Negotiations on Indo–Australian FTA Soon

The Indian origin Australian high commissioner during his recent visit to India said the negotiations on the proposed FTA would begin after governments of both the countries examine the feasibility study report on the pact. Peter Varghese, the newly-appointed high commissioner was in India with a mission to assuage safety concerns of the Indian students in Australia who are increasingly becoming victims of racial attacks in recent past.

Press Trust of India has reported that a Joint Study Group which was set up to conduct feasibility study for the Indo–Australian FTA had prepared a report favouring such a pact. After the formal reading by both the governments, a decision will be taken for when to start the negotiations.

The feasibility study, which began two years ago, is understood to have covered several areas of potential impact including implications on economic growth, trade in goods and services and investment, as well as for other commercial linkages. Varghese expressed confidence in the commencement of trade talks that would entail tariff liberalisation and removal of other barriers.

In 2007, India was Australia’s sixth largest market for goods exports, seventh largest market for services and seventh largest market for goods and services combined. The bilateral trade in goods and services in 2007 amounted to $13.3bn making India Australia’s tenth largest trading partner.

At the moment, the Australian export to India is largely focussed on commodities such as coal, gold, and services like education. Varghese opined Australia would like to bring under the FTA both “goods and services”, and also would be keen on reducing the tariffs on its wine in India.

The high commissioner acknowledged that his country wished to actively contribute to the energy needs of India by providing coal and liquefied natural gas. He indicated the approval, given by his government to the $20bn pact between Australian oil and gas company ExxonMobil and India’s Petronet, was an example. ExxonMobil is expected to supply natural gas to Petronet from the Gorgan oil field for 15 years starting from 2014.

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Arab Banking Conference to Focus on Reforms and Investments

The two-day Annual Arab Banking Conference to be held in Beirut, Lebanon between November 19 and 20 would lay emphasis on pan-Arab investments in the new global economic order post-meltdown, the Union of Arab Banks (UAB) stated. The UAB which is headquartered in Sharjah and groups nearly 400 Arab banks appealed to the banks in the region to be in sync with the global banks by removing existing barriers to increase investments in Arab countries.

The bank’s recent study showed that though Arab economies weathered the global economic crisis better than most economies, it was witnessing considerable fall in foreign direct investment in recent months. It stated the Arab nations largely avoided the onslaught of global downturn due to the adoption of strategic approaches either individually or collectively.

The conference with the title “Pan-Arab Investment in Light of a New Global Economic Order” is expected to roll out a road map for making the region once again the most attractive destination. It will discuss and study the challenges and opportunities of the recommendations of the new financial order by the G20 committee. An in-depth assessment on the implications of the new Basel Committee Suggestions (July 2009) is also expected to feature during the meet.

The UAB report felt that while G20 committee is planning to radically change international financial and economic rules and systems, Arab banks should also be taken into consideration in coping with the new challenges. According to the UAB figures, the Pan-Arab investment inflows almost doubled from 18bn in 2007 to 34bn in 2008. On the other hand, the bulk of increases of the overall foreign investment inflows to the Arab countries, which has risen by 18bn to reach 89.2bn in comparison to 70.3bn of 2007.

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EU Allays Fears of Italian Auto Industry over S-Korean FTA

The EU trade commissioner informed Italian industry representatives that the Italian economy would stand to gain from the FTA with South Korea – which is expected to come into effect from July 2010. The EU Commissioner Catherine Ashton said it was estimated that Italian economy could earn $194mn per year while the FTA would allow cheaper car imports into Europe.

Ashton stated the deal would help the European auto makers to seize the opportunities in the new auto market. She reiterated there was no need to worry about any negative impact on the European auto industry as the deal as enough safeguards to protect the EU car makers.

The EU-Korea FTA had been deadlocked several times during the negotiations owing to opposition from the bloc’s car makers. The EU auto industry argued that the cheap Korean cars could eat away a major share of the EU car market causing losses to already troubled industry, the fall out of economic meltdown.

Besides Italy, Germany, France and Spain also nurse similar fears as their economies dependence on the auto industry is huge. The EU auto industry, the largest in the world directly employs close to 2.5mn people and about 10mn in subsidiary sectors, and job losses of the industry would be a respective governmental concern.

