INTERNATIONAL

 

Nov 24 - Dec 07 , 2003

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF


AMERICAS MOVE ON GIANT TRADE ZONE

Trade ministers from the Americas have backed the outline of a deal to create a free-trade zone stretching from Alaska to the southern tip of Chile. The Free Trade Agreement of the Americas due to come into effect in 2005 is a key US economic goal. A summit on the issue has been taking place in Miami, Florida. There had been fears the talks might collapse amid disagreements between Brazil and the US but the deal actually came earlier than expected. But the trade ministers of the 34 

 

 

 

states involved agreed to a proposal announced by the US and Brazilian delegations earlier in the week which allows countries to opt in or out of certain clauses. The FTAA will cover 800 million people with an output of $14 trillion a year.

"We still have a lot of substantial issues to discuss and they are not easy," said Brazilian Foreign Minister Celso Amorim. "But what we decided was to pursue a course that will make it possible, creates the conditions to come to an agreement. It doesn't guarantee an agreement, but it creates the condition for an agreement." Brazil and the US drew up their "menu" approach to the FTAA as a way of overcoming their deep disagreements on how comprehensive the accord should be. This went against what many of the other countries meeting in Miami wanted that is, an all-embracing deal dropping tariffs and trade barriers across the twin continents.

EU MULLS WORLD TRADE COMPROMISE

The European Union (EU) may offer concessions in an effort to kick-start world trade negotiations. EU trade chief Pascal Lamy said the bloc might drop its insistence that the talks cover cross-border investment, competition, trade facilitation, and government procurement.Developing country resistance to including these issues contributed to the failure of world trade talks at Cancun in September. Mr Lamy called for greater compromise.

"My sense is that there are areas where we should show flexibility," he said during a visit to World Trade Organisation headquarters in Geneva. "I am looking at options like this in order to address the concerns in certain developing countries." At Cancun, developing nations refused to discuss the four issues raised by the EU dubbed the Singapore issues unless the West agreed to reduce agricultural subsidies. Mr Lamy said he hoped any concessions by the EU would be matched by greater flexibility among other WTO members. "The balance (between give and take) has to be kept," he said. But he stressed that the EU was committed to "re-igniting" world trade talks.

Any relaxation of the EU's negotiation stance would have to be backed by all 15 EU governments as well as the European Parliament. The current round of world trade talks is due to conclude in January 2005. All 146 WTO members are due to meet on 15 December to decide how to re-start negotiations after the setback at Cancun. The meeting is likely to be overshadowed by simmering trade tensions between the organisation's most powerful members. The EU, China and Japan are united in their condemnation of US tariffs on steel imports, which were declared illegal in a final WTO ruling last week.

DOLLAR FALLS TO ALL-TIME LOW

The US dollar has fallen to an all-time low against the euro, amid fears over trade wars and reluctance by foreigners to finance the US trade deficit. At its lowest point on Nov 19, one euro bought $1.1978. The dollar also neared a new three-year low against the yen, with one dollar worth just 107.94 yen. The dollar's fall against most leading currencies including the pound started when data showed a huge slump in foreign money coming into the US.

CHINA RETALIATES TO US IMPORT CAP

China may raise tariffs on certain US imports, in retaliation to America's planned import cap on Chinese textiles. China's trade minister Ma Xiuhong made the announcement in an interview with the official Chinese news agency. It is the first sign that the row could turn into a full-blown trade war, although no details have yet been given about which US products will be hit. China said it may introduce measures if the US does not agree with a WTO judgement to remove its steel tariffs. Before its tariffs announcement, the Chinese Government summoned the US ambassador in Beijing to officially complain against America's plans.

GREENSPAN WARNING ON PROTECTIONISM

US Federal Reserve chairman Alan Greenspan has called for action to combat "creeping protectionism" in the United States and other parts of the world. Speaking at a financial conference in Washington Mr Greenspan said it was imperative for the growing threat to be "thwarted and reversed." The United States is involved in high profile trade battles with the European Union and other countries over steel tariffs that have been ruled unfair by the World Trade Organization (WTO).

Washington has also embarked on a dispute with China over textile imports, and the Commerce Department has said it plans to set quotas limiting growth in Chinese textile imports. China's commerce minister Ma Xiuhong has said they will retaliate by raising tariffs on some American imports.

UN URGES $3BN FOR WORLD'S NEEDY

The United Nations is to urge wealthy nations to donate $3bn next year to save 45 million lives in crisis areas. UN Secretary General Kofi Annan is due to launch the UN Humanitarian Appeal 2004. The appeal aims to provide basic needs to the hungry and sick, and to protect the displaced, especially children, women and the elderly. The campaign on behalf of aid agencies worldwide will mostly cover African crises. It excludes Iraq.

UK AND TURKEY PLEDGE UNITED FIGHT

Turkey and the UK have pledged not to bow to terror following the blasts on the UK consulate and a British bank in Istanbul that killed at least 27 on Nov 20. Turkish Foreign Minister Abdullah Gul said the attacks would strengthen the global fight against terrorism. Addressing a joint news conference, his UK counterpart, Jack Straw, expressed his government's support for Turkey. Mr Gul confirmed that several arrests had been made but said it was too early to give further details.

