Aid agency Action Aid accused the US delegation at
Cancun of attempting to bully poor nations into accepting its proposals
— an accusation the Americans have denied. The charity claims US trade
representative Robert Zoellick attempted to bribe some countries into
leaving the G21 with trade incentives. It said Costa Rica, El Salvador and
Guatemala had been offered increased trade quotas if they quit the
The EU and the US have promised to reform the
subsidies, but their initial suggestions have been criticised for not
going far enough. The WTO has agreed to admit Nepal and Cambodia as new
members. They are the first countries classified as least developed to
join the trade body since it was founded in 1995. The EU and US says
poorer countries must agree to broader legal and commercial reforms in
return for any concessions on farming. Rich countries give their farmers
$320bn in handouts, more than six times the amount they give to poor
countries as aid. The G21 was, so far, standing firm and new members were
expected to join in the next few days, Action Aid added.
GROWTH SURGES IN JAPAN
Japan is growing faster than expected on the back of
surging exports, raising hopes that the country might finally be emerging
from a decade-long downturn. Growth in the three months to June was 1.0%,
even better than the 0.6% estimate published in August. The news will come
as a relief to Prime Minister Junichiro Koizumi, who faces an internal
party election this month which he must win to keep the top job. His
opponents in the Liberal Democratic Party have criticised his economic
package, calling for huge tax cuts to kickstart the economy. The news
helped support banking shares, although the broader market ticked down on
pressure from a weak Wall Street. The renewed vigour in the second quarter
gives Japan annualised growth of 3.9%, faster even than the US performance
in the same period.
Sales abroad are driving the gains, with the current
account surplus — the broadest measure of trade — leaping 34.6% in the
12 months to July. For once, the export performance on which Japan is
relying to pull itself out of the doldrums is being reinforced to some
extent by the domestic market. Personal consumption underwent an
unexpected surge in the second quarter — although the figures may have
been flattered by cancellations of foreign trips in the face of the Sars
virus. But the government is still seen as too cautious in its economic
policies and many economists warn that it remains much too early to be
sure of genuine revival. "There's no doubt the economy is recovering,
but the figures are probably overstating it," said Sumitomo Trust and
Banking economist Toshikimi Kaneki.
US STATE REJECTS 'CHRISTIAN' TAX HIKE
Voters in the US state of Alabama have overwhelmingly
rejected calls for a large tax increase. Governor Bob Riley had appealed
to voters to back the $1.2bn, saying it was their Christian duty to help
fund projects for the poor. Early reports indicated that two-thirds of
voters had rejected the $1.2bn plan — reputedly the largest tax hike
ever proposed in a US state.
Opponents of the plan argued state politicians needed
to rein in wasteful spending instead of raising taxes.Riley claimed the
plan would have provided much-needed funds for the poor, improved
educational resources and reduced its crippling $675bn tax deficit.
US TRADE GAP SWELL
The US trade deficit widened slightly in July as
consumers bought the second highest level of imported goods on record,
according to official figures. The trade gap grew to $40.3bn in July from
a revised $40bn in June, broadly in line with expectations. Exports also
rose, reflecting a pick-up in consumer spending and economic activity. But
the markets were more concerned about a surprise increase in weekly
Despite signs of life elsewhere in the economy, US
employment has remained stubbornly weak, prompting speculation about a
"jobless recovery". The US Labor Department said new claims for
state jobless benefits rose by 3,000 to 422,000 in the week ending 6
DUISENBERG DEFENDS EURO BUDGET RULES
Flouting EU rules on budget deficits will damage growth
prospects in the eurozone, the outgoing head of the European Central Bank
(ECB) has said. Speaking at what is expected to be his last appearance in
front of the European Parliament, Wim Duisenberg said some countries had
failed to show "sufficient determination" in meeting budget
rules. Both France and Germany are in danger of breaching the budget
deficit limit of 3% of gross domestic product for three years in a row, a
move which could lead to fines from the European Commission.
MOST COUNTRIES 'FLOUTING EU RULES'
The European Central Bank (ECB) has warned that most
countries are in danger of over-spending and breaking EU budget rules.
"Recent fiscal developments in the euro area are of great
concern," the bank said in a monthly report. "There is growing
evidence that most countries will miss their budgetary target for 2003 by
a significant amount."
France and Germany have faced criticism for some time
over the size of their budget shortfalls, with both looking likely to
breach the budget deficit limit of 3% of gross domestic product for three
years in a row. But it is the first time that the bank has indicated that
many other countries in the eurozone are in a similar predicament.
'END COTTON SUBSIDIES' DEMANDS AFRICA
Several African nations have joined forces to put the
issue of cotton onto the agenda of the World Trade Organisation meeting in
Cancun. Benin, Burkina Faso, Chad and Mali are demanding wealthier
countries end subsidies to farmers which they say results in them losing
$250m a year in exports.
SWEDISH PM TALKS UP EURO VOTE
Sweden's Prime Minister has predicted a strong surge by
the "yes" camp ahead of Sunday's vote on joining the European
single currency — as polls continue to show a strong lead for the
UK GRANTS ASYLUM TO RUSSIAN TYCOON
Boris Berezovsky, the controversial Russian
billionaire, has been granted political asylum in the UK on account of his
increasingly bitter relationship with the Kremlin. Berezovsky was briefly
held by the British authorities in April, in response to Moscow's request
for his extradition to face charges of massive fraud.
