IBT News Blog

Interestingly given the recent EU levels of economic growth, the inflation rate for Eurozone nations has risen dramatically. See http://news.bbc.co.uk/go/em/fr/-/2/hi/business/7219572.stm .

The case referenced in this article is factually disturbing but important to international trade because of the possibility that India will begin to require that international firms provide additional protections to their local workers. See http://www.nytimes.com/2008/01/31/business/worldbusiness/31cnd-rupee.html?_r=1&ref=business&oref=slogin .

Although this article and the general pubic concern with bird flu (or avian influenza), it is interesting to think about the effects which SARS had on trade and commerce during the outbreak which occurred several years ago and the possible impacts which an outbreak of bird flu would have on global trade. See http://www.iht.com/articles/ap/2008/01/31/news/Hong-Kong-Bird-Flu.php .

The EU is introducing new food labeling requirements in an attempt to educate consumers in its member states about the contents of their food and to improve their food choices. See http://www.iht.com/articles/2008/01/30/europe/fat.php .

In another move to prevent the rise in transnational digital piracy, several Swedish nationals were arrested in connection with a website called Pirate Bay. See http://www.iht.com/articles/2008/01/31/business/pirate.php .

As this article explains, there are new concerns over the content of medicines produced by a Chinese pharmaceutical company which exports its products and sells them domestically. See http://www.iht.com/articles/2008/01/31/asia/31pharma.php

Many parts of the world are currently suffering internet outages and issues due to a problem with a cable used in providing internet access. It is interesting to think about the effects that this will have on international commerce, as well as personal use of the internet. See http://news.bbc.co.uk/2/hi/technology/7219781.stm

The following article discusses the new found friendship between China and India. Recently, bitlateral trade between the two rising economic powers has increased "tenfold since 2002." Additionally, both countries have started regular joint military exercises. http://www.cfr.org/publication/15312/chinas_yin_indias_yang.html?breadcrumb=%2F

The EU has announced that it will stop the import of Brazilian beef to its member countries as a result of disease concerns. http://news.bbc.co.uk/go/em/fr/-/2/hi/americas/7218965.stm . If unresolved, this dispute could head to the WTO for settlement under the rules of the WTO dispure resolution body as similar disputes involving foot and mouth disease in cattle have been resolved.

The US Federal Reserve cut interest rates to 3% today, which will likely have at least a confidence-based effect on the global markets as a whole. See http://news.bbc.co.uk/go/em/fr/-/2/hi/business/7218055.stm .

In the wake of the Societe Generale scandal and the US sub-prime markets issue, the heads of several European states have issued a request that banks operate with greater transparency: http://news.bbc.co.uk/2/hi/business/7215873.stm .

The International Monetary Fund has announced that it is lowering its global economic growth forecast, however it has not intimated that it is predicting a recession. http://news.bbc.co.uk/go/em/fr/-/2/hi/business/7215957.stm .

The World Trade Organization will be deciding on its Chairman of the Geneal Council at a meeting in under two weeks. Given that important issues of international trade, such as the upcoming Doha negotiation rounds, are heavily dependent on the WTO, the installation of a new Chairman could be interesting for future trade policy. http://www.iht.com/articles/2008/01/29/business/wto.php .

This article briefly discusses the improved trade position experienced by Europe as a whole: http://news.bbc.co.uk/2/hi/business/7215418.stm .

Last night's State of the Union address by President Bush contained several policy statements about international trade, including reference to completing bi-lateral trade agreements with Colombia and Panama. The full text of the address is available at: http://www.whitehouse.gov/news/releases/2008/01/print/20080128-13.html .

These policy statements are interesting to think about in terms of our class discussion yesterday regarding the powers of each of the federal branches and efficiency issues which result from them.

http://www.nytimes.com/2008/01/27/business/27steal.html?pagewanted=2&ref=worldbusiness

Apparently Hollywood has realized that people other than Americans go to see American-made films. In fact, experts say that many movies gross more abroad than domestically. The international market for American made films is on the rise. For example, American movies made $158 million in China last year, up 38 percent from 2006.

As a result of the modernization of foreign theaters and the increasing demand, Hollywood has been consistently tailoring movies to appeal to international crowds by simplifying the content of the pictures and increasing the amount of destruction. While demand abroad is rising and New York City's skyline is falling, Hollywood's numbers are swelling, and domestic demand remains constant.

As a preview, this article discusses, among other things, economic points which are expected to be made by the President in his State of the Union speech this evening. Although many of the provisions are domestic in nature, one wonders what impact these proposls will have on global markets and the global economy generally. http://news.bbc.co.uk/2/hi/americas/7212820.stm .