 

 

LEADERS UNITE TO CONDEMN TERROR

Tony Blair and George Bush have spoken of their joint determination to defeat terrorism after bomb attacks in Turkey last week. The UK prime minister said the blasts showed "the evil these terrorists pose to innocent people everywhere". The perpetrators had "utter contempt" for innocent lives, said the US president at a news conference held to mark his state visit to Britain.Both men vowed to stay the course in Iraq, with Mr Blair saying they would not "flinch or concede one inch".

TURKISH STOCKS DIVE AFTER BLASTS

Turkish shares fell heavily after the bomb attacks in Istanbul on Nov 20, one of which hit the offices of HSBC bank in the heart of the city's financial district. The Istanbul Stock Exchange suspended trading after the main index dropped more than 7%. The lira was lower when banks resumed trading and stocks fell across Europe. One Istanbul trader, who asked not to be named, said: "There were panic sales on the stock market after news of the blast came." Major European stock markets were 1-2% lower in the hours immediately following the blasts. But after US markets opened only modestly lower, London, Paris and Frankfurt recovered slightly to be about 0.5% down.

CONGRESS BACKS NEW FUNDS REGIME

US legislators have approved a draft law aimed at stamping out irregular trading in the mutual funds industry. The House of Representatives voted in favour of the bill by 418 to 2. The measure explicitly bans trading practices which have benefited Wall Street insiders at the expense of ordinary investors. It is designed to protect millions of Americans who place their long-term savings in mutual funds. Representative Richard Baker, the Louisiana Republican who proposed the bill, said it would ensure that "all the rules will be applied equitably to all investors." Under the bill, investors would be barred from late trading in mutual fund shares, where professional investors buy stocks after hours in the expectation that overnight developments will boost their price.

EMI IN BID FOR TIME WARNER MUSIC

EMI has made a firm offer for its rival Time Warner Music, while unveiling that its own profits have fallen. EMI refused to give details of its bid rumoured to be $1.6bn but chairman Eric Nicoli said talks with Time Warner were "at an advanced stage". The group revealed adjusted pre-tax profits that were down 6.6% to 39.4m in the six months to September.

BROADBAND COULD BE A 22BN BOOST

Increased use of broadband Internet connections could boost the UK economy by 22bn, according to a new report. The study estimates that by 2015 broadband should have boosted Britain's productivity by 2.5%. This is the equivalent of each person working an extra hour a week.But the report, carried out by the Centre for Economics and Business Research, says the 22bn figure will only be possible if there is more competition in the industry.

BOE VOTED FOR RISE IN RATES

Just one of the Bank of England's rate setting committee voted against a rise in interest rates earlier this month. Minutes of the meeting showed most members believed an increase was needed to rein in inflation. The only dissenting vote came from Marian Bell, who wanted to keep borrowing costs on hold.

SA DEAL CREATES NEW MINING FORCE

A three-way merger is set to create South Africa's largest black-controlled mining company. African Rainbow Minerals, Anglovaal and Harmony have agreed to pool resources, putting Patrice Motsepe, a leading black entrepreneur, in charge. The deal marks a step towards meeting ambitious government targets for the transfer of mining assets to groups disadvantaged by apartheid rule.

TOUGH NEW REGIME FOR MUTUAL FUNDS

The US markets watchdog has unveiled new safeguards aimed at eliminating abuses in the mutual funds industry. Securities and Exchange Commission chief William Donaldson told Congress he would improve scrutiny of the funds, which handle billions in household savings.

He said the SEC may ban after-hours trading in mutual fund shares, a practice which has hit small investors.

CHINA DAM SHARES' SPARKLING DEBUT

Shares in the company behind China's huge Three Gorges Dam project have risen 45% on the first day of trading. China's largest IPO has raised $1.2bn for Yangtze Electric Power after the offer was 70 times oversubscribed. The $25bn dam project will eventually generate 10% of China's electricity. The controversial project will also displace one million people and flood millions of acres of farmland.

ASIAN ECONOMIES OVERCOME SARS

It is a year since the first recorded case of the pneumonia-like illness, SARS, in southern China. It was several months before the world took notice as the virus spread internationally. The outbreak had a significant economic impact, especially in East Asia, with some economists warning that it could tip the world into recession.

 

 

UK INFLATION SHOWS SURPRISE FALL

The UK inflation rate recorded a surprise dip in October, official figures have shown. The underlying rate, which excludes mortgage interest payments, dropped to 2.7%, down 0.1% on the previous month. The main reason for the fall was a slower rise in house prices than a year ago.

EU CALLS TIME ON GERMAN BUDGET

The EU plans to get tough with Germany over its huge budget deficit. Under the rules of the EU's Stability Pact, eurozone countries are not supposed to run budget deficits above 3% of GDP (gross domestic product). The EC wants Germany to cut its deficit by 0.8% next year and bring it down to 3% by 2005, after 4 years in violation. Germany says that with its economy slowing, it needs more time to comply. And Germany's finance minister Hans Eichel has rejected the threat of sanctions if it cannot reach a compromise deal.

S KOREAN ECONOMY SET FOR GROWTH

The IMF has said that the South Korean economy will grow by 4.75% next year. The projected economic recovery comes after several years of slow growth. The IMF said that rising global growth will boost Korea's exports to the USA.