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A. GLOBAL FINANCIAL CRISIS AND IMPACT ON TRADE AND INVESTMENT
IWorld Bank president sees end to ' Third World, China daily, 15 April 2010
WASHINGTON : World Bank President Robert B. Zoellick said on Wednesday that the world has entered a new multipolar economic order and "2009 saw the end of what was known as the ' Third World '." "It's time we recognize the new economic parallel," Zoellick said. "The outdated categorizations of First and Third Worlds, donor and supplicant, leader and led, no longer fit." Zoellick said the world now is in a new, fast-evolving multipolar global economy -- in which some developing countries are emerging as economic powers while others are moving toward becoming additional poles of growth. Others, Zoellick said, are struggling to attain their potential within this new system -- "where North and South, East and West, are now points on a compass, not economic destinies." He noted that the global economic crisis has shown that multilateralism matters. Staring into the abyss, countries pulled together to save the global economy. The modern Group of 20 was born out of crisis. It showed its potential by quickly acting to shore up confidence.
Accessed on 15April < http://www.chinadaily.com.cn/world/2010-04/15/content_9730691.htm >
G8/G20 leaders urged to have new policies for economic recovery, Sify, 29 April 2010
Meeting ahead of the G8 and G20 summits here in June, heads of business chambers from the G8 industrialised nations urged their leaders to institute new polices to sustain recovery from the global economic meltdown. The leaders of the largest business associations in the G8 nations Wednesday released the 'G8 Business Declaration' as their input for the G8/G20 summits. They called on the G8 and G20 governments to implement coordinated policies to restore confidence in global markets. To sustain recovery, they said, the world leaders must put their own fiscal houses in order and reform the global financial framework. 'The decisions made at the G8 and G20 summits will have an impact on every Canadian,' said Shauneen Bruder, chairman of the Canadian Chamber of Commerce.
Accessed on 29 April < http://sify.com/g8-g20-leaders-urged-to-have-new-policies >
China's strong start to 2010 backs tightening case, Reuters, 15 April 2010
BEIJING , China chalked up unexpectedly strong year-on-year growth in the first quarter of 11.9 percent, prompting renewed calls for tighter policies to prevent the world's third-largest economy from bubbling over. The rate of expansion, the fastest since 2007 and above the median forecast of 11.5 percent in a Reuters poll, was flattered by a low base of comparison a year earlier, when the economy was reeling from the global financial crisis. But economists said the figures, released on Thursday by the National Bureau of Statistics, were unquestionably sturdy and would justify a firmer policy stance to nip inflation in the bud.
Accessed on 15April < http://www.reuters.com/article/idUSTOE63D09120100415?type=usDollarRpt >
Japanese investors still committed to Thailand, Bangkok Post, 21 April 2010
Despite political risks and the Map Ta Phut environmental impasse, Japanese investors are not looking to abandon Thailand in search of cheaper costs in Vietnam , says the Ho Chi Minh City office of the Japan External Trade Organisation (Jetro). Managing director Yoshida Sakae said the booming local economy and low labour costs were competitive advantages of Vietnam in attracting direct investments from abroad. As in Thailand , Japanese firms are the top among foreign investors in Vietnam , followed by those from Singapore , Taiwan and South Korea , respectively. But Japanese investment in Vietnam is still relatively small compared to Thailand . Toyota Motor, for example, has a factory in Hanoi with annual output of 30,000 units compared with its capacity of 500,000 in Thailand . Many more local suppliers for various industries in Thailand make the country more attractive than neighbouring countries.
