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Business & Finance News Monday, September 01, 2003 Compiled by SDNP Head Lines UN sees no world foreign investment rally until 2004 ECONOMIC DESK, The Independent Plodding economies, poor profits and a loss of trust after a spate of scandals helped wipe 21 per cent off foreign investment flows in 2002 and investment is unlikely to rally until 2004, a UN report said yesterday. Last year's total foreign direct investment (FDI) of $651 billion came on the back of a 40 per cent drop in 2001 and was half the record $1.4 trillion in 2000, the UN Conference on Trade and Development (UNCTAD) said. "Our impression is that in the current year there hasn't been much change compared to last year but it is possible that global investment flows could start rising again next year, if recent forecasts regarding economic recovery are confirmed," UNCTAD Secretary-General Rubens Ricupero told a news conference to launch the World Investment Report 2003. Of the 195 economies in the survey, 108 saw investment inflows wane. The United States and Britain accounted for more than half of the decline in all countries mainly because mergers and acquisitions dried up as economies stagnated. Ricupero sounded a note of caution that economic growth would not automatically spark a rebound in long-term investment, but said psychological factors such as trust and the geo-political climate would also play a role. "Future flows will very much depend on economic recovery... and on the success of efforts to strengthen investors' confidence," UNCTAD said. "Low profits, falling equity prices, concerns about corporate debt and cautious commercial bank lending might all dampen prospects for increased investment." The decline in the developing countries was steepest in Africa and in Latin America and the Caribbean. Central and eastern Europe (CEE) bucked the trend, with inward investment reaching a new high of $29 billion in 2002. "CEE...is increasingly viewed by investors as a stable and promising location for FDI," UNCTAD said, adding it saw the region's FDI inflows reaching $30 billion this year "led by a surge of flows into the Russian Federation and fuelled by the momentum of the European Union (EU) enlargement." Flows into Africa fell 41 per cent to $11 billion from $19 billion-largely due to two big mergers in the region in 2001 - - but in 30 of the region's 53 countries, investment increased. UNCTAD was upbeat on the prospects for a recovery in 2003 as firms expand their petroleum operations amid continuing privatisation and expanding free trade initiatives. Latin American and Caribbean economies saw investment drop by one third to $56 billion, the lowest level since 1996. Political uncertainty and financial crises took their toll, and in Argentina, where the currency was devalued, last year's $1 billion worth of inflows was just 10 per cent of the average annual figure received during 1992-2001. While the political and economic environment in the region is improving, UNCTAD said it saw a slow recovery with FDI in 2003 remaining close to 2002 levels. Asia-the largest FDI recipient among developing regions in 2003 -- failed to escape the downturn, although inflows declined only moderately to $95 billion from $107 billion, thanks in part to a record $53 billion inflow into China. "Asia was least affected by the fall and was one of the most rapidly liberalising regions, with more national measures, bilateral investment treaties and double taxation treaties introduced in 2002 to facilitate FDI flows," UNCTAD said. US threatens to pursue own agenda if WTO talks fail AFP,
Washington, The Daily Star World Trade Organization ministers are preparing for a September 10 to 14 conference in Cancun, Mexico to salvage the negotiations, bogged down by deep-seated disputes, especially over farm trade. US Trade Representative Robert Zoellick said Washington was prepared to pursue its own free-trade agenda if the WTO proved unable to do its job. President George W. Bush was committed to free trade, he said, noting that Bush had signed legislation Wednesday to implement free trade deals with Chile and Singapore. "We will find countries that want to open up markets with the United States," Zoellick told a conference here. "I hope they will be in the WTO. But if they are not, we are not stopping. We are moving with the countries that are willing to go," he warned. His opposite number in Europe, European Trade Commissioner Pascal Lamy, speaking via satellite, said a failure to complete the agenda, launched in Doha, Qatar in November 2001, would have economic repercussions. "Cancun is a mid-term review and the big decision down there is whether or not we have done 50 percent of the road so that we are we confident enough that with a big push we can do the remaining 50 percent by the end of next year," Lamy said. "If we say we can do that and we do it, it is terribly good news for the world economy," he said. But "if we say we can do it and we cannot do it at the end of the day, it is going to be bad news for the world economy and for the world trading system." Zoellick and Lamy broadly agreed that goals in Cancun would be: -- To develop a framework for negotiations in agriculture, goods and services, without putting in the exact figures for subsidies or tariff cuts. EU defends farm subsidies ahead of Cancun talks AFP,
Singapore, The
Daily Star In a commentary in Singapore's Straits Times daily, Lamy said the talks will be an "intermediate stage" where negotiators will take stock and determine if a new round of liberalization will be achievable by the end of 2004. "It's a big undertaking -- about 20 separate issues and 146 countries to decide how to handle them," he said, singling out agricultural trade as the main "hot ticket item" to be debated in the Mexican beach resort. "Our objective is simple: To find a balance between market opening and preservation of a viable countryside, and not just in the European Union, but around the world," Lamy said. "We in Europe and many others, including a number of developing countries, have made a political choice to support our agriculture because it is not just another economic activity. It plays a part in conserving the environment, food safety and animal welfare." The Cancun conference has been called to assess progress toward trade liberalization under the Doha Development Agenda, adopted by the WTO in November 2001 in the Qatari capital Doha. The run-up to the Cancun talks has been plagued by persistent disagreements on several key subjects, notably the future of government subsidies to agriculture. The European Union (EU) and the United States last month reached a framework agreement aimed at reducing subsidies, and Lamy has said that EU negotiators were counting on continued cooperation with Washington in order to meet the January 1, 2005 deadline. Several developing countries such as Brazil and India are seeking the complete elimination of agricultural export subsidies. In his commentary, Lamy brushed aside charges that the EU was protectionist. |
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