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.

Global Recovery Slowing: OECD

(Thomson Reuters)

Global recovery looks to be slowing more than expected as growth weakens in rich economies, and stimulus should be extended or stepped up if the slowdown endures, the OECD said on Thursday.

The Organization for Economic Co-operation and Development forecast growth across the G7 group of major economies to average an annualized 1.4 percent in the third quarter and 1.0% in the fourth, down from 3.2 and 2.5% in the first and second quarters respectively. [...]

For Canada, the OECD has sharply reduced its forecast for third quarter growth to 2.2% from its previous estimate of near 3.2% while the fourth quarter has been cut to 2.3% from 2.9%. That follows annualized growth of 5.8% and 2.0% in the first and second quarter of the year.

The OECD forecast annualized U.S. growth rates of 2.0 and 1.2% in the third and fourth quarters, after 1.6% in the second quarter and 3.7% in the first. Read more here.

OECD: Rich Countries Raised Farm Subsidies in 2009

(Bridges Weekly)

The world’s rich countries boosted government support for agriculture in 2009, according to a report that the Organisation for Economic Co-operation and Development (OECD) released last week. The report, Agricultural Policies in OECD Countries: At a Glance 2010, is part of the OECD’s annual effort to quantify and assess the support that its 31 developed country members provide to their agricultural producers.

The OECD found that the Producer Support Estimate (PSE) rose to US$252 billion dollars in 2009, which was the equivalent of 22% of total farm receipts in that year. In 2008, the share of farm receipts attributable to agricultural support was 21%.

The Producer Support Estimate measures the annual monetary value of gross transfers from consumers and taxpayers to agricultural producers, relative to a situation without those policy measures in place. It is one of the many indicators designed and used by the OECD for monitoring and evaluating the composition of government support for agriculture.

The highlights of the report are available in PDF form here: here. The full report can also be purchased through the OECD bookshop: OECD bookshop.

Trade Experts Give G-20 Poor Grades On Resisting Protectionism

(Tom Barkley — Dow Jones/Wall Street Journal)

Group of 20 leaders don’t deserve to pat themselves on the back for avoiding protectionism this weekend, trade experts said Wednesday.

Discriminatory measures hurting trade are on the rise and affecting over 10% of global flows, while the prospects for a deal on the Doha round of trade talks are dimming, said participants at an event hosted by the Washington International Trade Association. […]

Earlier this month, the World Trade Organization, the Organization for Economic Cooperation and Development and the United Nations all applauded G-20 leaders for upholding the pledge they made at the first summit in November 2008.

However, those views are disputed by the latest Global Trade Alert… The report published Wednesday found that governments around the world have imposed more than 350 discriminatory measures since the last leaders’ summit in September 2009, bringing the total number that haven’t been reversed to nearly 650 since the first G-20 meeting. Sixteen of the most damaging provisions cover a combined $1.6 trillion in trade flows, or more than 10% of world imports in 2008. Read more here.

Emerging Economies Make Their Presence Felt

(International Freighting Weekly – Kizzi Nkwocha)

Shift in global economic power could impact supply chains

The rapid growth of emerging economies may lead to a long-term shift in global economic power – and that could affect how freight flows around the world, according to a new report.

Perspectives on Global Development: Shifting Wealth, published by the Organisation for Economic Co-Operation and Development (OECD), says the aggregate economic weight of developing and emerging economies should surpass that of the countries that currently make up the advanced world (the U.S., Europe, etc) within the next two decades.

The study says developing countries share of the world’s total economic power has risen from 40% of in 2000 to 49% today – and will be 57% by 2030. The OECD says that, due to their rapid growth and sheer size, India and China will remain the key influencers of macroeconomic variables that matter for poor countries – interest rates, the price of raw materials and wage levels for low-skill jobs – and will continue to have major impacts on global trading and investment patterns. Read more here.