This article discusses recent statements and proposals made by the manager of the group U2 regarding economic and legal responsibility for music piracy. It is interesting because it illustrates how the illegal downloading of a piece of music domestically ties into a larger global pattern which has, according to the recording industry, managed to cause serious financial damage to an entire industry.

http://www.iht.com/articles/2008/01/28/business/piracy.php

As a follow up to a previous blog posting about Russian involvement in the oil and gas supply used by the majority of Europe, this article discusses the Ukrainian stance on existing trade and also deminstrates the level of interdependecy which exists in terms of European access to energy resources.

http://www.iht.com/articles/2008/01/28/business/gazprom.php

The International Monetary Fund has just announced that its policies on the use of tight fiscal and economic policies by governments it assists can change. It has also started to embrace a greater role for globalization in its policies.

http://www.iht.com/articles/2008/01/28/business/28imf.php

The story of the trader at France's Societe Generale who apparently lost several billion dollars during the course of his time working at the bank and was able to conceal it has been going on for at least a week. The latest factual update is that the trader was just arrested and will be charged under French law for his actions. I thought this article was interesting because it explains how closely conneted the international banking markets are and how the acts of one person in a particular country can impact on the global markets:

http://www.iht.com/articles/2008/01/27/business/27socgen.php .

This article is very interesting because it discusses the idea of ecomonic decoupling (simply, the point at which various international economies have grown to the point where they are not as dependent on the US market) and how it applies as a theory and practice in light of the recent market downturn. http://www.iht.com/articles/2008/01/27/business/26delink.php .

It appears that there has been an agreement to hold another round of Doha talks in several months, which has several important trade and policy implications: http://news.bbc.co.uk/2/hi/business/7211264.stm .

Although this speech was given by the Japanese Minister at the recent Davos talks, it discusses likely topics for the upcoming G7 meeting: http://news.bbc.co.uk/2/hi/asia-pacific/7210696.stm .

This article discusses the new US policy of sending food and drug inspectors to US embassies in developing countries to monitor the quality of items sent to the US. It also discusses the use of this practice by other countries. http://www.iht.com/articles/2008/01/25/business/25fda.php .

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EU and U.S. try to rekindle Doha trade talks
By Stephen Castle International Herald Tribune
Thursday, January 24, 2008

Against a gloomy economic backdrop, the United States and the European
 Union called Thursday for a fresh effort to rescue stalled trade talks
 to restore confidence in the global economy and stave off the growing
 threat of protectionism.


Fears of a recession in the United States have raised the stakes over
 the dormant trade negotiations, and Susan Schwab, the United States
 trade representative, appealed to advanced developing countries to make
 more concessions.


With trade ministers slated to hold informal discussions on the Doha
 development round in Davos on Saturday, both the United States and the EU
 say a breakthrough in 2008 would generate billions of dollars in
 additional trade and help shore up confidence in the global trading system.


However, a deteriorating economic climate could make it harder for
 politicians to compromise because of worries voters would have about their
 jobs.


"With turmoil in the economy and a slowdown  - and we expect there to
 be some growth but we know it won't be so fast  -  it makes negotiating
 a trade-liberalizing agreement and implementing a trade-liberalizing
 agreement that much more important," Schwab said during an interview
 here. "But circumstances also carry some risk in terms of the potential for
 calls for retrenchment and economic isolationism."


Schwab  said that President George W. Bush strongly supports completing
 the round in 2008.


In addition to increasing trade, a deal in 2008 would make "an
 important statement about the health and prospects of the global economy" and
 would have a "psychological impact that you couldn't measure," Schwab
 said.


There was a strikingly similar message from the the European trade
 commissioner, Peter Mandelson, as he arrived here Thursday. "The Doha round
 is not a panacea to the immediate issues facing the global economy,
 but a breakthrough this year would be a timely injection of confidence as
 well as sending a political sign on of commitment to the WTO and its
 system of international trade," Mandelson said. "It would demonstrate
 our collective ability to manage the global system in the interests of
 all. Equally, failure would remove a much needed insurance policy against
 creeping protectionism and isolationism in the global economy."


The talks, which started in 2001, are designed to help increase trade
 and develop the economies of poorer countries but have failed to gather
 momentum with negotiators, who have missed a succession of deadlines
 set for striking a deal.


The United States is under pressure to reduce subsidies on agriculture
 and the EU to cut tariffs on farm products.


But with important negotiating texts due to emerge from the World Trade
 Organization within the next two weeks, the United States and the EU
 are joining forces in seeking to increase pressure on emerging economies
 to compromise over industrial tariffs.


"The U.S. and the EU have not resolved all our differences over Doha,"
 Schwab said, "but I think both of us realize how critically important
 Doha is. If an agreement were to start coming together, we are pretty
 sure we can bridge our differences.