Accessed on 21April < http://www.bangkokpost.com/japanese-investors-still-committed-to-thailand >
Moody's Lifts Korea 's Credit Rating to Pre-Asian Crisis Level, Chosun-Ilbo, 15 April 2010
Credit rating agency Moody's on Wednesday upgraded Korea 's sovereign credit rating by one notch from A2 to A1, the fifth highest rating on the agency's 21-notch scale and the level the country enjoyed before the Asian financial crisis in 1997. Moody's lowered Korea's rating by six notches from A1 to Ba1, a non-investment grade, in late December 1997, lifting it to Baa3, the lowest investment grade, in February 1999, and to Baa2 in December the same year. The agency upgraded Korea 's rating by two notches to A3 in March 2002 and again to A2. In a statement Wednesday, Moody's senior vice president Tom Byrne said the change was prompted by Korea's demonstration "of an exceptional level of economic resilience to the global crisis" while containing the budget deficit. "The Korean economy is responding rapidly to the improving global economic environment, and the government has put in place supportive policy measures which should help sustain economic growth over time," Byrne said.
Accessed on 15 April < http://english.chosun.com/site/data/html_dir/2010/04/15/2010041500522.html >
Viet Nam : FDI grows in first four months, Viet Nam News, 29 April 2010
HA NOI Foreign direct investment rose in both newly-registered and disbursed capital during the first four months of the year, according to the Foreign Investment Agency. Over 260 new projects were licensed during the period, worth a combined US$5.6 billion, an increase of 58.5 per cent in capital but a drop of 19.6 per cent in the number of projects over the same period last year. FDI disbursement reached $1.1 billion in April, lifting total disbursement during the first four months of the year to $3.6 billion, an increase of 5.6 per cent over the same period in 2009. During the period, the nation attracted $5.92 billion in FDI, a decline of 25.7 per cent year-on-year. Among existing projects, 92 registered to increase capital by a combined $325 million, year-on-year decreases of 92.7 per cent in terms of capital and 30.3 per cent in the number of projects, respectively.
Accessed on 29 April < http://vietnamnews.vnagency.com.vn/FDI-grows-in-first-four-months>
UNITED STATES OF AMERICA
U.S. Households Lost $100,000 From Financial Crisis, Study Says, Business Week , 28 April 2010
The financial crisis and recession cost U.S. households an average of about $100,000 in lost wealth and income, according to a study by former Treasury Department economist Phillip Swagel. From September 2008 through the end of 2009, households' stock holdings fell $66,000 and real estate dropped $30,000, according to the study, to be released today by the Pew Economic Policy Group. Each household also lost an average $5,800 from unemployment and lower earnings, the study said. While stocks have rebounded this year, the fallout from the crisis was broader than the price of the government's $700 billion bank rescue or $787 billion economic stimulus package, the study said. Swagel said the losses probably won't be recouped until 2011 at the earliest.
Accessed on 28 April < http://www.businessweek.com/u-s-households-lost-100-000-financial-crisis>
B. TRADE FACILITATION AND INVESTMENT PROMOTION
Malaysia : Miti hopes to boost further domestic investment, The Star , 29 April 2010
KUALA LUMPUR : The Government hopes the ratio between foreign direct investment (FDI) and domestic investment will be at 50:50 from the current 70:30 during the 10th Malaysia Plan period, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed. He said the Government was taking various initiatives to woo more domestic investments into the manufacturing and services sectors. The Government policy is to focus on domestic investments and FDIs. Both enjoy equal opportunities to obtain incentives and assistance from the Government, he said after chairing a discussion with government-linked and non-government-linked companies on strategies to increase direct investments.
Accessed on 29 April < http://biz.thestar.com.my/news/story.asp?file=/2010/4/29/>
TAIWAN - CHINA
Taiwan : ECFA, a springboard for globalization, Focus Taiwan, 29 April 2010
Opposition Democratic Progressive Party Chairperson Tsai Ing-wen recently said that by attempting to sign an economic cooperation framework agreement (ECFA) with China, the ruling Kuomintang (KMT) is trying to lead Taiwan's economy to the world via China. During her debate with President Ma Ying-jeou, Tsai said that the DPP, which held power from 2000 to 2008, had on the contrary taken steps to "lead Taiwan toward China via the world." Tsai opposed Ma's push to sign an ECFA with China too quickly, which she said would make Taiwan 's economy overly dependent on China . She suggested Taiwan first build multilateral trade ties with China and the rest of the world under the World Trade Organization (WTO) framework. Tsai's suggestion was unrealistic, given that the WTO's Doha round of talks has stalled and trade liberalization has not worked in Taiwan 's favor.
