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Business & Finance News Sunday, September 14, 2003 Compiled by SDNP Head Lines Mediators at work to end Cancun rift INDEPENDENT DESK, The Independent World trade talks face a day of decisions today with mediators expected to put forward a plan for bridging deep divisions between rich and poor, particularly over farm reform. The Mexican beach resort, which is hosting a five-day conference of ministers from the 146-state World Trade Organisation (WTO), was bracing for more street disturbances as anti-capitalist protesters vowed to make a final bid to disrupt the gathering that ends on Sunday. Ministers are struggling to find enough common ground to revive hopes of concluding a new global trade pact by their self- imposed deadline of the end of 2004. According to the members of the Bangladesh delegation attending the conference, there was no sign of agreement on a new global trade deal on Saturday, the penultimate day of the meet. "There are still no signs of agreement on a new global trade deal. The European Commissioner for Agriculture made arrogant comments in regard to the demands of poor and developing countries," Farhad Mazhar, a development researcher attending the conference, told BBC over telephone. He said that the EU Commissioner termed the developing countries’ contention that a cow in rich countries gets two dollar subsidy per day as ‘propaganda’ and said "since the living standard of rich countries is very high so a cow in those countries can get subsidy." The EU Commissioner asserted that "the subsidies would not be lowered any more." The US on the other hand opposing vigorously the duty-free and quota-free access of goods to its market. However, a deal to lower barriers to business could add more than $500 billion a year to global incomes by 2015, lifting 144 million people out of poverty, the World Bank estimates. According to a UNB report: Bangladesh would give a second thought to the multilateral trade regime, after getting the cold shoulder from the big players to its agenda at the WTO ministerial. A great deal of frustration crept in as soon as the negotiators at the Cancun meet crossed the mid-point of the 5-day parley on world trade. The negotiation "facilitators" wrapped up their first round of consultations and began drafting a new ministerial declaration. Hopes of Bangladesh, the co-ordinator for world’s 49 least developed countries, and the other LDCs for allowing temporary movements of semi-skilled personnel almost faded out as the United States strongly stood against, according to a message received here today. "There was no discernible breakthrough yet," Bangladesh delegation leader Commerce Minister Amir Khosru Mahmud Chowdhury told an evaluation Symposium on the sidelines of the Cancun trade summit on Friday, the third day of the meet. Centre for Policy Dialogue (CPD) organised the Symposium titled "Post Doha Marginalisation of LDC Concerns" with its executive director Dr Debapriya Bhattacharya in the chair. The Geneva-based International Centre for Trade and Sustainable Development (ICTSD) was the co-sponsor of the parallel trade talks. Khosru apprised the meeting that all in the poor-country ship Dhaka is steering were trying to push their agenda in the areas of market access, special and differential treatment and capacity-building support from the rich nations. Sharing his thoughts on the progress, he said as of now, a lot of discussions took place on agricultural market access and the Singapore issues, but the WTO members stood wide apart in their opinions. "These issues are staring among each other and everyone is waiting who will blink first," said the minister, who is also the Vice-Chairman of the Ministerial Meet. Meanwhile, India’s trade minister Arun Jaitley said he hoped that "Cancun turns out as an important turning point because this is an opportunity for developing countries to leave the imprint of their stance on the WTO." "If they miss this opportunity, the next will not come for decades," he told a news conference. Developed countries have also said that failure in Cancun could condemn the trade round to limbo with a host of competing political concerns -- U.S. presidential elections next year and the entry of 10 new members into the European Union -- leaving little time to talk trade. The talks have seen the emergence of a new alliance of developing countries, the G21, which brings together traditional farm exporters such as Brazil and Argentina and Asian powerhouses India and China. Although many Western envoys had bet that what they dubbed a "marriage of convenience" would not last, because of the countries' differing interests, the group has stood firm and become the principal counterweight to Washington and Brussels. In return for surrendering some of their subsidies, and facing down powerful political farm lobbies, the United States and the EU are demanding that the developing states also give ground over their high farm and industrial import tariffs. "Of course major differences remain, there is no reason to be over- optimistic or enthusiastic about the process," said Gregor Kreuzhuber, spokesman for European Farm Commission Franz Fischler. "(But) certain glimmers of hope are appearing. Tomorrow is the day, tomorrow is the crunch day," he said on Friday. Other key issues divide the WTO. The EU and Japan are pressing for guidelines on foreign investment and competition to be grafted onto world trade rules, but they have found virtually no allies among poor nations. Developing states refuse to go with WTO talks on