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Business & Finance News Thursday, September 04, 2003 Compiled by SDNP Head Lines Inequities in global trading system drag down export growth : WB ECONOMIC REPORTER, The Independent Inequities in the world trading system dragged down export growth in developing countries, observed a World Bank report titled "Global Economic Prospects 2004" released yesterday. "Exporters from developing countries generally have to pay more to get into foreign markets than exporters in rich countries," says Richard Newfarmer, economic adviser in the World Bank's Trade Department and Development Prospects Group, and lead author of the report. "Industrialised countries on average charge each other tariffs of about 1 per cent on their imported manufactures, but collect 5 per cent from East Asia, 6 per cent from the Middle East, and 8 per cent from South Asia. Mongolia, for example, pays nearly the same dollar amount in tariffs to the US government as Norway, even though it sells only 3 per cent of what Norway sells in the US," Newfarmer added. "Can anyone argue this system is living up to its development potential for the poor?" he questioned. The report argues that a "good" WTO agreement could produce about $290 billion-$520 billion in income gains to both rich and poor countries, lifting an additional 144 million people out of poverty by 2015. "In agriculture, for example, Japanese support to rice producers amounts to 700 percent of production cost, which effectively shuts out exports from Thailand and other producers. Direct budget subsidies to producers by the EU cost around $100 billion annually, and depress world market prices in sugar, dairy, and wheat. "These subsidies also have the indirect impact of raising prices paid by consumers. The US spends $50 billion annually on direct support to its agriculture sector alone. Annual cotton subsidies to US farmers of more than $3 billion (three times US foreign aid to Africa) depress world cotton prices and crowd out poor but efficient farmers in West Africa" the report said. Realising the Development promise of the Doha Agenda presents a detailed overview of the world economy, and the near-term outlook. It also offers a rigorous analysis of global trade issues, particularly those that head the agenda for discussion at the WTO meeting this month. The report said, "Officially, the Cancun meetings are an interim stock taking for the negotiations, which are scheduled for completion by January 1, 2005. However, the meetings occur at a time when the global economy and international trade are languishing. As the report notes, the trade talks are stalled over disagreements on issues of particular importance to developing countries, such as agriculture, tariff reductions on manufactures, special treatment for developing countries, and drug patents in poor countries. Progress in Cancun could bolster investor confidence, and create momentum towards a more significant WTO agreement that would spur trade. Such a result would eventually raise incomes around the world, leading over time to a substantial reduction in global poverty". The report said that the latest GEP projects anemic growth of 1.5 percent in 2003 in the industrialised world, well below potential. It foresees better performance next year, as industrial countries' growth rises to 2.5 percent. Developing countries are somewhat more buoyant than industrial countries, growing at 4.0 percent in 2003, and, if the recovery stays on track, will grow at 4.9 percent in 2004. (Growth forecasts in table on final page). World trade is projected to grow by 4.6 per cent, slightly more than last year, but still less than half the rate in 2000. World Bank Chief Economist Nicholas Stern said felt it was important for the rich countries to take the lead in negotiating a fair outcome to the Cancun negotiations. "They are the dominant players and account for two-thirds of the global market," says Stern. "They could show leadership by reducing agricultural protection, cutting high tariffs, and ensuring that the poorest countries have access to affordable medicines on the same terms as bigger developing countries. Trade ministers hammer out free-trade plan with China ECONOMIC DESK,The Independent Trade ministers from the 10- nation Association of Southeast Asian Nations (ASEAN) were in talks yesterday in PHNOM PEHN with Chinese officials to accelerate the creation of the world's largest free- trade area, officials said. Both sides were discussing an "early harvest" package of products to be initially covered undre the ASEAN-China Free Trade Agreement, whose creation was agreed on in the Cambodian capital last year during the ASEAN leaders' summit, officials said. The ASEAN-China FTA is to create a market of 1.7 billion consumers with a combined gross domestic product of 2.0 trillion dollars and total trade of 1.23 trillion dollars. It would be the biggest free trade zone of its kind in the world when it is realized in 2010. "The FTA is designed to attract investment in that it would not matter much if an investor locates his factory in China, in the Philippines or any other part of ASEAN," Philippine Trade Secretary Manuel Roxas told AFP. "By having an FTA, his product can enter China without really having to locate to China, for example. This is really an effort to make ASEAN and its members much more attractive." ASEAN-China trade reached 55.4 billion dollars in 