GHY Tradelines

(STR Trade Report)

In its second annual G-20 Business Scorecard, the International Chamber of Commerce rates as “poor” efforts by G-20 member nations over the past year to implement business community recommendations on trade and investment. This rating stands in contrast to the ICC’s evaluation of G-20 efforts on anti-corruption (fair), energy and the environment (fair), and financing for growth and development (good). Overall the G-20 earned a score of “fair,” compared to a “poor” rating in 2012, which the ICC states “suggests that the G-20 is responding to the calls of business but that renewed efforts and increased international cooperation will be required to achieve reform on major global challenges.”

Within the trade and investment area, the ICC rates as “poor” G-20 efforts to promote multilateral trade liberalization and rulemaking within the World Trade Organization (largely due to the ongoing impasse in the Doha Round negotiations) and roll back measures restricting trade and investment that have been imposed in the wake of the global economic downturn. However, efforts to finalize a WTO trade facilitation agreement, make trade and investment a permanent item on the agenda, and improve the international investment environment were deemed “fair.”
 

(MercoPress)

The world’s leading economies gave themselves a bit more space on Monday to meet targets for cutting budget deficits rather than risk worsening a slowdown in many countries, chief among them the United States.

Meeting a day before the U.S. presidential election, which is being disputed largely on tax and spending issues, the Group of 20 countries worried that previous commitments to cut in half the budget shortfalls of advanced economies by the end of next year might hurt the struggling global economy.

“In light of the weak pace of global growth, they will ensure that the pace of fiscal consolidation is appropriate to support the recovery,” G20 policymakers said in a communiqué after a two-day meeting in Mexico. Read more here.
 

(RTTNews)

The Group of Twenty finance ministers and central bank governors, meeting in Mexico, have urged the U.S. to take steps to avoid the so called ‘fiscal cliff,’ the scheduled tax increases and severe spending cuts that could hurt growth of the world’s largest economy.

The meeting also discussed the risks emanating from the delay in resolving the Eurozone debt crisis. The possible fiscal tightening in Japan also came up for discussion, which may unsettle the already fragile global economic growth.

The G20 feels that the global growth remained “modest” and risks remained “elevated,” reports said citing a draft communique to be released after the meetings’ conclusion today. Read more here.
 

(Reuters)

Leading members of the Group of 20 nations are prepared to trigger an emergency meeting to address soaring grain prices caused by the worst US drought in more than half a century and poor crops from the Black Sea bread basket.

France, the United States and G20 president Mexico will hold a conference call at the end of August to consider whether an emergency international meeting is required, aiming to avoid a repetition of the food price spike that triggered riots in poorer countries in 2008.

Yet even as the third grain surge in four years stirs new fears about food supply and inflation, many say the world’s powers are no better prepared to rein in runaway prices. Apart from a global grain database, which has yet to be launched, and the Rapid Response Forum that authorities are considering convening for the first time, the G20 has few tools. Read more here.
 

(MercoPress)

World leaders extended by one year their vow not to put up new trade barriers at the G20 summit on Tuesday in a last-minute deal that exposed deep rifts over protectionism.

The agreement to refrain from new protectionist measures until the end of 2014 as part of world leaders’ efforts to foster global growth was included in the final G20 communiqué.

Mexican President Felipe Calderon said it was hard won and struck only at the very end of two-day talks in the Pacific resort of Los Cabos. “There was resistance from some countries but beyond that we did manage to get a consensus and arrive at an agreement,” he told a news conference after the meeting.

Brazil, Argentina and South Africa had resisted extending the trade pledge beyond its current expiry at the end of 2013, while other countries wanted to push it back to 2015, a diplomat with knowledge of the G20 trade talks said. The deadlock was broken by Russian President Vladimir Putin, the diplomat said. Read more here.
 

(Balkans.com)

In a report released yesterday, the EU identifies a staggering increase in protectionism around the world with 123 new trade restrictions introduced over the last eight months – a rise of just over 25%. This brings the total number of restrictive measures in place today to 534. In its ninth report on potentially trade-restrictive measures, the European Commission points to a failure by the G20 countries to reducing trade barriers. G20 members have to do more to prevent the introduction of new barriers to trade, and to rectify protective measures introduced since the break-out of the crisis.

“Clearly G20 Members need to seriously step up their efforts to fight protectionism. I am very concerned to see the sharp rise in trade-restrictive measures in the last few months alone”, said EU Trade Commissioner Karel De Gucht. “Let us remind ourselves that the G20 pledged to end such practices and that protectionism benefits noone. It sends the wrong signal to global trading partners, it sends the wrong signal to investors and it sends the wrong signal to the business community which relies on a predictable business climate.” Read more here.
 

