EDC: Virtual Export Solutions Summit – November 2, 2010

(Export Development Canada)

Why does the global economic environment seem so uncertain? Do you understand the risks and barriers to trade and how they can be managed? Do you know your intellectual property rights?

Learn the answers on November 2, 2010. Export Development Canada (EDC) will present Export Solutions Summit, a free virtual conference and exhibition intended to provide Canadian exporters with information, tips and resources that will help them succeed in offshore markets.

Tuesday, November 2, 2010 – 12:00 p.m. to 4:30 p.m. (EST)
Topics will include:

• Global Export Forecast (Fall)
• Seeing the Forest for the Trees – Case Study
• Intellectual Property When Entering New Markets

Register here fore this FREE virtual event.

‘Blood Minerals’ in the Supply Chain

(Supply Demand Chain Executive – Andrew K. Reese)

Compliance to the new financial reform bill will pose unique challenges

The 848-page financial reform bill signed into law in the U.S. on July 21 (the “Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010”) contains a six-page section, starting on page 838, that addresses the issue of “Conflict Minerals” coming into the supply chain from the Democratic Republic of the Congo (DRC). The goal of Section 1502 is to ensure that certain minerals coming from the DRC are “conflict-free” – that is, not fueling the ongoing violence that has left more than 5 million people dead, and not funding the armed parties that have employed forced labor, child slavery and sexual terror as standard practice to control the minerals trade.

The minerals covered in the law – coltan (columbite-tantalite, a source of tantalum), cassiterite (tin), wolframite (tungsten) and gold – are used extensively in a variety of industrial, consumer and electronics products. Tin is used as a solder on circuit boards. Tantalum capacitors are used widely in the technology supply chain. Tungsten is used as tungsten carbide in applications like turning tools and milling, but it’s also used in cell phones to make them vibrate. Gold is used in jewelry, of course, but also used for the gold plating, printed circuit boards, connectors, switches and other electronic components. Collectively the minerals are referred to as the “3Ts, plus gold.” Read more here.

Why Currencies Aren’t the Issue

(CBC News)

As G20 finance ministers prepare for meetings in Seoul starting Friday, economists have been assessing the odds of a global currency war.

In a commentary Tuesday, European banking giant BNP Paribas took the threat seriously enough to try to reassure markets that countries would unite to avoid currency jockeying. “The chance of an agreement has increased as the International Monetary Fund uses its influence to convince G20 participants that an agreement is a must,” it said.

But Perry Sadorsky, associate economics professor at York University’s business school in Toronto, said the rhetoric about currency wars is a distraction from the real threat. “Competitive devaluations of national currencies are a reaction to a more pressing problem,” Sadorsky told CBC News.

And that is how to get the global trade in goods, services, savings and investment back in balance. Read more here.

UNCTADstat Online Database Unveiled on World Statistics Day, October 20

(UNCTAD)

UNCTADstat, a new free online database offering a single entry point to UNCTAD’s vast repository of statistics, is being launched today, World Statistics Day.

By harmonizing and incorporating all UNCTAD’s online statistical databases, UNCTADstat will serve as an integrated platform for extracting and analyzing data on development, trade, investment, and related issues.

The site will be continuously updated and enriched so that it offers not only long historical time series but also the most recent data. UNCTADstat will cover individual countries, regions, economic and trade groupings, and the world at large.
Among the topics covered are:

• International merchandise trade, including data breakdowns of exports and imports by partners and products;
• International trade in services;
• Economic trends;
• Foreign direct investment (FDI);
• External financial resources, including migrants’ remittances, development assistance, external debt, and international reserves;
• Commodity prices, updated monthly;
• Population and labour force; and
• Maritime transport.

Other topics, new tables, and indicators will be added over time.

UNCTADstat is intended to provide a statistical background against which users may address issues related to trade, investment, development, and economic growth. Among the topics of current concern for which it offers useful information are speculation in commodities markets; the global financial crisis with the severe decline of international trade that started to recover from the second quarter of 2009 to the second half of 2010; and the recent shifting in the balance of developing countries’ inward financial flows from Official Development Assistance (ODA) towards more foreign direct investment and workers’ remittances.

UNCTADstat is accessible here. Any questions can be addressed to statistics@unctad.org.

Five Lessons from Germany About Winning on Exports

(Wall Street Journal Blogs – Ed Gershwin)

Sprechen Sie Trade?

When it comes to exports, the United States could learn something from Germany.

