EJAD Trad Watch

During the last few decades, the world had moved towards growing global economic integration that served to bring different countries closer to one another. In 1944, Bretton Woods Conference resulted in the creation of International Monetary Fund (IMF), World Bank (WB) and predecessor to WTO. In 1989, World Wide Web was created, integrating the whole world into one single unit, through the Internet. During the same year, the Berlin Wall fell and socialist countries started switching over to market economy. The decade of 1990's brought with it policies of deregulation, liberalisation and privatisation and economic reforms were launched in many countries including Pakistan and India, to open up the economy and boost foreign investment. (The News, Pakistan)

The fault lines that run through the World Trade Organization (WTO) cracked open again in Doha, as the fast-growing BRIC nations of Brazil, Russia, India and China protested at demands for what they regard as unfair access to their vast markets by developed economies. The latest WTO outcome continues a dismal series of failed negotiations in the long-running efforts to reach a new agreement covering global trade terms. In July 2004, headlines declared "New WTO draft 'unacceptable' to India", a theme that continued with monotonous regularity through to last December, when the press announced: "India, Brazil slam new WTO Doha proposals". (Asia Times, Hong Kong)

The head of the World Trade Organisation today criticised the new US farm bill, saying it sends a "bad signal" to the world while talks on a new global trade deal are continuing. WTO chief Pascal Lamy also called for more flexibility in the negotiations on the part of the European Union, saying a new global trade deal would be a "positive-sumgame" for everybody. The US Congress last week passed a bill that sends new and bigger subsidies to US farmers and more food samples to help the poor with rising grocery prices. Some fear it will hinder global trade talks and exasperate a growing world food crisis. "This farm bill is not sending a great signal that the US are serious about reducing their subsidies," (The Economic Times, India)

Lack of infrastructure is a major impediment in South Asia, said the Asian Development Bank (ADB) in a brief presentation to the finance ministers of the region during the Bank’s Annual Meeting in Madrid. In the presentation, ADB underscored the importance of public-private partnerships, or PPPs, in closing the infrastructure gaps. ADB said it will pro-actively support mainstreaming of PPPs through capacity building, project structuring and financing of bankable projects. (ADB.Org)

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. (Bilaterals.Org)

India and New Zealand are keen on completing a study by end of the year to find out feasibility of a free trade agreement for boosting bilateral trade. India and New Zealand are keen on completing a study by end of the year to find out feasibility of a free trade agreement for boosting bilateral trade. Briefing a group of Indian representatives in Auckland on his recent visit to New Zealand, Commerce and Industry Minister Kamal Nath said that he wanted a time frame for India-New Zealand free trade agreement. Meetings of the Joint Study Group on FTA have made good progress, Nath said, hoping the negotiations on the agreement can start by next year. (Bilaterals.Org)

I have often in this column argued for greater regional integration and for greater connectivity for Bangladesh. I am on record as being a supporter of our entry into the trans-Asian rail and highway networks. I have been a strong proponent of transshipment and have often suggested that we need to be more open in our policies and mind-set towards the rest of the world. I have decried what I see as a "Fortress Bangladesh" mentality, and have argued that we need to integrate ourselves as fully as possible into the global community. It ought to follow from all this that I must be a strong supporter of Saarc (South Asian Association for Regional Cooperation), right? (Bilaterals.Org)

Indonesia has turned the heat on India in the ASEAN-India free trade agreement (FTA) talks. Not only is it unwilling to provide as much market access to India as has been agreed by other members, but it is also pushing New Delhi to cut import duties on crude and refined palm oil much below the levels negotiated by the two sides. India is unwilling to give Indonesia special favour as it fears other ASEAN members may then ask for the same. Government sources told ET Indonesia has asked India to commit to reduce import duty on refined palm oil to 30% and crude palm oil to 20%. (The Economic Times, India)

Tripura Government submitted a charter of demands to a parliamentry standing committee on Commerce regarding measures on how to increase bilateral trade between Bangladesh and the north eastern states. "We told the committee for improvement of land custom stations in both sides, repairing and widening of roads, connecting Akhaura and Agartala through railway tracks, facility to use the two nearby ports of Bangladesh, Chittagong and Ashuganj," Chowdhury told reporters here today. A seven member team of parliamentary standing committee of Commerce led by Kashiram Rana visited0lanecustomstations at Akhaura Check Post here yesterday and talked to Tripura minister for Commerce and Trade. (The Economic Times, India)

WTO, despite its dictum on multinational trade discipline, has made provision for preferential and differential treatment in trade to accommodate developing countries to enable them to come at level playing field with industrially rich countries in global trade arena, which has no doubt resulted in serious challenges being encountered by WTO regime from emerging quite a number of trade blocs/regions and resultant trade disputes. At the same time it has helped developing countries to command approximately 35% of the world export trade by now. However, low income developing countries, including Pakistan, because of several constraints being faced by them. (Business Recorder, Pakistan)

Chairman of Senate Standing Committee on Commerce, Senator Muhammad Amin Dadabhoy has said that it is essential for the government to introduce clear-cut policies on provincial and zonal level for the country to progress; otherwise Pakistan will lose all its international markets. Speaking to members of the Karachi Chamber of Commerce and Industry (KCCI), he said that the country would be free of its various crisis such as wheat crisis and power crisis once proper policies are introduced. Dadabhoy said that the new government needs to look at “the larger picture” and do something for the entire industry otherwise “there will be no industrialisation and Pakistan will be left only as a trading house.” Dadabhoy stated that the fact that ministries of industries and commerce is separate in Pakistan. (The News, Pakistan)