"The key rests with all of us but most particularly with advanced
 developing countries and whether they are prepared to make contributions to
 the round commensurate with their level of development and growth," she
 added.


One European official made the same argument while speaking on
 condition of anonymity, but Mandelson has not gone so far in public.


Schwab dismissed widespread worries that the U.S. presidential
 elections complicated the prospects of reaching a deal in 2008. Using this as a
 reason not to engage seriously in the negotiations would be "a
 convenient excuse," she said.


It remains far from clear whether developing countries share the new
 mood of urgency over the need for a deal, or whether they are willing to
 move even if they do.


The Indian trade minister, Kamal Nath, speaking in Davos, said  his
 country was probably less vulnerable to an economic downturn in the United
 States than other big nations. "No economy can totally decouple itself
 from the U.S,"  he said. "The question is: What is the impact? The
 economic impact in the West, I don't think, is matched by the economic
 impact in the East. China is dependent on the export market more than
 India."


Asked at a panel discussion whether there was a prospect of a deal this
 year, Nath was positive but noncommittal. "We have always come back to
 Davos and said 'we will do it this year.' Maybe this time we will not
 have to come back next year and say the same," said Nath.


Pascal Lamy, director general of the WTO, said that a deal was "doable
 in the next few months" and also highlighted the stabilizing benefits
 of a deal in the current circumstances. "When you are confronted by
 uncertainty and instability in the markets, one way to address this would
 be to create a more stable, transparent and certain trading system and
 the best way to achieve that would be to reach a Doha deal," Lamy said.


Despite the declarations, analysts remain skeptical. Andre Sapir,
 senior fellow at the Bruegel research institute in Brussels, said a meeting
 of heads of government might be the only forum that could give a real
 impetus to Doha and that, even if there was an agreement, it was
 difficult to see any deal being agreed by the U.S. Congress. "At these times
 there is always the risk of protectionism," he added.

This story discusses attempts currently underway by the Bush administration to enter into a bi-lateral free trade agreement with Colombia: http://news.bbc.co.uk/2/hi/americas/7207922.stm. It discusses the role of the domestic political climate in the US on the chances of the agreement's success and also demonstrates the link between trade agreements/protections and government stability in Colombia.

One topic that we did not address in our introductory sessions was the role of government in corporate governance. A Business Week article discusses the potential for the direct role that could influence trade and investment decisions made by companies: Sovereign Wealth Funds Top Davos Talks. The topic was the focus of a panel at the annual meeting of the World Economic Forum in Davos.

Large state pension funds (e.g., NY and CA) have exercised some muscle with respect to their holdings, what impact could these national funds, with their estimated $3 trillion, have? You can find out some basics in the IMF magazine Finance & Development or at the Economist.

Here is an interesting story from “The Economist”: Drive now, pay later .

Those of you who know me probably know I am a bit of an India buff, so things about South Asia tend to catch my eye. But I thought this might be an interesting topic in the context of whether “free trade” is always good.

Unlike the US where we are not shielded from market forces when it comes to oil, India subsidizes its fuel so that consumers don’t feel the heat too much. Although India has done lots of things to reform its economy to make it more amenable to capitalism, it retains many government programs that recall its past Marxist leanings. One of these is its heavy control over its fuel programs, and it appears that while this program may be helping consumers, India’s budget and its economy are likely to take quite a hit from rising oil prices.

One interesting issue raised in this piece is the question of who really benefits from subsidies, in this case fuel subsidies. While we would all like to pay less at the pump, I question the wisdom of these subsidies. I somehow doubt that the poor in India benefit a whole lot from this because they largely do not drive or use petroleum products including fuels. They get around on foot, in bicycles, and occasionally by train (Indian Railways is also a government controlled entity). They are unlikely to benefit as much as “middle class” and upper class consumers and industries that use oil a whole lot more.

Also, it may not be helpful to shield consumers from these costs when it simply adds a tremendous burden on the public purse, but it unlikely that India or other governments similarly situated for that matter will renounce fuel subsidies because it may cost certain politicians their jobs come election day.

Submitted by,

Gurudev (Dave) Allin

I thought this story on European energy access might be interesting:

http://bigmarketing.files.wordpress.com/2007/05/logo_facebook.jpg

Reports today (1/17/08) claim social networking website Facebook is considering setting up its European base in Ireland.

The Minister for Enterprise, Trade & Employment Micheál Martin met with company executives during a visit to California last October, the Irish Times has reported.

In the US, Facebook is now more popular than MySpace and it is the most popular social networking site in the UK.

This news blog is for students enrolled in the IBT Seminar at Albany Law School. The site will be a place where you can post or comment on current events related to the course. Please also add relevant links.