(The Globe and Mail – Kevin Carmichael)

The most alarming statistic in Bank of Canada Governor Mark Carney’s trade speech last week was this one: among Group of 20 countries, only Britain has lost a greater share of international trade since 2000 than Canada.

Some trading nation, eh?

Canada’s share of imports by the world’s major economies shrunk over the past couple of decades, with one exception: Mexico, the unsung hero of the global economy.

A few weeks ago, Export Development Canada chief economist Peter Hall did me the favour of crunching some numbers. […] Using the International Monetary Fund’s “Direction of Trade” data, Mr. Hall showed that Canadian exporters might finally be doing some serious business with Canada’s other partner in the North American free-trade agreement. Canada’s share of Mexican imports was 2.9% in 2010, down slightly from 3.1% in 2008 and 2009. But that’s markedly better than 1993, when Canadian exports represented 1.8% of Mexico’s purchases from abroad. Read more here.
 

(World Trade Interactive)

Following their Nov. 3-4 summit in France, leaders of G-20 member countries issued a communique that primarily focuses on economic and financial recovery and job growth but also includes the following provisions concerning international trade.

Trade Barriers 
The leaders extended until the end of 2013 their commitment not to impose new trade restrictions; vowed to roll back any new protectionist measures that may have arisen, including new export restrictions and WTO-inconsistent measures to stimulate exports; and agreed to ask the WTO, OECD and UNCTAD to continue monitoring the situation and report publicly on a semiannual basis

Doha Round 
The leaders expressed support for the Doha Round but asserted that it will not be completed “if we continue to conduct negotiations as we have in the past.” As a result, they called for “fresh, credible approaches to furthering negotiations” to be pursued in 2012, “including the issues of concern for least developed countries and, where they can bear fruit, the remaining elements” of the Doha Round talks. They instructed their ministers to work on such approaches at the December WTO ministerial meeting and to engage in discussions on “challenges and opportunities to the multilateral trading system in a globalized economy.”

WTO 
The leaders called for a “strengthening of the WTO, which should play a more active role in improving transparency on trade relations and policies and enhancing the functioning of the dispute settlement mechanism.”

Corruption 
The leaders emphasized “the need for swift implementation of a strong international legislative framework, the adoption of national measures to prevent and combat corruption and foreign bribery, the strengthening of international cooperation in fighting corruption and the development of joint initiatives between the public and the private sector.”

Currency
The leaders affirmed their commitment to “move more rapidly toward more market-determined exchange rate systems and enhance exchange rate flexibility to reflect underlying economic fundamentals, avoid persistent exchange rate misalignments and refrain from competitive devaluation of currencies.”
 

(WTO)

The WTO’s report on G-20 trade measures, issued on 26 October 2011, said that “disappointingly weak growth in some G-20 countries and continuing macroeconomic imbalances globally are testing the political resolve of many governments to abide by the G-20 commitment to resist protectionism”. It said that “the situation is not yet alarming, but it is clearly adding to the downside risks to the global economy”.

G-20 Leaders reaffirmed, at their last Summit meeting in Seoul on 11-12 November 2010, their unwavering commitment to resist all forms of protectionism.  Furthermore, recognizing the importance of free trade and investment for global recovery, they committed to keep markets open and liberalize trade and investment as a means to promote economic progress for all and narrow the development gap. Read more here.
 

(Industry Week – Agence France-Presse)

Leading industrialised and emerging nations appear to be buckling under protectionist pressure, with more trade-hindering measures imposed in the past six months than previously, international groups said on Tuesday.

“Over the past six months, most G20 governments have put in place more new trade restrictive measures than in previous periods since the crisis,” noted the report by the World Trade Organization, Organisation for Economic Cooperation and Development and the UN Conference for Trade and Development. “Their restraint to resist protectionism appears to be under increasing pressure.”

“The commitment to roll back export restrictions has not been followed; in fact, new export restrictions are on an increasing trend,” said the report. Read more here.
 

(Bridges Weekly)

A leaked report by top international food security experts urges the Group of 20 leading economies to tackle food price volatility by reforming biofuel policies, curbing the use of agricultural export restrictions, and rebuilding emergency food reserves.

Senior agriculture ministry officials from G-20 governments are meeting in Paris on 11-12 May to hammer out an action plan based on the experts’ recommendations.

Absent from the expert report was a World Food Programme proposal on an emergency reserve system. The new text does, however, provide new advice on biofuel policy and an Agricultural Market Information System (AMIS).

