EJAD Trad Watch

ECONOMISTS tend to divide the world in terms of economic development or growth potential. We have a group of G-7 countries, which are the most industrialised and the richest. Also, there is a group of OECD countries as well as a cluster of emerging economies. There is, however, another set of countries which have been further differentiated from the emerging economies and called BRICs. Goldman Sachs, an international consulting group, in its 2003 paper coined this acronym. BRICs stands for Brazil, Russia, India and China. (Dawn, Pakistan)

► International trading system

French Food and Agriculture Organization Chief Jacques Douf did not support reduction in agricultural subsidies and to accelerate the process of access to US/EU markets. He rather has pressed for similar subsidies for farmers in Africa, Asia and Latin America. He made remarks in interview on Friday April, 2008. Mr. Douf further stated that there are two solutions: end subsidies everywhere or give them to every one, I prefer the latter. Earlier, French President Nicholas Sarkozy in his inauguration speech to the Paris annual Farm show, on 22 February, 2008 had claimed that EU makes too many concessions in WTO talks. (Pak Observer, Pakistan)

A new text on industrial goods in global trade talks needs substantial revision to narrow differences between members before ministers can discuss it, India's trade minister said on Thursday. The comments from one of the major developing country participants in the long-running Doha round negotiations highlighted the gaps to be overcome before ministers can meet to clinch an outline deal. A statement issued by Trade Minister Kamal Nath's office in New Delhi quoted him as saying India was ready for a ministerial meeting but a lot of work needed to be done to narrow differences before "identifying a safe landing zone." (Economic Times, India)

► Free trade agreements mark a major shift in trade policy

Free trade agreements signed by GCC states with countries and economic blocks help reduce inflation and price hikes since they lead to waiving of customs duties and allow smooth flow of commodities and services. For example, the GCC countries signed a free trade agreement with European Free Trade Association, which includes countries with global economic and commercial status such as Switzerland, Liechtenstein, Norway and Iceland. These four countries, despite their small economies, may be more proactive than European Union countries, which are still hesitant in signing a free trade agreement with GCC countries. (Gulf News)

► SAFTA to accelerate intra-regional trade

SAFTA provides a good opportunity for increasing the regional trade in South Asia, and South Asian business should diversify and look at the opportunities within the region, particularly in view of the current slowdown in US and global economy. This was stated by Indian Commerce Secretary G K Pillai during the FICCI-ADB-UNCTAD Seminar on ‘Regional Cooperation in South Asia : Benefits from SAFTA and the Way Ahead’. Citing the example of imports of cements from Pakistan into India, Mr Pillai said that there are inherent complementarities within the region that needs to be effectively tapped to integrate further. (Asia Economy Watch, UK)

Pakistan and Jordan on Monday decided to rapidly move towards signing a Free Trade Agreement (FTA) and setting up of Joint Business Council (JBC) to promote trade and investment between the two countries. Talking to Prime Minister of Jordan Nader-al-Dahbi here on the sidelines of the World Economic Forum for Middle East, Syed Yousuf Raza Gilani said there was vast scope of bilateral cooperation in areas of diplomacy, economy, defence and security, tourism, energy and science and technology. The two leaders held discussions on issues of mutual interest in bilateral, regional and international spheres. The two leaders who have earlier served as ministers of tourism. (The News, Pakistan)

A bilateral treaty on investment will further enhance business ties between India and the US and give a positive signal to the world, a visiting US official said here Thursday. Speaking at a roundtable conference organised by the Confederation of Indian Industry (CII), Daniel Sullivan, assistant secretary in the State Department’s Bureau of Economic, Energy, and Business Affairs, said that concluding the bilateral investment treaty is an important priority of the present US administration. He noted that the first round of negotiations held in February “reflected a strong desire between the two sides to conclude the treaty”. (Bilaterals.Org)

Welcoming the booming bilateral trade ties, India and Australia today agreed to finalise a report on their joint FTA feasibility study by the end of this year. Australian Minister for Trade Simon Crean met Indian Minister for Commerce and Industry Kamal Nath here for annual bilateral trade discussions. "Australia has an historic opportunity to build a stronger relationship with this emerging power in our region," Crean said, according to official statement. "While India is already Australia's sixth largest merchandise export market and eighth largest services market there is potential to do much more together," Crean said. ." (Economic Times, India)

