INTERNATIONAL

 

July 28 - Aug 03 , 2003

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

US STEPS UP ASIAN TRADE WARS

United States trade officials have voted to impose steep tariffs on imports from two Asian countries.The US International Trade Commission's (USITC) decision to slap higher duties on Vietnamese catfish and computer memory chips made by South Korean firm Hynix will take effect in mid-August.Hynix Semiconductor has already vowed to fight back through the World Trade Organisation (WTO) or Court of International Trade.Hynix, the world's third biggest memory chip maker, said it was "very disappointed" by the decision.

 

 

 

It means that Hynix's Dram (Dynamic Random Access Memory) chips will face extra tariffs of 44.7%, while importers of Vietnamese catfish must pay a further 64%.Vietnamese-farmed fish has captured a fifth of the US market for catfish fillets.

US catfish producers had complained that Vietnamese farmed catfish fillets were being dumped on the US market at unfair prices.The dispute is the most serious between the US and Vietnam since the two former enemies normalised trade relations two years ago.

The USTIC upheld its earlier finding that the South Korean government had unfairly subsidised Hynix's Dram or Dynamic Random Access Memory chips.Defending Hynix, the South Korea Commerce Ministry said: "It is unfair to hold Hynix responsible for the falls in Dram prices, which were caused by a global market slump."

But rival US chipmaker Micron Technology, whose takeover offer Hynix rejected in April 2002, has welcomed the decision.Hynix was teetering on the verge of collapse when it turned down Micro's takeover but was later bailed out by an alliance of South Korean banks.

CALIFORNIA'S DEBT 'NEARLY JUNK'

The California's state debt has been downgraded to two points above junk status by US credit ratings agency Standard & Poor's (S&P).S&P slashed its rating on California's $27bn of debts as Republicans succeeded in forcing a vote on 7 October on whether Democrat governor Gray Davis should keep his job.

California, the richest state in the US, faces economic turmoil unless it can pass a state budget.S&P managing director Steve Zimmerman said: "This recall election just makes it more difficult to focus on the job in hand."

"Today's S&P downgrade is our latest and loudest wake-up call," Governor Davis said, urging lawmakers to "pass a budget and pass it quickly".

The cut in California's credit rating from A to triple B twists the screw on its economic woes as it is likely to make it harder for the state to borrow money to cover the cost of services and salaries to tide it over its budget crisis.

California has become less affluent since the collapse of the dotcom boom in the late 1990s, though its economy remains roughly the same size as the UK's.

Mr Davis has drawn strong criticism for California's economic problems.California has a $38bn (22.8bn) budget deficit, equal to one-third of total state spending. Lawmakers are deadlocked over how to solve it.

"This will take us years to dig out from...this is a very sad day for the state of California," the Wall Street Journal quoted California state controller Steve Westly as saying.It is only the second time in 47 years that S&P has rated a US state's debt so low, the Journal said. Massachusetts also got a triple BBB ranking in the early 1990s.

 

 

BIG MAJORITY FOR UK RATE CUT

The Bank of England's monetary policy committee (MPC) voted by an eight to one majority in favour of cutting rates earlier this month, the minutes of its latest meeting have shown.

The minutes show that the MPC came close to unanimity on the need to cut borrowing costs in July, after voting by a slender majority to leave rates on hold in each of the two previous months.

The eight MPC members who backed a rate cut did so because of concerns about sustained weakness in the world economy, and the knock-on effects this could have on the UK.

The sole dissenter was the Bank's new deputy director for monetary policy, Rachel Lomax, who voted for no change because she saw the outlook for the British economy as "benign."

It was Ms Lomax's first appearance at the MPC's monthly rate-setting meeting, and the first MPC vote since Mervyn King succeeded Sir Edward George as Bank of England governor.

UK INDUSTRY 'STILL SUFFERING'

The end of the Iraq war and a weaker pound have not helped business pick up for British manufacturers, a survey has suggested.