In the second quarter, Germany’s economy grew at a blistering annual rate of 9%, almost all of which was due to robust exports. In August, German manufacturing orders expanded by a healthy 3.4%, driven by strong foreign demand for products like Audis in China. America’s economy is four times larger than Germany’s, but Germans export more manufactured goods than us, and those exports account for over a third of Germany’s GDP.

Germany exports aggressively because it must. Unlike the United States, where private consumption fueled 70% of our economy in pre-crisis years, Germany’s famously frugal consumers contribute only 57%. Germans can only prosper if exports fill the gap.

But after being battered by recession, America’s consumers are now almost Germanic – saving more and spending less. Economists estimate that, over the next several years, the private sector share of U.S. GDP will remain about three percentage points below 2003-07 levels.

President Obama is wisely seeking to close this gap – and to create good American jobs – by doubling U.S. exports, but there are no magic formulas for doing this. So, as it pursues this vital goal, America might ask: “What would Dieter do?” Read more here.

Chinese Exports Growth Slows

(RTT News)

China’s exports rose at a slower, although at a still marked pace in September, official figures showed on Wednesday. The slowdown in export growth dragged down the trade surplus to a five-month low.

Exports jumped 25.1% year-on-year to $145 billion, the General Administration of Customs said. This was just shy of analyst expectations for a 26% increase and comes after a 34.4% rise in the previous month.

Imports, on the other hand, climbed 24.1% to $128.1 billion, following the 35.5% increase a month ago. Economists had forecast a 25% rise.

As a result of the slowdown in exports, the trade surplus fell to a still substantial $16.9 billion from $20 billion in August. Analysts had forecast a surplus of $17.8 billion.

The large trade surplus is likely to heap more pressure on Beijing from the U.S., which runs a substnatial trade deficit with China, to let the yuan appreciate more rapidly. The U.S., which runs a huge trade deficit with China, has recently stepped up its criticism of Beijing’s exchange rate policy, claiming that the yuan is artificially undervalued to boost exports. Read more here.

Rush to Asian Gateways for Around-the-World Services

(Cargonews Asia – Ian Putzger)

Airlines have rushed freighters to Asian gateways to take advantage of the expected peak season surge in demand. Both European and Asian carriers have inaugurated new routes, several of them moving east around the world in a bid for better yields. [...]

The rush of freighters to Asia’s major gateways reflects the bullish mood in the air cargo industry. In preparation for a strong peak season, carriers have built up capacity in the market over the past few months. Read more here.

Developing Asia-Pacific States Press for Less Red Tape in Trade

(BusinessWorld Online)

Over 200 individuals from 33 Asia-Pacific economies participating in the Asia-Pacific Trade Facilitation Forum in Kuala Lumpur, Malaysia last Oct. 5-6 urged their governments to streamline international trade procedures and ensure that regulations are simple, consistent and transparent, a statement the United Nations released yesterday read.

The hidden cost of red tape amounts to $300 billion a year in the Asia-Pacific region, the statement read, and it takes an average of 30 days to move goods from factory to ship deck in countries of the region, compared with 10 days on average for members of the Organisation for Economic Cooperation and Development (OECD).

Brought together by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), the United Nations Economic Commission for Europe (UNECE) and the Asian Development Bank (ADB), forum participants also called for greater regional cooperation to promote paperless trading systems and increase trade in agricultural products. Read more here.

India Protests Against US Trade Barriers at WTO

(Economic Times)

India at WTO today protested against escalating tariff and non-tariff barriers imposed by the on Indian goods and services including enhanced visa fee on Indian short-term services providers and the ban in Ohio on state outsourcing projects.

New Delhi cautioned the USA on its recent trade initiatives, particularly the Anti-Counterfeit Trade Agreement (ACTA), saying “they contribute collectively to undermining not only the (Trade related Intellectual Property Rights) agreement but the multilateral trading system as well in some measure.”

“The US, which is the undisputed leader of the global trade arena, needs to set the bar high for the other nations to emulate” instead of delaying compliance with trade rulings pronounced by the WTO’s dispute settlement body, it said. Read more here.

When Everybody Exports, Nobody Wins

(Bloomberg BusinessWeek – Simon Kennedy)

Japan’s yen intervention may be a bad omen for global trade

On Sept. 15, Japan sold yen for dollars to slow the yen’s climb to a 15-year high against the dollar. Japan decided to take on the market to protect its exporters from the devastating impact of the super-yen. It’s a logical move, from Japan’s point of view. Yet it exposes a flaw at the heart of the current global recovery effort: The world’s major industrial economies can’t all export their way to prosperity.

