EJAD Trad Watch

India today flayed many developed countries for strengthening forces of protectionism and asked them to reciprocate offers from emerging economies to clinch a multi-lateral trade agreement that will boost global economy. "It takes two hands to clap", Prime Minister Manmohan Singh said, referring to reluctance of some rich nations to cut back on subsidies to their farmers even while seeking access to industrial goods and services market in developing nations. The Doha round of WTO talks launched in 2001 has been hanging over lack of consensus on agriculture, with developing countries including India declaring that they would not compromise the interests of their mostly subsistence farmers. (Economic Times, India)

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)

The government looks at FTAs and regional trade blocs as building blocks. Last December, Commerce and Industries Minister Kamal Nath said that the Free Trade Agreement (FTA) with the Association of Southeast Asian Nations (ASEAN) will be wrapped in a matter of months - and concluded before the next annual meeting. But there still appears to be a spanner in the works. The deadline is being extended by three or six months every time, but the impression that is sought to be created is that ‘We are almost there’ - so near and yet so far. Though the Union Government has been pushing for an FTA with many countries on a bilateral basis, and also with regional blocks like ASEAN. (Bilaterals.Org)

A leading UN Committee has recommended that India review all aspects of its trade negotiations - particularly those with EU and EFTA - to ensure that they do not result in a situation which undermines the rights of people within the country, particularly the most disadvantaged and vulnerable. Meeting last month in Geneva, the Committee also noted its concern about the impact of genetically-modified seeds in India on farmers’ livelihoods. These recommendations were made by the Committee on Economic, Social and Cultural Rights, an independent body entrusted with monitoring the implementation of the International Covenant on Economic Social and Cultural Rights around the world. (Bilaterals.Org)

With the Yousaf Raza Gilani government still finding its feet in Pakistan, India has decided to wait for some time before reviving the initiative to start trading across the line of control. Although the new government has been giving positive signals to India on the trade front, the recent Cabinet reshuffle has unsettled things a bit, government sources said. India is confident that by October, the time would be ripe to take the talks forward. “By that time, the new government would have settled down. It would be the right time to take the talks forward,” an official said. In fact, both the countries have scheduled commerce secretary-level talks in Islamabad in October. (Economic Times, India)

Iran will mediate between India and Pakistan to end a deadlock on the issue of transit fees to be paid by New Delhi for gas transported through a 7.5-billion dollar pipeline to be built by the three countries. Iranian President Mahmoud Ahmadinejad has constituted a four-member committee of officials to hold talks with Pakistan and India on the transit fee issue, Zee TV reported. He has given the panel 45 days to settle the issue between the two countries and submit a report to him. Pakistan and Iran were set to sign a bilateral gas sale purchase agreement (GSPA) for the Iran-Pakistan-India gas pipeline project by May 31 but would now sign the pact after the Iranian committee resolves the transit fee issue between Pakistan and India. (Business Recorder, Pakistan)

The Bangladeshi caretaker government stopped subsidy to coarse variety of rice sold at fair price outlets in capital Dhaka in the wake of high price of foodstuff. The government decision forced closure of 75 outlets run by paramilitary Bangladesh Rifles (BDR) from Friday. The rice was sold at 25 taka (about 36 U.S. cents) per kilogram, cheaper than open market. Poor people were the buyers of such coarse rice. Thousands of men, women and children were seen in long queue for hours to buy the rice from these outlets since they went into operation last September. "We've suspended the outlets till June 9 as the government stopped subsidy from June 5," a senior BDR official said. (English People Daily, China)

India and Afghanistan today held discussions on firming up bilateral cooperation and the situation in the war-torn country and its neighbourhood. Chairman of the Upper House of Afghan Parliament Hazarat Sibghatullah Mojadidi met Vice President Hamid Ansari and held discussions on improving bilateral relations besides Indian assistance to Afghanistan in the reconstruction of the war-torn country. The situation in Afghanistan and neighbouring countries was also discussed. Mojadidi, who was accompanied by two Afghan Parliamentarians, met Ansari for nearly 40 minutes during which training of Afghan Parliamentarians and staff was also discussed. (Economic Times, India)

The Union Cabinet today gave its approval to Bilateral Investment Promotion and Protection Agreement with the Government of the Union of Myanmar and ratification thereof. The Agreement shall remain in force initially for a period of 10 years. To protect existing investments, it has been provided that in respect of investments made before the termination of the Agreement, its provisions shall continue in effect with respect to those investments for a period of 15 years after the date of termination. The Agreement will increase investment flow between India and Myanmar. (Bilaterals.Org)

The surge in the global inflation has affected developing economies more than the developed economies, because the share of food in the consumption baskets of developing economies is significantly higher than developed countries. According to SBP sources, a number of factors are continuing to stoke up global inflationary pressures and notably, these factors are: sustained increase in global commodity demand, supply issues, and growing interest of investors in commodity markets on the back of a weak dollar and falling interest rates. Prices of all key commodities have witnessed significant growth since July 2007, they said. (Daily Times, Pakistan)

India will enter into an investment promotion and protection agreement with Myanmar to increase fund flows and protect interests of investors of the two countries. "The Union Cabinet today gave its approval to the Bilateral Investment Promotion and Protection Agreement with the Government of Myanmar and its ratification," Information and Broadcasting Minister P R Dasmunsi told reporters here after the Cabinet meeting. The agreement will help increase investment flow between India and Myanmar. It will also promote and protect interest of the investors of either country in the territory of the other country. (Economic Times, India)

► 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)

India's diversified business conglomerate Essar today expressed its keenness to invest in Pakistan's economy, especially in the energy, steel and shipping sectors. The offer was made to Essar Group chairman Sashi Ruia during a meeting here with Pakistan Prime Minister Yousuf Raza Gilani, who said his country "is open to business and foreign direct investment (FDI)". Gilani said almost all sectors of Pakistan's economy allow FDI, which is fully protected under the country's laws, and "there is no discrimination between foreign and local investment as no government sanction is required in either case". (Economic Times, India)

The world's farmers were bypassed at this week's Rome UN food summit, reflecting a crucial gap in addressing the crisis at its most basic level, the leader of a global farmers' group said Friday. "It's a reflection of how disconnected and dislinked our multilateral agencies are, from the situation on the ground," Ajay Vashee, the freshly- elected head of the International FAP told AFP at the close of the 38th World Farmers' Congress in Warsaw, Poland. "The people who have the ability to actually do something about this crisis were precluded," Vashee said, adding it was a recipe for "confusion and chaos." (Daily Times, Pakistan)