investment ECONOMIC DESK, The Independent More than 70 developing countries yesterday announced their refusal to go ahead with WTO negotiations on investment and other new issues, potentially creating a serious obstacle to agreement at this week's ministerial meeting at Cancun, according to the World Bank Press Review received in Dhaka. Rafidah Aziz, Malaysia's veteran trade minister, on behalf of the group said on Friday that the group was not prepared to trade negotiations on the new issues for gains on agriculture. The EU said it would not back down. A spokeswoman for Pascal Lamy, trade commissionerof EU, said the EU would continue to insist that negotiations on the four Singapore issues be launched at Cancun. "We think we have a good case," she added. WTO members struggle for agreement on how to open markets to international trade, one of the biggest fights likely will be whether to even start more negotiations. The European Union and Japan are urging trade ministers to consider adding four new issues to the current round of treaty talks, which are scheduled to be completed by the end of next year. The four topics are known jointly as the "Singapore issues." The Economist writes that the EU wants rules on investment, competition policy, government purchases and customs clearance. Some of these rules make sense on their own terms but they would be costly for poor countries to implement and monitor. Worse, if poor countries signed up to the rules, then failed to meet them, they would be vulnerable to trade sanctions. The Guardian (UK) notes that the EU, meanwhile, warned (some countries) in Africa and in the Caribbean that their joining the so-called Group of 21 could well endanger their privileged access to Europe's single market. Washington told Costa Rica, El Salvador and Guatemala that if they left the G21 they would get a "sweetheart deal" giving them increased access to America's $10 trillion economy The Bangkok Post reports that sugar exporters want negotiating parties at the WTO talks to speed up efforts to reform farm trade including sugar. The Global Alliance for Sugar Trade Reform and Liberalization issued a statement yesterday after meeting in Cancun last weekend, ahead of the fifth WTO ministerial meeting that opened yesterday and runs until Sunday. The news comes as the FT reports that the EU is chipping away at some of the last unreformed bastions of its common agricultural policy in a move that will also target the EU's heavily-protected sugar sector. The European Commission is preparing reform proposals for [Tobacco, cotton, olive oil and sugar], though none will be as keenly followed as its plans for the sugar regime. According to draft papers seen by the FT, the Commission is likely to focus on three different policy options ranging from full liberalisation to retaining the status quo. However, the most plausible advocates a cut in the guaranteed sugar price and an eventual phasing out of production quotas. The New York Times reports that the director general of the WTO said Thursday that he would intervene to address the grievances of four poor African nations whose cotton farmers have been hurt by rich nations' farm subsidies. The Economic Times notes that Lee Jong-Wook, the director-general of the WHO today Thursday that the world body would be willing to offer a helping hand to those who find the conditions attached to the recent WTO deal on access to cheap drugs cumbersome. The Far Eastern Economic Review notes that a recent World Bank study projected that a new trade agreement would have a giant impact on the global economy. It estimated that an accord promoting free trade would produce annual income growth of between $290 billion and $520 billion and lift 144 million people out of poverty by 2015. In East Asia alone, free-trade policies on agriculture, services, logistics and trade facilitation would create annual benefits of $300 billion, or 10 percent of GDP, within a decade. Meanwhile, World Bank President James Wolfensohn writes in an op-ed in Le Monde (France) that on average, those living on $2 a day or less-more than 2.7 billion people-face double the trade barriers confronting the wealthy. Yet many rich countries continue jealously to guard trade-distorting policies. Rich countries' total farm subsidies, for example, are greater than Africa's gross domestic product. In the absence of meaningful steps by rich countries, developing countries have been reluctant to liberalize their markets further. Having already made great strides in opening their markets, they want first to see reciprocal action by developed nations. The fate of the Doha agenda does not rest solely in the hands of rich countries. All must play a part. The Wall Street Journal writes in an editorial that we'll all be better off if the folks at Cancun keep in mind that the point of trade talks is to get out of the subsidy and import restriction business altogether. The scandal of European and US protectionism is how it assists the politically well-connected rich. The scandal of protectionism in developing countries such as Mexico is how it ensures that those without connections will always remain poor. US dollar remains firm in thin inter-bank trading ECONOMIC DESK, The Independent The US dollar remained firm against the Bangladesh Taka in thin inter-bank trading yesterday .The dollar was traded at between 58.4250 Taka and 58.4350 Taka per unit in line with its previous day Thursday. The inter-bank call money rate remained steady yesterday due to lower government's borrowings . The call money rate yesterday touched its low at 2.50 