Even as Nepal prepares to abolish monarchy and declare itself the world’s newest republic under a government led by Maoists, the Indian government is preparing a new wave of business diplomacy to establish cordial ties with the new regime. Quiet steps are being taken to secure the interests of Indian businesses in Nepal, led by Dabur, Manipal Medical College and Hospital and United Telecom, in which MTNL, VSNL and Telecom Consultants hold 26.66% stake each. A comprehensive economic cooperation agreement is under consideration as this would benefit the Nepalese economy. Better connectivity, improved cooperation between the Customs departments of the two countries to check illegal trade, (The Economic Times, India)

India’s economy grew nine percent in the last fiscal year, second only to China among big economies, but the better than expected figure was overshadowed by a surge in inflation, data showed Friday. Growth to March 2008 was down from the previous year’s 9.6 percent but still marked the third straight year the economy expanded by nine percent or more despite aggressive monetary tightening to tame price rises. Annual growth was 8.8 percent in the fourth quarter to March, underpinned by strong construction and investment. But interest rates at six-year highs dented manufacturing growth, which virtually halved to 5.8 percent. (Daily Times, Pakistan)

Recent information points to an increased risk of a decline in aggregate value-addition by important major crops in FY08 relative to the previous year. It was hoped that a wheat harvest close to the annual target would offset much of the drag from the disappointing aggregate performance of the FY08 kharif harvest. But some reports suggest that wheat production in FY08 may also turn out to be substantially below the target. If these concerns prove correct then a weak performance by major crops would drag the annual growth substantially below the annual target. (Business Recorder, Pakistan)

Annual inflation in Sri Lanka hit 26.2 percent in May, according to official data on Friday, driven by higher food, fuel and other prices. The inflation rate was calculated using the new Colombo Consumer Price Index which tracks price movements since 2002, the statistics department said. The level was a record high according to the index, which was released for the first time on Friday. The statistics department said it was discontinuing the previous Colombo Consumer Price Index, which has been tracking price movements since 1952. Under the old index, inflation hit a decade-high of 29.9 percent in April. (Daily Times, Pakistan)

Few may agree while some may not that we are living in an era of global casino. With burgeoning population growth, the global demand of food, oil and metals is certainly on the rise. But the high incidence of speculation about the prices of commodities is the worrisome factor. The last episode was the Asian bubble in 1997-98, then came the dot.com bubble in 2000 and now housing bubble in 2007-08, which has contributed towards global credit crunch. The panic in world financial markets has led to sharp falls in share prices and led to the contraction of credit markets. Liquidity is available, but quality credit is the real factor. Key indicators around the world have moved as recession fears grow. (Business Recorder, Pakistan)

Malaysia is Sri Lanka's largest foreign investor in 2007 for the third year running and has increased its trading with Sri Lanka to US$32.53 million in 2007 from US$23.47 million in 2006. Malaysian High Commissioner Rosli Ismail said bilateral relations must be enhanced and strengthened through increased promotion in trade and investment. Speaking at a press conference organized by the Sri Lanka – Malaysia Business Council (SLMBC) at the Ceylon Chamber of Commerce, Ismail said Malaysian exports to Sri Lanka far outnumber Sri Lankan exports to Malaysia and that areas of mutual interest have to be identified. He added that the Sri Lankan government should take steps to end the conflict to further economic growth and development. (Sunday Times, Sri Lanka)

Amartya Sen, who received the Nobel Prize in economics in 1998, has said that the present global food crisis will eventually end. Senator questions whether the food crisis that is menacing the lives of millions will ease up - or grow worse over time. According to Sen, the answer may be both. "The recent rise in food prices has largely been caused by temporary problems like drought in Australia, Ukraine and elsewhere. Though the need for huge rescue operations is urgent, the present acute crisis will eventually end. But underlying it is a basic problem that will only intensify unless we recognise it and try to remedy it." (Business Recorder, Pakistan)

World leaders must radically change their strategy toward beating poverty now that hunger can no longer be staunched by cheap food, the head of the United Nations farm aid agency said. At a food summit in Rome next week, the international community must recognise that poverty challenges have changed and agree to reverse years of neglecting poor farmers, said the head of the International Fund for Agricultural Development. “They (governments and donors) have taken cheap, affordable food on the international market for granted. We no longer can do that and we have to realise it’s a profound structural problem,” IFAD President Lennart Bage said in an interview late on Monday. (Daily Times, Pakistan)

Leading European and US clothing brands are buying clothes made in Sri Lanka and also designed by Sri Lankan designers. Local design teams at Brandix Lanka are churning out international standard designs in lingerie, loungewear and pants that are bringing in design orders by big brand names like Victoria's Secret Stores, Pink and Express. The country’s biggest apparel exporter is slowly moving out of the traditional cut-and-sew model where buyers provide the designs. Instead, Brandix designers are visiting international fashion shows, picking up fashion trends and putting out their own designs. “We visit fashion shows and get an idea of the trends for each new season. (Sunday Times, Sri Lanka)