The EU is South Korea’s second largest export market after China, and the Asian country is the EU’s fourth-largest non-European trade partner. The successful signing of the deal is expected to give a gigantic boost to the two-way trade between both sides and estimated to be more than $125bn.

The South Korean and the European Union representatives have completed the formal negotiations for the trade agreement that would reduce tariffs on chemicals, textiles, machinery and automobiles. The translated copies of the proposal will be ready within four months in 23 different EU languages apart from the Korean one.

Ashton said the proposed accord aimed to “open a new market in Korea for cars, and to ensure we have safeguards in place to protect industry in the future.” Italian vice minister Adolfo Urso, who attended the briefing with Ashton, also shared the opinion of the trade commissioner.

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Ethiopia to be the Cynosure of African Trade

The multi-million dollar Africa International Trade Centre which is coming up at Ethiopia’s capital, Addis Ababa is expected to transform the country to be the trade hub of the African continent. The centre owned by the Addis Ababa Chamber of Commerce and Sectoral Associations (AACCSA) at current estimations will cost about $23mn.

Ato Eyesuswork Zafu, the president of the AACCSA had informed in the Stakeholders’ meeting held in July that the work of the centre would start in couple of month’s time. As planned, the work of the project will start soon under the supervision of Trade centre project manager Ayalew Abey, and expected to be completed in three years in three distinct phases.

Abey opined that the project was unique and would provide all African nations an opportunity to sell their merchandise, particularly exports, to rest of the continent. Similarly, Hayat Hailu, a businesswoman based in Addis Ababa said the centre would be dream come true for female entrepreneurs in Africa as it would provide a platform to connect easily with the international traders. On the other hand, Zambia’s ambassador to Ethiopia Albert Muchanga said the ambitious project would not only help African businesses but even the Middle Eastern traders.

Zafu believes that besides bringing together the African investors, the centre will also play a key role in the creation of the African Economic Community (AEC) under the guidance of the African Union (AU). Through the AEC, the AU aims to establish free trade zones, customs unions, a single market, a central bank and a common currency within the African continent in line with the European Union (EU) to promote trade and commerce.

The non-governmental business centre will be built on 110,126 sq. meters of land in front of Addis Ababa’s CMC Diplomatic Village. The multi-purpose complex will house a training, research and information department apart from exhibition halls, and also a significant area has been allocated for green spaces and play grounds.

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Australian SMEs Optimistic – Jobs by Next Quarter

A survey indicated Australian small businesses are confident after two strong quarters of business to reach a record high above the peak confidence level of August 2007. The recent survey by Sensis Business Index, showed confidence of the SMEs had increased by 20 points to 50 percent in the September quarter, and is now at the highest level since the global economic crisis affected businesses in February 2008.

The survey which is available since 1993 provides quarterly business updates of Australian SMEs below 200 employees. It is based on a sample size of 1,800 businesses from metropolitan and regional areas, interviewed between 18 August and 4 September 2009.

Christena Singh, the author of the report acknowledged that the jump was the highest since the inception of the Index. Businesses were expecting their operations to perform significantly better in the next 12 months, added Singh.

65 percent of the participants said they were very optimistic about the coming quarters while 15 percent were sceptical about the same. The report stated that though there was significant improvement in confidence, the real performance did not match the optimism, giving room to doubts in the sustainability of the current economic recovery.

The employment figures too was not in favour of job creation rather it showed a downward trend with 15 percent of SMEs decreasing their workforce size over the quarter and 10 percent increasing staff numbers. From the survey it is clear now the September quarter shaved off more jobs than its previous quarter.

However, majority of the respondents in the survey felt the approaching quarters would definitely see more jobs being created along with the rise in sales and profitability. Many firms have confirmed that they were in the process of expanding the workforce in the next 12 months.

Business confidence was highest in Tasmania and the Northern Territory and lowest in New South Wales. Business confidence has jumped strongly in Western Australia, the largest state, during the quarter and is now above the national average. The optimism of the region has propelled interest in capital goods at a level above the national average.

Most of them surveyed also reported lower profits, while the number of respondents who said their sales rose was equal to the number who saw sales decline. Singh said despite two “strong quarters of improvement”, the current economic downturn was still having an impact on SMEs.

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