Orders fell faster than expected over the past three months and output is weak, a quarterly survey by employers' group the CBI said.

"Optimism is shown to have increased but it's hard to see what manufacturers are optimistic about when orders are still falling at a fast rate," economist Paul Dales from Data Response told BBC News Online.

Of the almost 900 companies polled, 38% reported a fall in domestic orders while just 14% saw a rise which are worse figures than in the last survey, in April.Export orders fell at their fastest pace in 18 months despite a weakening pound as the slowdown in the global economy continued.

TAIWAN TO BEAT GROWTH FORECASTS

Taiwan's economic growth will now beat original forecasts for this year as the impact of the Sars virus declines, according to the leading economic forecaster.The Taiwan Institute of Economic Research (TIER) raised its growth forecast for 2003 to 3.53% from the 3.02% it projected in April.

It said domestic demand had been increasing since the Sars virus had been brought under control and more importantly, that government spending was now also rising.The Sars epidemic, particularly acute during April and May, killed 84 people in Taiwan.

But the Taiwanese economy also depends heavily on factories in mainland China and regular travel by business people to visit them, both of which were severely affected by Sars.

UK PLUNGES 10BN INTO RED IN JUNE

The UK's public finances were 10.1bn in the red last month, the worst June figure on record, official data show.

The public sector net cash requirement the difference between government spending and receipts was also the worst since March's 10.9bn shortfall.And it gave a deficit of 16.1bn for the first three months of the tax year compared with 7.1bn a year earlier.

The deterioration in public finances has come as government spending surges despite lower tax receipts.

FRENCH PARLIAMENT BACKS PENSION REFORMS

The parliament in France has passed a controversial plan to reform the pension system that provoked a wave of recent strikes and demonstrations.

The law, which increases the number of years public sector employees must work to earn a full pension, was ratified by the upper house or Senate, soon after being passed by the National Assembly.In the National Assembly, 393 MPs voted in favour and 152 against.

BOEING PUNISHED FOR SPYING

The US Air Force has punished Boeing for resorting to industrial espionage in order to better its defence rival Lockheed Martin.The Pentagon has barred Boeing from future rocket work and revoked $1bn worth of contracts which will be re-assigned to Lockheed Martin.

But it stopped short of banning all Boeing business units from being awarded government contracts.Lockheed Martin sued Boeing for acquiring about 25,000 confidential documents during a 1998 contract competition.

That stolen information is thought to have helped Boeing win 21 of the 28 tendered military satellite launches, part of the Air Force's Evolved Expendable Launch Vehicle (EELV) programme.

EBAY PROFITS

Online auction site eBay has enjoyed a surge in profits, making more than $100m (61.9m) in just three months.

PLATINUM FIRMS

A South African investment firm established to promote black ownership has signed a deal with leading platinum producer Anglo American Platinum to develop an area in the north-east of the country. Under the deal, Khumama Platinum will gain a 50% stake in the Booysendal project near Johannesburg.

 

 

AIDS 'ECONOMIC CATASTROPHE' LOOMS

The economic impact of HIV/Aids may be far worse than previously thought and some African countries may face complete collapse, a report has warned.

The study, jointly authored by economists from Heidelberg University and the World Bank, models the impact of the virus in various scenarios.

In South Africa, one of the countries worst affected by HIV/Aids, a failure to fight the disease will cause incomes at least to halve over the next three generations, the study predicts.

By 2080, full-time child labour will be ubiquitous, with an inescapable descent into economic "backwardness" a generation later.

NETWORK RAIL NEEDS TO 'SAVE 2BN'

Network Rail needs to save 2 billion a year, the Rail Regulator says.In a report published last week, the regulator Tom Winsor said he wanted the company to spend less public money.

He proposes that Network Rail postpones improvements to track on the west coast main line between London and Glasgow.There are plans to spend 10bn on the west coast line, with work already begun to make trains faster, cutting journey times.