Governments from Tokyo to Washington are counting on exports to keep their economies growing at a time of painfully high jobless rates and record budget deficits. The danger is that the race to hand companies such as Hitachi and Boeing an edge in the international marketplace will lead to a series of currency devaluations and protectionist measures that threaten global growth – a reprise of the 1930s-era beggar-thy-neighbor trade policies that worsened a global depression. Read more here.

Air Cargo Demand Set to Slow

(International Freighting Weekly – Katerina Kerr)

Rapid rebound from recession can’t be maintained, claims IATA

International air cargo traffic growth will slow over the second half of 2010 and into 2011, following the sector’s rapid rebound from recession, according to the International Air Transport Association (IATA).

“Uncertainties are rising about the economic outlook with talk of a ‘double-dip’, but current conditions in cargo markets remain positive,” says IATA in its third-quarter Cargo E-Chartbook report. “Air freight has entered a slower phase of expansion, but the pace of growth in both volumes and yields remains above trend. Revenues have been growing strongly and, in many regions, cargo profitability is back to pre-recession levels.

“The environment will get more difficult. Even without a ‘double-dip’, demand will slow and new capacity will put pressure on load factors and yields.” Read more here.

China Says Will Increase Imports; Analysts Doubtful

(Rediff.com)

China has promised to “vigorously” expand imports of key products from around the world to balance its export driven trade, but analysts dismissed it as a mere lip service than a firm commitment. China, the worlds largest exporter, will “vigorously” expand its imports of key products to cut its trade surplus to avoid growing protectionism against its products in different countries, China’s deputy international trade representative Chong Quan said.

“We will especially encourage imports of products the nation is short of, especially advanced technology and key equipment,” Quan was quoted in the official media as saying.

Special attention will be paid to expanding imports from countries that China has a trade surplus with, he said at the China Import Forum. Read more here.

World Trade to Grow 10% in 2010

(Industry Week – Agence France-Presse)

The World Trade Organization on July 23 raised its forecast for growth of global commerce to 10% this year, with its director general saying that even this might yet “turn out to be too low.” WTO chief Pascal Lamy said: “Our forecast for world trade this year is plus 10% in volume after the minus 12% we registered in ‘09.” Lamy was speaking at the launch of the trade body’s annual report on the sidelines of the Shanghai World Expo.

In a separate speech at Shanghai’s Institute of Foreign Trade, Lamy said that after last year’s dramatic slump, “trade growth is coming back fast, thanks in no small measure to the continuing dynamism of China and the others.” The WTO’s latest forecast marks a rise from the 9.5% issued in March. The secretariat had warned then that the figure could prove too optimistic as markets were at that point unsettled by Europe’s sovereign debt crisis.

In the trade body’s annual trade report, the WTO focused on the issue of trade in natural resources. It called for greater global cooperation on such trade, warning that a failure to work together could spark new tensions. “I believe not only that there is room for mutually beneficial negotiating trade-offs that encompass natural resources trade, but also that a failure to address these issues could be a recipe for growing tension in international trade relations,” said Lamy in the report. Read more here.

WTO Report Calls For More Cooperation Among Governments in Natural Resource

(WTO)

In the WTO flagship publication World Trade Report 2010 launched on 23 July 2010 in Shanghai and Geneva, the economists maintain that “in a world where scarce natural resource endowments must be nurtured and managed with care, uncooperative trade policies could have a particularly damaging effect on global welfare.”.

The World Trade Report 2010 focuses on trade in natural resources, such as fuels, forestry, mining and fisheries. The Report examines the characteristics of trade in natural resources, the policy choices available to governments and the role of international cooperation, particularly of the WTO, in the proper management of trade in this sector.

Director-General Pascal Lamy, in his foreword, said: “I believe not only that there is room for mutually beneficial negotiating trade-offs that encompass natural resources trade, but also that a failure to address these issues could be a recipe for growing tension in international trade relations”.

“Well designed trade rules are key to ensuring that trade is advantageous, but they are also necessary for the attainment of objectives such as environmental protection and the proper management of natural resources in a domestic setting,” he added. The key elements of the Report:

Natural resources have a number of distinctive features — the skewed geographical distribution of natural resources, their exhaustibility, the widespread occurrence of economic effects of natural resource exploitation disregarded by the market (externalities), high natural resource dependency in some economies, and tendencies towards high price volatility in natural resource markets. These specificities affect the modes of resource trade as well as the effects that international commerce in natural resources has on welfare.