► India, Brunei to sign bilateral investment agreement

India and Brunei Darussalam will be signing an agreement on bilateral investment and protection and three other MoUs in different areas to further strengthen their bilateral cooperation. The agreements will be signed during the state visit of the Sultan and Yan Di-Pertuan of Brunei, Darussalam Haji Hassanal Bolkiah Waddaulah to India beginning today (May 20). Besides an MoU on trade and economic cooperation the two sides will sign MoUs on cooperation in the areas of information and communication technology and in the field of culture, arts, mass media and sports. (Bilaterals.Org)

Malaysia is keen on increasing bilateral trade with Pakistan. The setting up of a Malaysian trade office in Karachi is also being planned. This was stated by Zainuddin A Jalil, Trade Commissioner at the Consulate General of Malaysia, in Chennai, India. He was in Karachi to attend an International Food Technology Exposition held here. Zainuddin pointed out that his visit was aimed at promoting Malaysian products and services. He said it was good for him to look at the potential here in Pakistan and that he would be disseminating the relevant information to the businessmen in Malaysia. (The News, Pakistan)

► 'Indo-Russian bilateral trade poise to touch $10 billion'

Bilateral trade between Russia and India is poised to touch $10 billion by 2010, a top official of the Russian Federation in Southern India said. "The bilateral trade between the two countries at present is about $5 billion and within a couple of years it should go double," Blatislab V Antonyuk, Consul General of the Russian Federation in Southern India said at a function organised by International Cultural federation here recently. Pointing out that India currently accounts for a little over one per cent of Russia's total external trade volume, he said, "energy and infrastructure development are the core areas Russia is interested in investment". Antonyuk also expressed the hope that the Russian aided nuclear power plant at Koodangulam in Tamil Nadu would become operational by 2009. (Economic Times, India)

► Pacts with developed nations to take Indian trade into new era

India is currently negotiating preferential trade and investment agreements with some developed countries — the European Union, Japan and Korea. It is also contemplating similar agreements with Australia and New Zealand. If these agreements materialise (they are most likely to), it would mark a new era in not only India’s global trade but also its globalisation per se. All of India’s present bilateral agreements for trade liberalisation are with under-developed or developing countries (barring the Comprehensive Economic Cooperation Agreement with the city-state of Singapore, which, essentially, is a trading economy, and not of the likes of EU or Japan that are strong in manufacturing and large markets themselves). (Economic Times, India)

► Remittances, the lifeblood of Sri Lanka’s economy

Remittances from abroad are the lifeblood of the economy. Without remittances the Sri Lankan economy would be in a perilous state. The balance of payments would be in serious difficulties, incurring a massive deficit that would have serious repercussions on the foreign exchange reserves and the exchange rate. The amount of foreign exchange brought in by remittances is much larger than the earnings from many exports. The remittances last year exceeded the record earnings from tea. It is much higher than the earnings from tourism, foreign aid and other capital inflows. Even last year’s massive borrowings are of lesser magnitude. (Sunday Times, Sri Lanka)

► Sri Lankan poverty levels declining

The main contributor to the drop of the national poverty level to 15.2 percent in 2006/07 from 22.7 percent in 2002 is the decrease of poverty incidence in the rural sector to 15.7 percent in 2006/07 from 24.7 percent in 2002, officials involved in the study of poverty say. The rural sector is significant as 80 percent of the population of Sri Lanka falls under that category. However, poverty in the estate sector which holds about 5.5 percent of the population of the country has reached a new high to 32 percent in 2006/07 from 30 percent in 2002, indicating that almost 1 in every 3 persons suffers from poverty. (Sunday Times, Sri Lanka)

► Indian Tata resumes talks with Bangladeshi gov't on its $3 bln investment

The Bangladeshi government and Indian industrial giant Tata Sunday resumed talks here after a two-year break on its proposed 3 billion U.S. dollars investment in steel, fertilizer, power plant and coal mine projects. Officials said Tata Sons Executive Director Alan Rosling led the Tata team to the meeting with Bangladesh BoI. BOI Executive Chairman Kamal Uddin and the Secretaries to the Energy, Power and Industry Ministries and senior officials were present from the Bangladesh side at the meeting that lasted for nearly four hours. "It's a positive development that we formally resumed discussion after two years. (English People, China)