2001, significantly higher than the 8.9 billion dollars a decade ago, official figures showed. Between 1993 and 2001, two-way trade grew by an average of 25.7 percent annually, while initial studies suggest that this would be pushed significantly higher once the FTA is fully in place. The aim is to have the six senior or original ASEAN members - - Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- fully implement the FTA with China in 2010. Newer members Cambodia, Laos, Myanmar and Vietnam would be given five more years to join, officials said. Any agreement to be reached in talks here in Phnom Penh is expected to be transmitted to ASEAN leaders for approval when they meet for their annual summit in Bali, Indonesia next month. AFP, TOKYO,The Independent Sept 3: Asian stock markets were mostly higher on Wednesday with investors continuing to pin their hopes on global economic strength after gains on Wall Street. Tokyo share prices rose 0.24 per cent to end higher for a fourth straigth session on continued expectations a recovery in the local economy will boost corporate earnings. Dealers said that while the market continues firmer, gains were trimmed back as investors took profits on the recent sharp advance. The Tokyo Stock Exchange's Nikkei 225 index gained 25.61 points to close at 10,715.69, below the intra-day high of 10,813.59. The broader Topix index of all first-section stocks gained 4.37 points to 1,03.28. Shares rose strongly in early trading but began to surrender gains by late morning as profit-taking increased after the benchmark Nikkei 225 index racked up gains of 4.6 per cent over the three previous trading days. The market slipped into the red in early afternoon trade before last-hour buying pushed it back into the black. HONG KONG: Share prices in Hong Kong closed 1.49 per cent higher at a 14-month high on a boost from property stocks and second-liners in active trade after the previous day's typhoon-shortened session. The key Hang Seng index gained 162.42 points to close at 11,102.36 -- its highest closing since reaching 11,119.33 on June 13 last year-with the index trading between 10,989.75 and 11,114.50 points. SYDNEY: Australian share prices slipped 0.22 per cent as profit-taking hit Telstra and BHP Billiton and investors continued to move out of the banking sector. Dealers said investors were switching out of the banks as they sought more attractive targets against the background of an improving economic outlook at home and abroad, especially in the United States. The benchmark SP/ASX 200 index closed down 7.1 points at 3,210.9, off a high of 3,231.6 and just above the low of 3,210.6. The All Ordinaries index fell 4.7 points at 3,219.2. SINGAPORE: Share prices in Singapore closed 0.54 per cent higher after gains on Wall Street, with banks holding on to their gains. The Straits Times Index closed 8.64 points up at 1,605, while the broader All-Singapore Equities index rose 0.86 points to 436.32. SEOUL: South Korean share prices closed flat after choppy trading as futures-linked program selling offset buying by foreign investors ahead of 'triple witching' next week. The composite index closed down 0.18 points or 0.02 per cent at 766.32. KUALA LUMPUR: Malaysian share prices closed firmer, supported by gains in blue chips. The Kuala Lumpur composite index closed up 3.15 points or 0.42 pct at 745.17. TAIPEI: Taiwanese share prices fell 0.75 per cent as investors took profits to wipe out early gains resulting from a firmer Wall Street. The weighted index closed down 42.77 points at 5,673.18. MANILA: Philippine share prices closed 1.92 per cent higher, supported by strong gains on Wall Street and gains in key blue-chips such as Philippine Long Distance Telephone Co. (PLDT). The Philippine Stock Exchange composite index gained 23.38 points to 1,241.48 after trading between 1,218.10 and 1,241.48. BOMBAY: Indian stocks fell 1.87 per cent on heavy profit taking amid perceptions many shares were overvalued after a rally of several months. The Bombay Stock Exchange's 30-share index shed 81.26 points to close at 4,257.94. Brokers offloaded when they found themselves with overbought positions as fresh institutional inflows receded. BANGKOK: The Thai stock market lost 0.37 per cent on the back of ongoing profit-taking and a technical correction which outweighed gains in communications stocks. The Stock Exchange of Thailand (SET) composite index dropped 2.02 points to 539.88 and the blue-chip SET 50 index was 0.26 points lower at 33.97. JAKARTA: Indonesian shares closed sharply higher, with the benchmark index at its highest level in over a year, on gains in blue chips after gains on Wall Street. The Jakarta Stock Exchange composite index ended up 19.310 points or 3.58 per cent at 558.249. SHANGHAI: Chinese shares closed flat, supported by select oversold stocks but trading remained cautious amid uncertainties over the upcoming large initial public offer by China Yangtze Electric Power. The Shanghai A-share Index was up 1.41 points or 0.06 per cent at 1,517.41, while the Shenzhen A-share Index added 0.98 to 418.37. WELLINGTON: New Zealand share prices closed 0.46 per cent higher on the back of a strong Wall Street performance. The key NZSX50 index rose 10.08 points to 2,216.77. Peter Lynds of Direct Broking said the market saw nothing startling but closed near its highs, boosted by Telecom's 11 cents rise to 5.05 dollars. |
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