instituted the three-year tariffs of up to 30% on steel imports from Europe, Asia and South America in March 2002, to protect ailing US steel mills and their workers.