Accessed on 29 April < http://focustaiwan.tw/ShowNews/WebNews_Detail.aspx>
C. TRADE FINANCE
Standard Chartered, World Bank Set Up $1 Billion Trade Loan Plan, Business Week, 21 April 2010
Standard Chartered Plc agreed with the World Bank's International Finance Corp. on a program to enable $1 billion of trade credits focusing on the world's poorest countries. This arrangement will help boost trade finance in Asia, Africa and the Middle East , which has been sharply curtailed by the global financial crisis, Standard Chartered Chief Executive Officer Peter Sands said today in an e-mailed statement.
Accessed on 21 April < http://www.businessweek.com/standard-chartered-world-bank-set-up-1-billion-trade-loan>
World financial markets tumble on fears of debt crisis in Europe, Los Angeles Times, 28 April 2010
In U.S. , the Dow falls below 11,000 for first time in two weeks. Global financial markets tumbled Tuesday as investor sentiment caved to the worsening government-debt crisis in Europe . The Capitol Hill grilling of Goldman Sachs Group Inc. executives on their role in the housing-market meltdown also undercut Wall Street, traders said. Financial shares led the market lower, although Goldman's stock rebounded. U.S. stocks, which Friday had hit 19-month highs, suffered their biggest sell-off since early February. The Dow Jones industrial average slumped 213.04 points, or 1.9%, to 10,991.99, falling below 11,000 for the first time in two weeks.
Accessed on 28 April < http://www.latimes.com/topstories/la-fi-debt-markets>
Asean May Need to Manage Capital Inflows, IMF Says, San Francisco Chronicle, April 8 2010
Southeast Asian nations may need to manage excessive short-term capital inflows to avoid destabilizing the region's economic recovery, the International Monetary Fund said. Economies in the region may need measures against asset- price bubbles, Naoyuki Shinohara, an IMF deputy managing director, said at a press conference today in Nha Trang , Vietnam . Economic growth in the region may be 5.5 percent in 2010, he said." Capital inflow is something that should be welcomed, but there are cases when excessive short-term capital flow could disturb sound economic management," Shinohara said. Management options include fiscal tightening, exchange-rate flexibility, and reserve accumulation, he said.
Accessed on 8 April < http://www.sfgate.com/cgi-bin/article.cgi/2010/04/08/ >
Indonesia, Malaysia to use money swaps in trade, Commodity Online, 21 April 2010
JAKARTA , Southeast Asia's two large economies Indonesia and Malaysia are likely to back their bilateral trade with currency swaps to ease currency volatility against the dollar. According to Indonesia 's central bank, with bilateral currency swaps in support of trade, both countries can avoid the use of a third currency such as the dollar. This will reduce demand for US dollars and that will make the exchange rate of the rupiah against the dollar more stable, Bank Indonesia said. Indonesia 's currency, the rupiah has strengthened 4.2 percent this year and reached 8,990 last week, the strongest level since July 2007. Exporters have raised concerns against the strengthening of rupiah. They fear a too-strong rupiah will make Indonesian goods more expensive and less competitive.
Accessed on 21 April < http://www.commodityonline.com/Indonesia-Malaysia-to-use-money-swaps>
D. WTO RELATED NEWS
WTO chief rejects changing Doha agenda, Money Control, 21 April 2010
The head of the World Trade Organization rejected proposals to revise the Doha trade agenda on Tuesday, saying it was unacceptable to developing nations seeking to open up world commerce. European Union trade chief Karel de Gucht was quoted as saying last week that the goal of the long-running Doha round should be revised to either seek a ' Doha light' deal or aim for a more ambitious outcome. However, WTO Director-General Pascal Lamy told reporters revising the agenda would be "horribly complex, plus probably politically unpalatable for developing countries who want this round to resolve a fairer system of rules for them." Lamy said none of the WTO's 153 members had suggested revising the Doha agenda during a stock-taking exercise in March during which they tacitly dropped a deadline for a trade liberalization agreement.