The report, a collaborative effort between ten international organisations working on food, such as the UN Food and Agriculture Organization and the Organization for Economic Cooperation and Development, has changed little since its previous draft version, though some described the analysis as more “nuanced.” Read more here.

(CRI)

China is to cut import taxes on some products, including formula milk and cosmetics. The move aims to balance international trade.

In January, the Ministry of Finance said tax revenues jumped 23% year-on-year to more than 7 trillion yuan or about $1 trillion US dollars in 2010, partly boosted by import taxes.

Economist Luo Dingyu said the tax reductions are partly a response to the global financial situation. He said “the cuts are in line with the expectations of the world’s major economies. A number of countries have been hoping that an increase in exports to China will help to fuel their struggling economics.”

The move comes after just days after the G20 meeting in Paris, at which China came under pressure to increase imports and lower its trade surplus as a means of reducing global trade imbalances.

Data from the General Administration of Customs show that China’s trade surplus decreased by about 6% year-on-year in 2010.

(Story: New York Times – Sewell Chan et al. / Video: Fox News)

President Obama’s hopes of emerging from his Asia trip with the twin victories of a free trade agreement with South Korea and a unified approach to spurring economic growth around the world ran into resistance on all fronts on Thursday, putting Mr. Obama at odds with his key allies and largest trading partners.

The most concrete trophy expected to emerge from the trip eluded his grasp: a long-delayed free trade agreement with South Korea, first negotiated by the Bush administration and then reopened by Mr. Obama, to have greater protections for American workers.

And as officials frenetically tried to paper over differences among the Group of 20 members with a vaguely worded communiqué to be issued Friday, there was no way to avoid discussion of the fundamental differences of economic strategy. After five largely harmonious meetings in the past two years to deal with the most severe downturn since the Depression, major disputes broke out between Washington and China, Britain, Germany and Brazil.

Each rejected core elements of Mr. Obama’s strategy of stimulating growth before focusing on deficit reduction. Several major nations continued to accuse the Federal Reserve of deliberately devaluing the dollar last week in an effort to put the costs of America’s competitive troubles on trading partners, rather than taking politically tough measures to rein in spending at home. Read more here.

(Story: Postmedia News via Calgary Herald / Video: PMOCPM)

Leaders from the Group of 20 went behind closed doors early today for intense talks on how to fix currency rates and trade imbalances — with the likely result expected to be a final declaration that papers over their differences but sets little new ground.

The political leaders from the world’s key industrialized and emerging economies came here – their fifth encounter since the economic recession of recent years – with initial hopes to make advances from the last summit in Toronto.

Prime Minister Stephen Harper is attending this conference, and as chair of the previous summit, he was granted the opportunity to open today’s talks.  Read more here.

(The Guardian – Kenneth Rogoff)

China has been criticised by the U.S. for keeping its currency artificially low; the ‘currency war’ could be just an opening skirmish in a much more serious trade war, warns Kenneth Rogoff.

G20 leaders who scoff at the United States’ proposal for numerical trade-balance limits should know that they are playing with fire. The U.S. is not making a demand as much as it is issuing a plea for help.

According to a recent joint report by the International Monetary Fund and the International Labor Organisation, fully 25% of the rise in unemployment since 2007, totalling 30 million people worldwide, has occurred in the U.S. If this situation persists, as I have long warned it might, it will lay the foundations for huge global trade frictions. The voter anger expressed in the U.S. midterm elections could prove to be only the tip of the iceberg.

Protectionist trade measures, perhaps in the form of a stiff U.S. tariff on Chinese imports, would be profoundly self-destructive, even absent the inevitable retaliatory measures. But make no mistake: the ground for populist economics is becoming more fertile by the day.

The new U.S. Congress is looking for scapegoats for the country’s economic quagmire. And, with a president who has sometimes openly questioned rigid ideological adherence to free trade, anything is possible, especially in the run-up to the 2012 presidential election. If trade frictions do boil over, policymakers may look back on today’s “currency wars” as a minor skirmish in a much larger battle. Read more here.

(New York Times – Keith Bradsher)

An unusually broad coalition of business groups in North America, Europe and Asia has sent a letter to the heads of state of the Group of 20 major economies, asking them to make a commitment at their meeting this month in Seoul that trade in crucial rare earths will not be interrupted because of industrial policies or political disputes.

The range of countries and industries whose business groups signed the letter underscores the level of worry in corporations around the world about recent export restrictions placed on rare earths by China, which mines 95% of such materials. The minerals processed from them are needed for products and processes like cellphones, cars, clean energy and the production of missiles and sonar. Read more here.

(CBC News)

As G20 finance ministers prepare for meetings in Seoul starting Friday, economists have been assessing the odds of a global currency war.