Gains from resources trade — Due to the geographical concentration of natural resources, trade has the potential to improve efficiency and increase welfare by shifting resources from regions of relative abundance to regions of relative scarcity. However, welfare comparisons are complicated by dynamic factors, namely the exhaustibility of natural resources, and pervasive market failures. The latter include imperfectly competitive markets and open access to resources when property rights are poorly defined. Four other major issues are commonly associated with natural resources trade — the presence of environmental externalities, the effect of technology on the sustainability of resources, the so-called “curse” faced by resource-rich economies, and the high volatility that characterizes some resource sectors. International trade interacts with all these factors in complex ways, in some cases exacerbating existing problems and at times providing solutions.

Trade policy in resource sectors — Resource-rich countries often restrict exports through a variety of means such as export taxes and quantitative restrictions, whereas tariff s and other import restrictions in resource-scarce countries are low. There are, however, two important qualifications to this general rule. First, domestic policies that are likely to affect trade flows, including subsidies, technical regulations and consumption taxes, are frequently used. Second, the structure of protection that resource exporters face tends to rise with the stage of processing (tariff escalation).

Policy interventions in natural resource sectors are justified on welfare grounds by the specific features of natural resources. Governments employ trade policies as instruments to achieve a number of legitimate objectives, such as improving resource conservation or stimulating diversification of exports away from dominant resource sectors. However, three significant caveats need to be kept in mind. First, trade measures are often a second best policy to address problems associated with natural resources.

Second, restrictions on trade have beggar-thy neighbour effects, either because they may affect world prices or because they shift profits between exporters and importers. Third, trade and domestic measures in natural resource sectors are close substitutes in some cases.

Resources trade regulation — The general principles of the multilateral trading system provide a framework for limiting non-cooperative trade policies, including within resource sectors. Several WTO rules have relevance in relation to the specific features of natural resources. WTO rules, however, were not drafted to regulate natural resources trade and may not always respond adequately to sectoral specificities.

The Report identifies several areas where consideration could be given to intensified cooperation. One such area involves trade policies such as export taxes, where bargains might ameliorate uncooperative trade outcomes. A second issue concerns the scope for conservation policies, such as the treatment of subsidies aimed at improving the conservation of natural resources. A third issue relates to the facilitation of trade flows of natural resources, specifically the scope of freedom of transit. A fourth area concerns the clarity of current WTO rules and the coherence between these and rules of international law embedded in different agreements that may be relevant to natural resources.

Key facts:

The total value of world trade in natural resources was US$ 3.7 trillion in 2008, or nearly 24 per cent of world merchandise trade. This value has increased more than six fold between 1998 and 2008.

The share of fuels in natural resource trade rose from 57 per cent in 1998 to 77 per cent in 2008. Fish and forestry products each represented 3 per cent of world trade in 2008, while mining products were responsible for 18 per cent.

The top 15 exporters of natural resources were responsible for 52 per cent of world resource shipments in 2008, while the top 15 importers received 71 per cent of traded resources.

Applied tariffs are (on average) 23 per cent lower in natural resource sectors relative to merchandise trade. Average bound rates in natural resource sectors are 1.7 per cent in developed countries and 30.4 per cent in developing and least-developed countries. Export taxes cover 11 per cent of natural resources trade compared to 5 per cent of other merchandise trade. Export restrictions on natural resource products represent 35 per cent of notified export restrictions.

Several natural resource sectors appear prominently in the subsidy notifications. Available research suggests that global subsidies to fisheries are in the order of US$ 25 and 29 billion annually.

The Doha Round and Round

(The Jakarta Globe)

When it comes to the World Trade Organization’s Doha Round of trade negotiations, the resolution of the G-20 meeting in Toronto can be characterized as vapid. The best the G-20 could do was reiterate its support for achieving an agreement and direct negotiators to “report on progress at our next meeting in Seoul where we will discuss the way forward.” In other words, nothing is expected to happen.

Originally scheduled to end in 2005, the Doha negotiations have dragged into their ninth year. The centrality of the WTO in the trading system is disappearing as its members increasingly pursue their trade interests through bilateral agreements.

While an agreement on the round would offer substantial economic benefits by reducing farm subsidies and opening up new markets, political obstacles inhibit its conclusion.