OECD Statistics on International Trade in Services 2009, Volume II, Detailed Tables by Partner Country

(OECD)

This CD-ROM provides statistics on international trade in services by partner country for 28 OECD countries* plus the European Union (EU25 and EU27), Euro Area, Hong Kong (SAR China), and the Russian Federation as well as definitions and methodological notes. The data concern trade between residents and non-residents of countries and are reported within the framework of the Manual on Statistics of International Trade in Services. Data are also broken down by type of service according to the EBOPS classification. Series are shown in US dollars and cover the period 1999-2007.

The database uses Beyond 20/20™, a user-friendly Windows™-based software that allows the user to extract data and build customised tools for analysis such as graphs and tables. Technical documentation on the software and the statistics is included in Acrobat™ format.

Raise Rates ‘Without Delay’: OECD

(Tavia Grant — Globe & Mail)

The Bank of Canada should raise interest rates “without delay” and continue to gradually hike throughout this year and next, the OECD said Wednesday.

The recommendation comes just six days before central bank officials announce a decision on whether to boost its key lending rate from a record low.

Strategists had thought, until lately, a June 1st rate hike was a done deal after a string of stronger-than-expected Canadian economic reports. That certainty has ebbed, though, as European debt problems shake global confidence. The OECD, for its part, thinks the central bank should act swiftly to raise rates. Read more here.

Canadian Economy to Far Outpace Growth of Other G7 Nations, OECD Says

(MSN – The Canadian Press)

A global economic forecasting group says Canadian economic growth will blow away that of other G7 nations by a wide margin during the first half of 2010. The Paris-based Organization for Economic Development and Co-operation is forecasting that Canada’s economy grew 6.2% in the first quarter, well ahead of the 1.9% overall growth for the G7 nations.

The OECD predicts that Canada’s second-quarter growth will be about 4.5%, nearly double the 2.3% growth expected from the combined G7.

The latest outlook comes as Canadian economic data shows the country embarked upon an enthusiastic rebound at the start of the year. In January, Canada’s gross domestic product advanced 0.6%, driven by growth in activity in factories, at construction sites, in mines and in the oilpatch.

However, economists have cautioned that Canada’s economic growth will likely slow down as the Bank of Canada is expected to raise interest rates this July, while consumers could decrease spending to pay off their debts. Read more here.

Export Restrictions on Strategic Raw Materials and Their Impact on Trade and Global Supply

(WTO – Frank van Tongeren et al., OECD)

This paper examines the presence and impact on trade and global supply of export restrictions applied to selected metals and minerals. The strategic metals and minerals selected for this study have a number of shared characteristics which in turn determine their impact. Their exploitable mineral reserves are generally found in one or a few geographical regions of the world implying that their potential mining and export are concentrated in a few countries. For most of these strategic raw materials, the top three producing countries account for over half of world production. In some cases, production is so concentrated that over half of world production occurs in a single country. This in turn leads to a dependence on such imports by countries that consume these materials or the finished goods produced from them. It also suggests that countries producing these raw materials may influence their prices and quantities made available on world markets.

The metals and minerals in this study are generally used as inputs into high-technology or strategic sectors. Although often needed only in small quantities, these metals are increasingly essential to the development of technologically sophisticated products. They play a critical role in the development of innovative “environmental technologies” to boost energy efficiency and reduce greenhouse gas emissions. Hydrogen-fuel based cars, for example, require platinum-based catalysts; electric-hybrid cars need lithium batteries; and rhenium super alloys are an indispensable input for modern aircraft production. In addition, there are few substitutes available in the short-term for these raw materials. Read more here.

OECD Economic Surveys: China 2010

(OECD)

This 2010 edition of OECD’s periodic review of China’s economy includes chapters on recent achievements and prospects, monetary policy, financial reforms, product market regulation and competition, inequality, the labour market, old-age security and the health care system.

OECD Statistics on International Trade in Services 2009

(OECD)

This book includes summary tables by country and by service category and zone totals for the European Union, Euro area, G7, NAFTA, OECD - Asia and Pacific, OECD - Europe and total OECD which are comparable. Tables for each individual OECD country and for the EU and the euro area showing data for detailed service categories are also provided. Series are shown in US dollars and cover the period 1999-2007.