Accessed on 21 April < http://www.moneycontrol.com/news/wto-chief-rejects-changing-doha>
China seeks WTO expert panel, UPI , 21 April 2010
GENEVA , Switzerland , China , contesting the European Union's anti-dumping duties on its footwear, Tuesday asked a World Trade Organization expert panel rule on the issue. The Chinese delegation at a meeting of the WTO dispute settlement body in Geneva , Switzerland , said the EU action violates global trade regulations, China 's state-run Xinhua news agency reported. " China requests the DSB to establish a panel to ensure the protection of China 's legitimate rights and benefits under the WTO agreements," the delegation said in a statement, claiming its latest consultations with the EU last month did not result in mutually satisfactory solution.
Under WTO procedures, an expert panel is sought to settle trade disputes when contending parties fail to settle the issues during a 60-day mutual consultation period.
Accessed on 21 April < http://www.upi.com/2010/04/21/China-seeks-WTO-expert-panel >
Russia looking to join WTO at year end: ministe, AFP, 15 April 2010
BRUSSELS Russia is looking to join the World Trade Organization by the end of the year, when it would agree to lower its customs duties, Deputy Prime Minister Igor Shuvalov said Wednesday.
Shuvalov, on a visit to Brussels to meet members of the European Commission, told journalists he had discussed measures to speed up Russian accession to the global trade rules body and said he would soon meet US officials. "We're looking to the end of the year," he said. "If it is possible, we would ratify the accession document and immediately lower customs duties." Russian export taxes on wood, which have risen sharply in the last few years in order to encourage European paper makers to invest in the country, have been a key stumbling block in Moscow 's bid to join the WTO.
Accessed on 15 April < http://www.google.com/hostednews/afp/>
Russia to Pursue Solo WTO Bid, The Wall Street Journal, 28 April 2010
Russia will revive its bid to join the World Trade Organization on its own rather than as part of a regional group, removing a major obstacle to membership for the largest country outside the bloc.
Moscow had been asking to join the WTO as part of a customs union with former Soviet republics Kazakhstan and Belarus . WTO officials said that would have been impossible, and the approach was seen as a ploy to avoid membership. " Russia will formalize its membership on its own," Deputy Prime Minister Igor Shuvalov told reporters in Washington on Monday, according to the official ITAR-TASS news agency. "It will be good for everyone if Russia becomes a WTO member before we create a common market with Kazakhstan and Belarus ."
Accessed on 28 April <
E. REGIONAL AND BILATERAL TRADE AND INVESTMENT RELATIONS
ASEAN - CHINA
ASEAN-China FTA fruitful since realization: official, Xinhua, 29 April 2010
SINGAPORE , The Association of Southeast Asian Nations' (ASEAN) success in engaging pro-actively with China in free trade agreement (FTA) is bearing fruit, an ASEAN official said here on Thursday. Sundram Pushpanathan, Deputy Secretary-General of ASEAN for the ASEAN Economic Community, spoke at the ASEAN Roundtable 2010 that ASEAN-China trade reached over 192 billion U.S. dollars last year, and is growing at an annual rate between 24 percent to 30 percent. He said that ASEAN has positioned itself well for the boom in China and India being their FTA partners as the growth pole shifts to East Asia , adding that ASEAN will grow along with these economic giants and strengthen trade and investment ties.