SWISS BANKS FREEZE LIBERIA FUNDS

Swiss authorities have frozen bank accounts worth $1.5m belonging to two associates of the Liberian leader, Charles Taylor.The account holders and banks in Zurich and Geneva were not named in accordance with Swiss custom.

Officials from the Swiss Justice Ministry said no bank accounts held directly by Mr Taylor have so far been discovered.The Swiss authorities agreed to freeze accounts linked to the Liberian president following a request by the United Nations-backed war crimes court in Sierra Leone last month.

SONY PROFITS PLUNGE 98%

Japanese consumer electronics giant reported slumping sales and profits for the three months to end-June.Sony said restructuring costs were behind the 98% plunge in net profits to 1.1bn yen ($9.3m; 5.8m) when compared with the same period of 2002.

CHIPMAKER PROFITS DISAPPOINT

STMicroelectronics, Europe's biggest chipmaker, has reported a sharp fall in profits in the past three months, blaming pricing pressure.

The group said profits fell to $79.5m or 9 cents per share for the second quarter of the year, down from $104.7m or 12 cents per share a year before.

WORLD BANK PLEDGES KENYA AID

The World Bank has promised to restart lending to Kenya after its president praised the country's renewed fight against corruption.

The Bank and its sister body, the International Monetary Fund cut off the flow of money in 2001, after what it saw as the refusal by the then government to take action against Kenya's all-pervasive corruption.

But after talks with President Mwai Kibaki, whose National Rainbow Coalition government won a landslide election in December 2002, World Bank President James Wolfensohn said things had changed.

MEXICAN JOBLESS RATE SOARS

Mexico's jobless rate shot up in June to its worst level in nearly five years, as the effects of the stubborn slowdown in its massive northern neighbour hammered its economy.According to the government, the base unemployment rate in June was 3.17%, up from 2.72% in May and 2.39% in June 2002.

IMF IN ZAMBIA CRISIS TALKS

The Zambian Government and the International Monetary Fund (IMF) have begun a week of talks, aimed at resolving a month-long stand-off over fiscal policy.The IMF in June suspended a $100m (63m) poverty-reduction credit after Zambia unveiled an unexpected and unexplained $125m budget deficit.

The Fund is concerned that Zambia's external position could become unsustainable, given its $6.8bn of foreign debt.Without a reconciliation with the IMF, Zambia will find it hard to keep on terms with international lenders, many of which see the Fund as a benchmark.

 

 

BOEING FLIES IN $192M LOSS

Boeing, the US aviation giant, has reported a loss of $192m (119m) for the April-to-June period.

SK STRIFE SPREADS TO TELECOMS

South Korea's biggest mobile phone operator saw its value slump by one eighth after a share deal embroiled it in a long-running scandal.The deal saw SK Telecom spend 332.5bn won ($281m; 176m) on 2.73% of the country's top steelmaker, Posco.

SEGA PLAN TO DOUBLE SALES

Sega, the games maker which crashed out of the hardware market two years ago, has entered its second year in the black with a bullish promise to double sales by 2008.

WEAK DOLLAR HITS GSK SALES

Europe's biggest pharmaceutical firm GlaxoSmithKline has turned in weaker than expected sales, blaming a decline in the value of the dollar against the pound.

The UK drugs firm said revenues for the three months to late June came in at 5.3bn ($8.6bn), down by 1% on the same period last year, and short of the 5.4bn forecast by analysts.

CZECHS MULL TOUGH TAX REFORMS

Cech lawmakers are voting on a complex and controversial package of tax reforms, which aim to dig the government out of its current fiscal difficulties.The government has proposed cutting spending, raising some indirect and personal taxes, lowering profit taxes, and closing many loopholes in an effort to reduce the state budget deficit to 4% of gross domestic product (GDP) by 2006.

This year, after strong increases in expenditure in the past few years, the deficit is likely to hit 7% more than twice the level expected by the European Union (EU), which the Czech Republic is to join in 2004.