In a commentary Tuesday, European banking giant BNP Paribas took the threat seriously enough to try to reassure markets that countries would unite to avoid currency jockeying. “The chance of an agreement has increased as the International Monetary Fund uses its influence to convince G20 participants that an agreement is a must,” it said.

But Perry Sadorsky, associate economics professor at York University’s business school in Toronto, said the rhetoric about currency wars is a distraction from the real threat. “Competitive devaluations of national currencies are a reaction to a more pressing problem,” Sadorsky told CBC News.

And that is how to get the global trade in goods, services, savings and investment back in balance. Read more here.

span style=”LINE-HEIGHT: 115%; FONT-FAMILY: ‘Verdana’, ‘sans-serif’; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-bidi-language: AR-SA; mso-bidi-: EN-CAfont-family:Arial;font-size:85%;color:black;” (Globe and Mail – Kevin Carmichael)br //spanspan style=”LINE-HEIGHT: 115%; FONT-FAMILY: ‘Verdana’, ‘sans-serif’; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-bidi-language: AR-SA; mso-bidi-: EN-CAfont-family:Arial;font-size:10;color:black;” br /strongThe resolve of the Group of 20 countries to stare down trade barriers is wavering./strongbr /br /The G20 declared early in its fight against the financial crisis it would resist the impulse to placate domestic interests, vowing to resist protectionism. Officials recognized the self-defeating effect that tariff walls had during the Great Depression.br /br /For the most part, the leaders of world’s major economies have remained true to their word. Global trade will increase 13.5% this year, according to the World Trade Organization, a feat that suggests shipping lanes have been left wide open.br /br /Still, trade friction between some nations is building.br /br /Lawmakers in the United States are scheduled to vote on legislation Wednesday that would allow companies to seek retribution for sales lost to international competitors that benefit from government manipulation of exchange rates. The bill is aimed squarely at China, which many unions and some companies blame for lost jobs, even though the country is the U.S.’s fastest-growing export market.br /br /“We’ve had a trend towards more disputes, as compared to the sort of businesslike flow which we had for the two to three years preceding the crisis,” WTO director-general Pascal Lamy conceded last week, according to a report on Forbes.com. Read more a href=”http://www.theglobeandmail.com/report-on-business/economy/despite-g20-pledge-global-trade-friction-heating-up/article1731322/”span style=”color:#0000ff;”here/span/a. /span

span style=”font-size:85%;”(Financial Post – Sylvain Charlebois, University of Regina)/spanbr /br /strongWe can choose short-term G20 gains, or the vast benefits of freer trade/strongbr /br /Because of global economic uncertainties, the World Trade Organization’s latest attempts to liberalize markets through the Doha Round of trade negotiations [have] been jeopardized. Having begun in 2001, the Doha Round has lingered in multilateral purgatory for even longer than its immediate predecessor, the Uruguay Round, which from inception to signing was debated for seven years. The Doha round continues to be stalled as nations disagree about the fairness of the negotiations, especially in relation to trade barriers, despite the WTO’s track record as a beneficial agent to world economies.br /br /For maybe the first time in history, a significant number of economists and the public are criticizing protectionist reactions to large-scale economic crises. Still, most political leaders are leery about the commitments required by sustainable trade promises. After U.S. President Barrack Obama’s arrival in the White House more than 18 months ago, many believed that the Doha Round would live on. During his campaign, the current President pledged to dump former president George W. Bush’s unilateral approach to foreign-trade policy. But certain inconsistencies in the economic practices of many countries, the United States and Canada included, have led to clashes that threaten to scuttle the negotiations. Read more a href=”http://opinion.financialpost.com/2010/07/02/canada-a-roadblock-in-trade-talks/”here/a.

span style=”font-size:85%;”(NASDAQ/Dow Jones Newswires)/spanbr /br /strongProtectionist trade policies continue to be implemented among Group of 20 countries, despite national commitments to the contrary, according to a report./strongbr /br /With unemployment hovering near 10% among the advanced G-20 members, many governments have and continue to adopt protectionist measures with the hope of securing domestic jobs and industry, attempting to shield themselves from global competition. However, a a href=”http://www.iie.com/publications/papers/hufbauer20100622.pdf”new report by the International Chamber of Commerce/a with research by the Peterson Institute for International Economics, finds that the effect of such actions is just the opposite. “Protectionist trade measures meant to protect jobs have the opposite effect, because of emulation and retaliation,” said the report.br /br /All G-20 countries have implemented protectionist trade measures over the past two years, and there are hundreds more coming, according to the authors.