per cent in a few deals and high at 7.00 per cent yesterday. In most deals, the call money rate, however, ranged between 4.00 per cent and 5.50 per cent yesterday. "The demand for money is very thin when most banks hold surplus liquidity driven by lower credit flow", fund managers said noting that banks are very cautious in lending to avoid piling classified loans. Meanwhile, the dollar fell sharply against the euro on Friday after anxiously awaited US retail sales figures failed to live up to the market's high expectations. But investors remained cautious on the yen amid possible Japanese intervention in the markets, allowing the greenback to rise firm against the Japanese currency. " The demand for the greenback was lower from importers as most international markets remained closed due to weekend holiday in most international trading centers", dealers said. But the dollar was farm as many dealers see its upward trends in the near term following the Japanese intervention, they added. "We have sufficient dollar inflow thanks to remittance growth and IMF assistance. But the dollar still in our target amid rumours of market intervention by Japanese authorities when traders took sidelined for the euro", dealers of leading private and foreign banks said. The inflow of dollar through remittance and export receipts remains satisfactory level since long while the foreign exchange reserve is very strong, they noted. Meanwhile, the euro jumped to 1.1288 dollars yesterday from 1.1207 dollars late on Thursday in line with New York closing on Friday while the dollar stood at 117.43 yen against 117.07, dealers said. They said the single currency climbed above 1.13 dollars briefly on Friday after the release of data showing US retail sales rose by 0.6 per cent in August from July, less than half the size predicted by Wall Street analysts. Retail sales were nonetheless up 5.4 per cent from August 2002. "The data were definitely worse than expected," dealers said adding that the market wasn't positioned for that and we have had a bit of dollar selling. Currency analysts said the markets' knee-jerk reaction to the data will clearly be positive for bonds and negative for the dollar. But in the longer term, we would be a little more cautious given the retail sales figures' high propensity for revision and inconsistency of the autos numbers. Adding to the unease about the state of the economic recovery in the United States was a worse than expected survey of consumer sentiment from the University of Michigan. The index weakened to 88.2 points in early September from 89.3 in late August, when it had been expected to a rise to 90.3. Traders said they believed the Bank of Japan was buying dollars throughout the week and possibly on Friday, leading to a relatively tight dollar-yen range. "The dollar is also deriving support from the suspected intervention by the Japanese authorities," dealers said. The Japanese government is thought to have resumed its efforts to curb the strength of the yen recently through intervention on the foreign exchange market to help boost the competitiveness of its exporters. The dollar was being quoted in late New York trade at 1.3797 Swiss francs from 1.3834 Thursday and the pound was at 1.6022 dollars after 1.5946, dealers said.
Implement Saarc cumulation protecting local
textiles Star Business
Report, The Daily Star Saarc cumulation may be implemented but ready made garments made of imported fabrics and eligible for the generalised system of preference (GSP) facilities may be subjected to export tax equal to the benefit, it said. Abul Kalam Azad, a professor of the Department of Economics, Chittagong University and AKM Atiqur Rahman, an associate professor of the Department of Economics, North South University conducted the study. Earlier, a study of the Ministry of Commerce supported the Saarc cumulation saying it would not harm Bangladesh's textile industry. But other studies opposed the idea terming it "ill-conceived" or "ill-advised", the researchers said. The proposed Saarc cumulation will allow Bangladesh to export products by importing inputs from other South Asian countries. The latest study said if the RMG exports and the domestic supply of fabrics continue to grow at the current rates, the latter will meet roughly 33 per cent of the total fabric requirement for the RMG exports in the year 2004. The RMG exporters may be granted GSP certificate for exports worth Tk 200 against their use of local fabrics worth Tk 100 in producing export items, the study recommended in order to protect local textile industry. Otherwise, the study said, RMG exports to the EU produced from imported fabrics may be subjected to the export tax. "The implementation of the Saarc cumulation in this manner is expected to prevent the loss of domestic textile production while allowing the RMG exporters to obtain GSP benefits on exports made from imported fabrics," the study said. It mentioned that the GSP benefit is two per cent in case of less than 50 per cent local value addition while it is 12.8 per cent for more than 50 per cent value addition. The experts said nearly 70 per cent of the fabric requirement of the knit products and 20 per cent of the woven are met from domestic sources thus making them eligible for GSP benefits offered by the EU. They said the European Union takes about 70 per cent of knit-RMG exports and more than 45 per cent woven products, which indicates the importance of the EU as a destination of Bangladesh exports in general and RMG exports in particular. |
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