APPLE SELLS 10M TUNES ON THE NET
Music fans have snapped up more than 10 million songs
from Apple's iTunes music store in four months. Apple said the 10
millionth song bought from its online store for 99 cents (66 pence) was
Complicated by Avril Lavigne.
AUSTRALIAN HUNT FOR AFRICAN OIL
An Australian consortium has started exploration
drilling at the Chinguetti oilfield off the coast of Mauritania,
Perth-based company Hardman Resources has announced. The drilling is
expected to confirm the presence of 95 million barrels, the company said
— a significant find for a small explorer and impoverished country but a
relatively small field by international standards. Chinguetti 4-5 is the
first of four wells to be drilled this year. The consortium consists of
five companies: Hardman, which has a 21.6% stake, Woodside Mauritania
(35%), AGIP Mauritania (35%), Fusion Oil & Gas (6%) and Rock Oil
FRESH SARS FEARS HIT ASIAN MARKETS
Markets across Asia have fallen after a Singapore man
was found to be infected with the Sars respiratory virus. Singapore's
stock exchange weakened further after a sharp fall, the day the case was
discovered, while Hong Kong's Hang Seng index was 2% lower at midday.
Taiwan, Malaysia and the Philippines followed suit, with airline stocks
taking the worst of the beating.
GERMANY DRAFTS 'RISKY' BUDGET
German Finance Minister Hans Eichel has asked
parliament to back what he admitted was a highly risky 2004 draft budget.
By combining borrowing, projected revenue from privatisations and an
optimistic assessment of economic growth prospects, Eichel hopes to keep
Germany's budget deficit within the fiscal limits set by Brussels.
Germany has been the most glaring delinquent from the
so-called Stability Pact, which prevents eurozone member states from
running excessive deficits. But Eichel's assumption of 2% economic growth
next year has been criticised by the opposition, a level of uncertainty
admitted in the budget text itself.
SRI LANKA UPBEAT ON ECONOMY
Sri Lanka's economic prospects are strong, its central
bank has insisted, shrugging off fears that its peace-process-related
recovery could backfire. The rupee hit a 12-month high last week, buoyed
by hopes that ongoing talks to end the country's 20-year civil war could
spark an influx of foreign money. This has, however, sparked fears that
Sri Lanka may no longer be competitive in international markets,
especially for its crucial textile exports.
GOLD SOARS ON GLOBAL TENSIONS
Gold has soared to its best level in seven years, as
its safe haven image shone in the face of a weak dollar and the imminent
second anniversary of the 11 September 2001 terrorist attacks. On New
York's Comex market, the price of gold for delivery in December - the
benchmark for the market — rose $6.60 to $382.80 an ounce.
BROWN DELIVERS TOUGH PAY WARNING
Chancellor Gordon Brown has insisted that the
government will not give into any unaffordable demands that would risk the
upsetting the UK's current economic stability. In a warning against
inflation-busting wage demands by union leaders, Brown said that he would
not yield to "short term fixes or soft options".
SERVICE SECTOR 'FAR FROM RECOVERY'
The UK's service sector is far from recovering with
jobs, investment and confidence still hard to come by, a survey has found.
The quarterly study, prepared by the Confederation of British Industry
(CBI) and accountancy firm Grant Thornton, found few positive signs for
professional and business services firms such as employment agencies and
computer services companies.
VIETNAM EASES PATH FOR FOREIGN CASH
Vietnam is to simplify and clean up its commercial law
in an attempt to attract more foreign investment. A sweeping series of
reforms aims to combat the country's reputation for excessive red tape,
corruption and official mismanagement. The reforms, which take effect at
the beginning of next year, are the latest step in a rapid liberalisation
and modernisation of Vietnam's economy, one of the fastest-growing in
ARGENTINA WRESTLES WITH IMF
Argentine ministers and International Monetary Fund (IMF)
officials are wrestling over the terms of a new loan that will save the
South American country from a fresh default. If an agreement is not
reached within 24 hours, Argentina will be forced into a damaging $2.9bn
(£1.8bn) default on its debt. The government in Buenos Aires received
some important backing on Monday from the US - by far the most influential
member of the IMF - which called for flexibility.
"The US believes the conditions for reaching an
agreement with the IMF are favorable and thatArgentina enjoys terrific
political support from the US and the G8 in general," said US
Assistant Secretary of State Roger Noriega. The loan in negotiation is a
three-year pact that will allow Argentina to just pay the interest on the
$13bn of debts it owes the IMF, allowing it put more money into its social
MAHATHIR TO UNVEIL FINAL BUDGET
The Malaysian prime minister, Dr Mahathir Mohamad, will
unveil the country's budget for 2004 on Friday. Dr Mahathir, who is also
Malaysia's finance minister, is due to step down in October after 22 years
in charge. The budget is also expected to be the last before the general
election. Two decades under Dr Mahathir have seen the country and its
economy transformed. His last budget will be designed to protect that