Many observers assign blame to the complexity of 153 members reaching consensus on an agenda with dozens of issues, but the heart of the matter is far simpler.

If the United States and China stepped up to the plate with new offers, the momentum for a speedy agreement would be unstoppable. Read more here.

China Export Surge Heightens Risk of Trade Friction

(DNA – Venkatesan Vembu)

China exports surged in June, widening a trade surplus that critics say fuels global imbalances and increasing the risk of trade friction with the U.S.

Exports grew 43.9% year-on-year in June, on top of a breathtaking 48.5% growth in May; at the same time, import growth slowed to 34.1% y-o-y from 48.3% in May. As a result, China’s trade surplus widened to $20 billion in June, against $19.5 in May.

Some economists believe the latest trade data is bad news for the prescribed effort to rebalance global economic growth and trade balances. “China’s strong export data adds to global imbalances,” points out RBS chief China economist Ben Simpfendorfer. “The fact that both China’s exports to the U.S. and its exports of steel are accelerating is a recipe for worsening trade protectionism, especially ahead of U.S. mid-term elections.” It would additionally fuel criticism of China’s management of its currency, the renminbi. Read more here.

U.S. Double Dip Recession Would Have Negative Impact on Canada

(Journal of Commerce – John Clinkard, CanaData)

A number of recent developments in the U.S. and globally have raised the spectre that after expanding for three consecutive quarters, the American economy may have a relapse and experience a second period of economic contraction. If the U.S. were to experience a double-dip recession, it would doubtless have a significant, negative impact on Canada, given the strong trade links between the two countries.

Recent indicators of consumer spending in the U.S., including employment and retail sales, have been disappointing, as have mortgage applications for new homes, which have dropped by 40% since the end of April.

From an international perspective, the Baltic Dry Index – which measures the global demand for global shipping capacity versus the supply of dry bulk shipping – exhibited a significant decline late in May, suggesting that the global recovery may be losing steam. Read more here.

Can The U.S. Double Exports In 5 Years?

(Bloomberg)



Jim McNerney, chief executive officer of Boeing Co., talks about a World Trade Organization ruling against some of the financial aid Airbus SAS has received for aircraft development. McNerney also discusses President Obama’s efforts to boost U.S. exports.

Canada a Roadblock in Trade Talks

(Financial Post – Sylvain Charlebois, University of Regina)

We can choose short-term G20 gains, or the vast benefits of freer trade

Because of global economic uncertainties, the World Trade Organization’s latest attempts to liberalize markets through the Doha Round of trade negotiations [have] been jeopardized. Having begun in 2001, the Doha Round has lingered in multilateral purgatory for even longer than its immediate predecessor, the Uruguay Round, which from inception to signing was debated for seven years. The Doha round continues to be stalled as nations disagree about the fairness of the negotiations, especially in relation to trade barriers, despite the WTO’s track record as a beneficial agent to world economies.

For maybe the first time in history, a significant number of economists and the public are criticizing protectionist reactions to large-scale economic crises. Still, most political leaders are leery about the commitments required by sustainable trade promises. After U.S. President Barrack Obama’s arrival in the White House more than 18 months ago, many believed that the Doha Round would live on. During his campaign, the current President pledged to dump former president George W. Bush’s unilateral approach to foreign-trade policy. But certain inconsistencies in the economic practices of many countries, the United States and Canada included, have led to clashes that threaten to scuttle the negotiations. Read more here.

China Rebuffs U.S. Trade Criticism

(Reuters – Jonathan Lynn)

China has dismissed U.S. comments that Beijing is blocking a new trade agreement, saying that it was the United States that was stalling progress in the World Trade Organization’s long-running Doha round.

The angry comments, by China’s ambassador to the WTO, indicate how difficult it now is to bridge the gaps in the Doha talks, launched in late 2001, because of differences between the United States and big emerging economies, foremost China.

“Everybody knows what the real reason for the deadlock of the Doha round is and where the main political obstacles come from,” Sun Zhenyu told Reuters on Sunday. “The U.S. is the sole member who insists that we’re still far away from the conclusion of the round. Their new excessive request on an elevated level of ambition is in fact equivalent to a restart of the round and a flagrant deviation from the original negotiation mandates.”

Frustration on both sides has now boiled over into a public war of words, making a deal even harder, a fact recognized by leaders of the G8 countries, who include the United States but not China, when at their summit in Canada on Saturday they dropped a commitment to complete Doha this year and simply renewed a pledge to conclude an agreement. Read more here.