Services covered: Sea transport; Air transport; Other transport; Travel; Communications services; Construction services; Insurance services ; Financial services; Computer and information services; Royalties and licence fees; Other business services; Personal, cultural and recreational services; and; Government services.

Further details and ordering information here.

OECD October Leading Indicator Suggests Recovery

(RTT News)

Friday, the Organisation for Economic Co-operation and Development said its composite leading indicator for its member countries rose to 101.4 in October from 100.4 recorded in September, suggesting recovery.

Press release, and information by country, available on the OECD website at the OECD website.

OECD Forecast Highlights

(OECD via The Globe & Mail)

Canada

• The contraction that began in the last quarter of 2008 seems to have ended in the second half of 2009. External demand and domestic investment now appear to be rebounding, but they also pose the greatest risks to the recovery’s sustainability.

• Unemployment is projected to keep rising until the end of 2009 and underlying disinflation to continue for several more quarters under the weight of persistent slack.

• The Bank of Canada should hold the policy rate at its current near-zero level until the end of June 2010, as it has committed, and probably beyond.

• Given the time required to roll out fiscal stimulus and the nascent recovery, additional expansionary measures, including extending the window of eligibility for extraordinary unemployment benefits, should be resisted. Instead, governments should be preparing detailed and credible medium-term fiscal consolidation plans to be announced soon and be implemented when the recovery is firmly underway.

Non-OECD countries

• The upturn in the major non-OECD countries, especially in Asia and particularly in China, is now a well established source of strength for the more feeble OECD recovery.

• The strength of the upturn reflects both the limited direct exposure to the financial origins of the crisis and the strong policy stimulus these countries were in a position to apply.

• The major policy issue in many of these countries is now becoming one of withdrawal of stimulus so as to avoid igniting asset or general price inflation.

United States

• The U.S. economy is recovering on the back of policy stimulus, improving financial conditions, non-OECD demand growth, normalisation of stockbuilding and stabilisation of the housing market.

• With rapid labour shedding in the downturn, employment should respond quickly to economic activity and unemployment may peak in the first half of 2010.

Euro Area

• The euro area economy will benefit from many of the same growth-drivers as the United States.

• But work-sharing schemes which cushioned employment in the downturn may also weaken the employment intensity of growth going forward.

• With unemployment not set to peak before the end of 2010 or the beginning of 2011, household confidence is likely to be weak and sap the strength of the recovery.

Japan

• Japan is well positioned to benefit from strong growth in the rest of Asia but, fiscal stimulus notwithstanding, weakness on the domestic side will remain a drag on growth.

• With activity insufficient to materially reduce unemployment, deflation is set to linger.

OECD Economic Outlook No. 86, November 2009: Country summaries and a special chapter on the Automobile industry are on the OECD website.

Challenging “Buy National” Clauses under BITs

(Bridges Monthly – Marie Wilke)

The ‘buy national’ clauses that numerous governments have included in their economic stimulus packages are causing growing concern. For many developing countries, bilateral investment treaties may be the best option for legal recourse against such provisions.

Despite their likely trade-distorting effects, buy national requirements appear to be consistent with WTO rules on trade in goods and services (the GATT and the GATS), although they may well breach commitments made under the plurilateral Government Procurement Agreement (GPA). The GPA, however, applies to signatories only, which leaves the many developing countries that have refrained from joining the agreement without a possibility for legal recourse. For emerging markets, such as Argentina, Brazil and India, this causes major distress.

Turning away from the multilateral trading system, about 2,800 bilateral investment treaties (BITs) that provide for investor-state arbitration in international fora, such as the International Centre for the Settlement of Investment Disputes (ICSID), might serve as a basis for legal challenges. It is conceivable that investors engaged in the importation of products manufactured abroad, possibly even directly involved in bidding processes for government procurement contracts, will challenge buy national clauses under bilateral investment agreements with reference to (i) the substantive assurance of national treatment and (ii) the general principle of fair and equitable treatment. Read more here.

