Developing Nations barring China Joint Hands to Cut Tariff

The trade representatives from 22 nations of developing and emerging economies at the sidelines of the three-day WTO ministerial meet have signed an accord to reduce industrial tariffs. According to the deal, the signatories have agreed to cut tariffs at least 20 percent on a minimum 70 percent of goods.

The lack of topics beyond the existing issues at the WTO ministerial meet provided trade representatives from developing countries a platform to discuss the likely fallout of the forthcoming Doha talks and evolve strategies like the deal they had at the end of the meet. However, China’s absence in signing the agreement was conspicuous since the country has vented similar concerns as that of the other developing nations over Doha discussions until recent past.

The Doha Round was launched in late 2001 with a paramount aim of helping poor countries to prosper by removing all trade barriers. However, the aftermath of global economic meltdown has forced developed countries not to budge from subsidies to tariffs as it is feared to create losses to their farming, manufacturing and service sectors.

After several missed deadlines, the WTO members have set a new deadline for concluding the negotiations in 2010. But the recently concluded ministerial summit, appear to have made little progress, reinforcing skepticism that the 2010 target would be out-stretched as it had happened in the past.

The Washington-based International Food Policy Research Institute observed the global trade and the global economy had changed profoundly since 2001. It further added that a study showed that commodity market strains and environmental pressures were not part of the original Doha agenda then.

Lately, many countries are getting into individual FTAs and PTAs to ward off the likely trade talk failure at Doha Rounds next year. This week alone witnessed the launch of feasibility studies on PTAs between China and Switzerland, and between India, the Mercosur group of Argentina, Brazil, Paraguay and Uruguay, and the SACU.

The countries participating in the agreement are Algeria, Chile, Cuba, Egypt, India, Iran, Indonesia, Malaysia, Mexico, the Southern Common Market (MERCOSUR) nations – Argentina, Brazil, Paraguay and Uruguay – Morocco, Nigeria, North Korea, Pakistan, South Korea, Sri Lanka, Thailand, Vietnam and Zimbabwe. The agreement provides special treatment for Iran and Algeria, which are yet to become WTO members. The details of the tariff reduction will be made available by the end of September 2010 after extensive negotiations in the coming months.

The 22 countries represent a market of 2.6bn people accounting for 13 percent of world GDP, 15-18 percent of trade, 43 percent of farm and 16 percent of industrial production. Supachai Panitchpakdi, secretary-general of the UN Conference on Trade and Development who was instrumental in materializing the deal said it was estimated that the tariff cut would bring an additional trade of $8bn for these countries.

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UAE Ruler Backs Dubai Govt – Claims Economy is Fine

The UAE President Sheikh Khalifa bin Zayed Al Nahyan on the eve of 38th National Day said that the country’s economy was ‘fine’, and supported the efforts by Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum and his team in managing the crisis. He purportedly came out with a statement after last week Dubai World, the largest investment firm in the Middle East made standstill request while it restructured for its $59bn of liabilities.

Zayed stated the leadership and the people of UAE were confident, and would continue steadily and consistently the implementation of what it had adopted in terms of strategies and plans. The top priority was to build national capacity and launch human energy directed toward the horizons of excellence, innovation and competition, he added.

Dubai World’s announcement not only rocked the very financial establishments of the UAE but also many financial institutions of the region including that of neighbouring Qatar. Later, while the Dubai government detached itself from the investment firm calling it functioned as a separate entity, stock markets fell to the lowest level in eight years in Dubai, and Abu Dhabi and Qatar experienced similar trends as well.

On Monday, Abdulrahman al-Saleh, director general of Dubai’s department of finance said creditors should partly shoulder the responsibility for their decision to lend to the companies. Besides, Saleh remarked in an Arabic interview to Dubai TV, a station owned by the ruler of Dubai that the people think that Dubai World was part of the government, which was incorrect. On the contrary, John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group, said the distinction between the Dubai government and the investment company appeared minimal.

Without directly referring to the Dubai’s crisis, Sheikh Khalifa said any crisis on its severity would not be a reason for hesitation or retreat, neither a justification to despair nor inaction. He further added by saying that the country’s economic model would enable it to move from a labour-intensive economy to a more viable one of high-tech and knowledge-based which underscored environmental protection, and preservation of jobs for its progeny.

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China Advises to Maintain Quality Instead of Blindly Pursuing Profit

As to stimulate its frail brand value, one of China’s business heads said that while entering the ASEAN market, the Chinese enterprises should abide by local industry regulations and establish sound reputations for quality and service instead of blindly pursuing profit by any possible means. Xu Ningning, executive secretary general of China-ASEAN Business Council (CABC) told this on Wednesday to entrepreneurs of machinery, auto mobile and steel sectors at a symposium held to evaluate the China-ASEAN FTA (CAFTA).

Xu said the Chinese enterprises should conduct adequate market research and give punctilious care to the latest policy changes of individual ASEAN member states to improve the quality and efficiency of bilateral trade. The CAFTA will likely begin from Jan 1, 2010, with zero tariffs on 90 percent of the products traded between both sides, and the services trade market is expected to follow suit on a significant scale.