Accessed on 29 April < http://news.xinhuanet.com/english2010/china/2010-04/29/c_13272393.htm >
China slaps new penalties on US chicken imports, AFP, 28April 2010
BEIJING China said Wednesday it will impose preliminary tariffs on a variety of US chicken products it claims received government subsidies as trade tensions grow between the two sides. The commerce ministry said importers of US broiler chicken products will have to pay deposits based on the alleged US government subsidy rates of 3.8-31.4 percent of the import price. "The domestic broiler chicken industry suffered material damages" due to the subsidies, the ministry said on its website. A broiler is a type of chicken raised specifically for meat production. The United States accounts for more than 70 percent of China 's broiler chicken imports. Chinese customs authorities will start collecting the deposits from Friday.
Accessed on 28April < http://www.google.com/hostednews/afp/article/>
Hatoyama seeks Sarkozy help to seal EPA with EU, The Japan Times, 15 April 2010
WASHINGTON , Prime Minister Yukio Hatoyama urged French President Nicolas Sarkozy Wednesday to cooperate on launching a joint study toward signing an economic partnership agreement between Japan and the European Union. Hatoyama told Sarkozy on the sidelines of the Nuclear Security Summit that Japan will consider easing nontariff barriers that the EU says are detrimental to its industries and that have prevented the sides from starting EPA negotiations. "I told him that we want to break down nontariff barriers and start a joint study on it," Hatoyama told reporters. "Then he gave me a very positive response. It feels like the direction toward an EPA between Japan and the EU is becoming clearer." The talks took place ahead of an April 28 meeting in Tokyo between Hatoyama and EU President Herman van Rompuy, who will focus on issues related to an EPA.
Accessed on 15 April < http://search.japantimes.co.jp/cgi-bin/nb20100415a6.html >
Japan, EU to launch high-level trade talks, The Japan Times , 29 April 2010
European Council President Herman Van Rompuy agreed with Prime Minister Yukio Hatoyama during a summit Wednesday that Japan and the European Union will establish a "high-level group" to discus their economic relations, including the possibility of a free-trade agreement. The two sides also agreed to promote cooperation in areas such as building peace in Afghanistan and preventing piracy off Somalia , Hatoyama said at a news conference in Tokyo with Van Rompuy and European Commission President Jose Manuel Barroso. Hatoyama said Japan understands the EU's frustration with nontariff barriers in Japan , such as the tight regulations on public procurement and product safety screening, which Brussels blames for distorting fair trade.
Accessed on 29 April < http://search.japantimes.co.jp/cgi-bin/nb20100429a2.html >
PAKISTAN SRI LANKA
Pakistan, Lanka agree to boost defence, trade ties, The Nation, 29 April 2010
THIMPHU ( Bhutan ) - Prime Minister Yousuf Raza Gilani and Sri Lankan President Mahinda Rajapakse in a meeting here Wednesday agreed to promote the relations in all the fields especially in defence, trade and commerce between the two countries. During the meeting, which was also attended by Foreign Minister Shah Mahmood Qureshi, both the leaders also emphasised the need to strengthen the SAARC organisation for the betterment and more development in the region. PM Gilani felicitated Mahinda Rajapakse on his re-election for a second term as President of Sri Lanka as well as on United Peoples Freedom Alliance's victory in the parliamentary elections. Pakistan greatly values its traditionally close, cordial and mutually supportive relationship with Sri Lanka , he said, adding that both the countries had always stood by each other in difficult times.
Accessed on 29 April < http://www.nation.com.pk/Pak-Lanka-agree-to-boost-defence-trade-ties >
F. DO YOU KNOW THAT?
CFTC votes against more oversight for carbon market, Reuters, 28 April 2010
The top U.S. futures regulator, attempting to throw more light on contracts traded on unregulated exchanges, ruled on Tuesday to extend oversight to seven energy contracts because of the important role they play in setting the price for a commodity. The decision by the U.S. Commodity Futures Trading Commission comes as Congress presses for an overhaul of U.S. financial regulation -- including tough rules for the derivatives market -- and as the CFTC considers a crack-down on speculative trades in the energy and metals arenas. The CFTC last year identified more than 40 contracts listed on electronic markets that might merit closer supervision, mostly for electric power and natural gas. Congress had empowered the agency to look at the contracts as it sought to close the so-called Enron loophole that allowed futures contracts to be traded on exempt electronic platforms with little government oversight.