► Sri Lanka is Fonterra’s second largest investment next to China

The New Zealand-based dairy products firm which owns the Anchor, Raththi and Newdale brands is making its second largest investment in the Asian region, in Sri Lanka, according to Fonterra Brands Lanka Managing Director Achyut Reddy. Speaking to The Sunday Times FT at the foundation stone laying ceremony at the firm’s Biyagama production plant this week, he said that the Rs. 1.2 billion they will be investing in the operation was a result of the double digit growth in the local market for yoghurt. The investment is set to increase the yoghurt manufacture of the firm as well as treble its raw milk supply. (Sunday Times, Sri Lanka)

Prime Minister Yousuf Raza Gilani, while addressing a huge gathering at Multan, vowed to bring foreign investment and prosperity to the country, which should give the nation hope that the economy will at long last start moving in the right direction. Citing terrorism and sectarianism as major impediments to attracting foreign investment, he pledged to restore the 1973 Constitution, restore judiciary and other institutions and ensure press freedom. He has rightly claimed that the PPP is a symbol of federalism. He also said that his government had inherited problems like price hike, etc, which the PPP will address. (Business Recorder, Pakistan)

► Threatened agriculture and bio diversity

The World Biodiversity Day was observed in Bangladesh on Thursday. The occasion has been of great significance for this country because both its agriculture and biodiversity are already under stresses from global climatic change. The stresses are likely to become severe in the future. This provides the compelling reason to do whatever things can be done at the soonest to acquire coping abilities against the expected adverse conditions. There is no way to look at agricultural research as having secondary importance in the context of Bangladesh, the first one being production and related activities. (The Financial Express, Bangladesh)

► India blames ISIs for food and fuel crisis

Firmly rejecting the contention that rising consumption in developing nations was responsible for the soaring food and fuel prices, India has blamed the policies of World Bank and IMF and "excessive and unsustainable" demand in developed countries for the crisis. "This consumption trend has existed for more than a decade," said Indian UN Ambassador Nirupam Sen, pointing out that over last two years, the demand for oil has gone up one per cent but prices in dollar terms have risen by 90 per cent. Addressing a special meeting of the United Nations Economic and Social Council to consider the issue of rising food prices, he held financial crisis leading to weakening dollar and diversion of grains to production of bio-fuels among the major causes. (The Financial Express, Bangladesh)

The Bangladeshi caretaker government might require to spend around 12 percent of its upcoming fiscal budget on subsidies for fuel, fertilizer and food, putting a serious pressure on the country's macroeconomic stability. "We need to set aside at least 12 percent of our budgetary expenditure on subsidies in fertilizer, fuel and food in the next fiscal budget which starts from July 2008," a senior finance ministry official told Xinhua on Monday, who declined to be named. "In current fiscal year (July 2007 to June 2008), the government exchequer is under huge pressure due to increased prices of fuel, food and fertilizer in the international market and therefore the government has to provide huge subsidies. (English People, China)

AS world food prices continue to soar and developing countries’ struggle to feed their hungry and angry populations, the European Union has become entangled in yet another acrimonious internal debate on the future of its heavily subsidised farm sector. Significantly, the discussions, likely to last for several months, could well have a negative impact on efforts to revitalise the efforts of the World Trade Organisation to clinch a much-sought-after deal on global trade liberalisation.The EU quarrel pits France and Germany, the EU’s most powerful nations, which want to safeguard — and reinforce — the bloc’s controversial Common Agricultural Policy (CAP). (Dawn, Pakistan)

► Pathways out of poverty

THE World Bank’s report Agriculture for Development has very rightly called for greater investment in agriculture in developing countries and stressed that the sector should get extra priority if goals of halving extreme poverty and hunger by 2015 are to be realised. Admittedly, the logic used by the report to back its suggestion has been there all along for everyone to see. Who does not know that 75 per cent of the world’s poor live in rural areas and that GDP growth originating in agriculture has been four times more effective in reducing poverty than GDP growth originating in other sectors? (Dawn, Pakistan)

► Sri Lanka-Bangladesh Chamber holds AGM

The AGM of the Sri Lanka-Bangladesh Chamber of Commerce & Industry was held on March 29 at the Royal Park Residence in Dhaka. S. Renganathan and T.D.Packir were reelected as president and secretary of the chamber for the 2008-09 term. Other office-bearers and directors of the chamber are Fahim Sinha and Harikesha Wijesekara (Vice-Presidents’), Lalindra Wijekoon (Treasurer) and Md Salim Ullah, Syed Tanvir Asan, Muhammadul Haque, Athula Talagala and Priyan Seilman. (Sunday Times, Sri Lanka)