Xu also observed that the Chinese enterprises should be prepared for the competitions brought by zero-tariff product imports through the forthcoming FTA with the ASEAN region. According to sources, several Chinese enterprises have already been able to prepare for the new market reality as they enjoyed zero tariffs for various merchandises through other free trade zones set up since the preparation of the framework for the FTA with the ASEAN region was signed in 2002.

Once the CAFTA comes into force, it is expected to create huge business opportunities for the Chinese enterprises by providing access to the ASEAN market with 600mn population. It is set to become Asia’s largest and the world’s third largest FTA with a trade volume of $4.5 trillion and a combined GDP of $6 trillion, after the North American FTA and the European FTA.

Nonetheless, it will be the largest FTA in the world by means of the sheer size of the population at about 2bn people it represents. The two-way trade between both sides have grown exponentially since the negotiations began for the FTA in 2001 from about $41.6bn to $231.1bn.

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Bulgarian Hoteliers to Start Own Bank to Tame Credit Crisis

The Bulgarian hotel owners are all geared up to start their own banking initiative to overcome the high interest rates as rentals and revenues are receding owing to the ongoing economic downturn and other obstacles. According to Sofia News Agency, to strengthen its plans, the hoteliers are in talks for a joint venture with the Bulgarian Construction Chamber, which also announced similar plans to establish their own financial institution.

The President of the Bulgarian Association of Hotel and Restaurant Owners, Blagoy Ragin, said that the only way to deal with the negative effects of the economic crisis was to create a bank of its own. The unique way of funding the hotel industry with its own means is the brainchild of Georgi Shterev, the owner of a Black Sea beach resort in Golden Sands.

The concept was overwhelmingly accepted by all major hoteliers in Bulgaria including owners from the top Bulgarian tourist destinations such as Golden Sands and the other major beach resort Sunny Beach. And that includes the winter resorts of Bansko, Chepelare, Smolyan and Ribaritsa, the SPA centers of Velingrad, and Sandanski, the cities of Sofia, Veliko Tarnovo and Dobrich.

Ragin stated that those who wished to become the members of the new financial institution would have to deposit close to $40,000. The association intends to raise funds of about 8mn as a minimum required capital for this venture. Ragin feels that raising that amount is an achievable target, if just 200 out of the 1000-odd members of the association chipped in for the cause.

The president of the hoteliers’ association informed the funds would be used to buy out the default loans and grant new ones with interest rate 2 percent lower than the commercial banks. He warned that anyone who backed out of the initiative would find themselves isolated and eventually succumb to the crisis.

Since the onset of the global economic crisis the revenues of hotel business in Bulgaria have fallen by about 30 percent, and the recent H1N1 advisories made matters worse for the hotel owners. Besides, they face challenges such as, redundancy and lowered rentals, and the competitive pricing by hotels of the neighbouring Turkey and Greece have even lured away the domestic tourists.

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Canada Aims to Feed the Growing Seafood Appetite of Asia

The Canadian fish industry is agog over capturing the new emerging markets of Asia through aggressive promotion programs in spite of competition from ASEAN fishing industry. The Canadian fishing industry see great business potential in marketing their products in emerging Asian economies including China, Japan and S. Korea.

They argue the sudden economic growth of many Asian countries have brought about change in their dietary needs aided by higher purchasing power to go for expensive food products such as, lobsters and shrimps. Currently, major chunk of the Canadian fish products are exported to the US, however, the effects of downturn force the industry to expand to far-off markets of Asia despite likely stiff competition from the local and neighbouring producers.

As part of promotion, representatives from the lobster industry in Nova Scotia and the government recently completed a 10-day trade mission to China. Last week, Alberta government too took similar initiatives to send feelers to Japan and Hong Kong to show its interest in increasing its presence in their seafood markets. In a partnership running through April 2010, Agriculture and Agri-Food Canada have teamed up with the Canadian Tourism Commission to export food products to South Korea.

Estelle Bryant, the mission market development officer with the Department of Agriculture in Nova Scotia opined that lobsters were a luxury product and there were only a finite number. He added that if one wanted a strong lobster industry one had to increase what one got for them, and China had the real appetite for it.

It has been observed that there was great demand for live seafood and could attract good price from the burgeoning Chinese middle class, which is annually growing by about 300,000. These days, the Chinese middle class serve expensive lobsters as a special delicacy during wedding banquets and other festivities.

Ivy Wang, who owns the consultancy business Atlantic Canada Business Network in China, felt that Canada’s seafood products were not aggressively promoted in China. Wang’s agency is collaborating with governments of New Brunswick and Prince Edward Island and private-sector companies for a18-month regional campaign to market frozen lobster products in China.

Canada’s exports of fish and seafood products reached around $3.7bn in 2008, and more than half of it went to the US markets. The exports to the US were up by just 2 percent from the previous year, at about $2.25bn.

The EU remained as another important market, importing $460mn, or about 14 percent of Canada’s fish and seafood products in 2008. Japan was the third largest with exports worth $294mn followed by China with exports increasing to $243mn during the same period.

Canada largely exports lobster, crab, salmon and shrimp, and these seafood products accounts for 46 percent of all fish and seafood exports by volume and 65 percent by value. Lobster remains number one, with exports in excess of one billion dollar.

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