Global Recession Ending: OECD

(Reuters – Brian Love)

The global recession is coming to an end faster than thought a few months ago and may already be over, but recovery will rely on massive government spending and low interest rates for some time, the OECD said on Thursday.

The Organization for Economic Co-operation and Development issued forecasts showing a broad return to economic expansion in the third quarter of 2009. It also said that while authorities needed to map out a strategy for withdrawal of fiscal and monetary stimulus once recovery was surer, now was no time to economies off life support.

Read the complete article here. Click here for the OECD document and the press conference.

Minister Day Promotes Canadian Trade in France

(Minister of International Trade)

The Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, today concluded a two-day visit to France where, during important multilateral meetings, he strongly reiterated Canada’s calls to keep markets open and resist the temptation of protectionism.

Minister Day and Ted Menzies, Parliamentary Secretary to the Minister of Finance, met with Organisation for Economic Co-operation and Development (OECD) and World Trade Organization (WTO) partners to address the current state of the world economy and the need for continued trade and investment liberalization.

“In order for us to succeed in restoring prosperity to the global economy, we need to work with OECD and WTO members to fight the impulse to hide behind trade barriers. Canada is leading by example by pursuing free trade agreements with markets all over the globe,” said Minister Day. “We are strongly opposed to protectionism and will continue to defend free and open trade on the world stage.

“The Doha Round of WTO negotiations offers the best way forward to ensure fair, rules-based international trade. We need to aggressively pursue these talks to ensure our Canadian companies gain access to as many markets as possible, especially during this difficult economic period.”

Following the OECD meetings and informal meetings of WTO ministers, Minister Day delivered a speech to senior business officials from the Canada-France Chamber of Commerce where he highlighted Canada’s aggressive free trade agenda, positioned Canada as the best place in the world to do business and called for the need to resist protectionism.

Minister Day also had a very productive meeting with his French counterpart, Anne-Marie Idrac, Secretary of State for Foreign Trade, where he reinforced the need for stronger commercial relations with France and emphasized the importance of concluding negotiations on a comprehensive economic and trade agreement with the European Union as soon as possible.

“An agreement with the European Union, now more than ever, will help provide Canadian companies with enhanced access to the world’s largest market,” said Minister Day. “We will continue to work with our European partners, such as France, to ensure this becomes a reality.”

France is Canada’s eighth-largest merchandise trading partner worldwide and its third-largest in Europe, after the United Kingdom and Germany.

For the complete text of the OECD meeting’s ministerial conclusions is available here (PDF) and more details about Minister Day’s visit can be found here.

World Trade Set to Fall 13%, OECD Urges Governments to Avoid Protectionism

(OECD)

With world trade volumes likely to shrink by as much as 13% in 2009 from 2008 levels, the OECD is urging governments to avoid protectionist measures and keep markets open in order to allow economies to benefit from the recovery when it comes.

Speaking at a meeting in Brussels to present a new OECD publication on trade policy, International Trade: Free, Fair And Open?, OECD Director for Trade and Agriculture Ken Ash warned that government actions to discriminate against foreign goods, services, firms or workers “could have a devastating effect in terms of prolonging and deepening the recession.”

• Consumers would be hurt by higher prices and reduced choice.

• Domestic industries would face higher input costs, as a huge amount of trade today is in intermediate goods and services.

• Exporters would be penalised twice: through higher costs and through retaliation from other countries. The net effect on the economy would be even bigger job losses than otherwise
European Trade Commissioner Catherine Ashton, speaking at the same event, stressed the need to help citizens better understand the role of trade in contributing to economic growth and job creation.

The new OECD publication, International Trade: Free, Fair And Open?, was written with that objective. Part of the OECD’s Insights series of publications aimed at a wide public, it explains that while open markets are a necessary condition for growth and prosperity they are not sufficient on their own to guarantee positive outcomes. Trade policy must be accompanied by other policies if the potential benefits are to be realised and the negative impacts of liberalisation on vulnerable individuals and sectors are to be addressed. “Today, in particular, effective labour market policies need to be in place to assist those that need to adjust,” Mr. Ash said.