Accessed on 28 April < http://www.reuters.com/article/idUSTRE63Q22X20100427 >
Japan Voices Concern Over Ontario Green-Energy Program, The Wall Street Journal, 14 April 2010
TORONTO (Dow Jones)--In a meeting this week, Japanese trade officials asked Ontario government officials to "get rid of the local-content requirement" contained in Ontario's feed-in-tariff program. Toshihiko Fujii, director of trade rules and dispute settlement for Japan's Ministry of Economy, Trade and Industry, said Ontario didn't agree to the request but the two sides will continue the discussion. Fujii said he made it clear that Japan "cannot rule out the possibility" of a legal challenge of Ontario 's domestic-content requirements at the World Trade Organization in Geneva . Officials from Ontario 's Ministry of Energy and Infrastructure weren't immediately available to comment.
Accessed on 14 April < http://online.wsj.com/article/BT-CO-20100414-709846.html >
G. RECENT PUBLICATIONS ON TRADE AND INVESTMENT
Asian Development Outlook 2010: Macroeconomic Management Beyond the Crisis, ADB (available online, pdf version, 3, 613kb, 301 pages)
The annual Asian Development Outlook provides a comprehensive analysis of economic performance for the past year and offers forecasts for the next 2 years for the 45 Asian economies that make up developing Asia . This edition sees developing Asia emerging from the recent crisis and posting a strong recovery in the next 2 years, as a moderate global recovery supports a modest revival in global trade. Investment is expected to remain strong and private consumption is anticipated to improve. Inflation will pick up, but at manageable levels.Beyond the crisis, developing Asia faces the challenge of adjusting its monetary, exchange rate, and fiscal policies to foster macroeconomic stability and sustained growth within the broader direction of a return to prudence and discipline.
Accessed on 15 April <http://www.adb.org/ado2010>
International Trade: Free, Fair and Open?, OECD (available online, 197 pages)
\International trade affects the price and availability of practically everything we buy. It also plays a role in many other domains, including jobs, the environment and the fight against poverty. Trade, in turn, is affected by a host of factors ranging from natural resources to fashion.
OECD Insights: International Trade argues that prosperity has rarely, if ever, been achieved or sustained without trade. Trade alone, however, is not enough. Policies targeting employment, education, health and other issues are needed to promote well-being and tackle the challenges of a globalised economy.
Accessed on 28 April http://wdn.ipublishcentral.net/>
World Economic Outlook (WEO): Rebalancing Growth, IMF, (available online, pdf version, 5.71 MB, 216 pages)
The World Economic Outlook (WEO) presents the IMF staff's analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF's global surveillance activities.
Accessed on 30 April <http://www.imf.org/external/2010.pdf>
lobal Financial Stability Report : Meeting New Challenges to Stability and Building a Safer System, IMF, (available online, pdf version, 253 KB, 235 pages)
With the global economy improving (see the April 2010 World Economic Outlook), risks to financial stability have subsided. Nonetheless, the deterioration of fiscal balances and the rapid accumulation of public debt have altered the global risk profile. Vulnerabilities now increasingly emanate from concerns over the sustainability of governments' balance sheets. In some cases, the longer-run solvency concerns could translate into short-term strains in funding markets as investors require higher yields to compensate for potential future risks. Such strains can intensify the shortterm funding challenges facing advanced country banks and may have negative implications for a recovery of private credit. These interactions are covered in Chapter 1 of this report.
Banking system health is generally improving alongside the economic recovery, continued deleveraging, and normalizing markets. Our estimates of bank writedowns since the start of the crisis through 2010 have been reduced to $2.3 trillion from $2.8 trillion in the October 2009 Global
Financial Stability Report.
Accessed on 30 April < http://www.imf.org/external/gfsr>
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