News, events and analyses related to global trade and snippets of changing trade matrix during the month of March 2015

 

China

Arms Exports

Dragon fire, literally

 

China has overtaken Germany to become the world’s third biggest exporter of arms and ammunition. According to the annual report on weapons transfers from the Stockholm International Peace Research Institute, China’s exports of arms and ammunition have risen by 143% in the five years between 2009 and 2014. Although still far below United States and Russia, which are the world’s top two arms exporters, China, thanks to state-owned defence equipment manufacturers like Norinco Group, is believed to have made serious inroads into Africa, which is its fourth biggest market, following Pakistan, Bangladesh and Myanmar. The growth of the defence equipment sector in China also means that the country is now only the third biggest importer of arms and ammunition, from being the Top Dog till as recently as five years back.

China’s rise as a defence equipment powerhouse has also rattled United States – not due to a fear of a military conflict, but due to the fear of losing out in this massively profitable market. “One of the concerns about China is not just that they are modernising – we don’t anticipate a conflict with China, certainly – but that they export,” Frank Kendall, the Pentagon’s Chief Weapons’ Buyer, had told the US Congress last year. On the other hand, thanks to political opposition from its Centre-Left, Germany is fast slipping as a defence equipment exporter. In fact, in the five years between 2009 and 2014, Germany’s arms and ammunition exports are believed to have slipped by almost 43%. Now, that’s huge!

 

New Zealand-Vietnam

Trade Target

For a closer and stronger Asia-Pacific

Celebrating 40 years of diplomatic ties, New Zealand and Vietnam have agreed to more than double the quantum of trade between the two nations to $2.2 billion by 2020. The decision was made at meeting between the Kiwi Prime Minister John Key and his Vietnamese counterpart Nguyen Tan Dung at Auckland. “Given the current rate of growth, we have agreed on an ambitious goal of doubling trade in goods and services from its current levels by 2020 to around $2.2 billion a year,” Key said after the meeting.

It’s worth noting that the trade between the two nations is fairly balanced and hit an all-time high of $863.5 million in CY2014, registering a growth of 12.4% (year-on-year). While New Zealand’s main export to Vietnam comprise milk, cream and other dairy products, Vietnam’s main exports to New Zealand include mobile handsets and computers.

 

Thailand-Russia

Trade Expansion

Rising against the tide

At a time when Russia is struggling to find many trade partners, thanks to western sanctions, Thailand is emerging as a bit of a saviour, with trade between the two nations rising to the pre-sanctions $5 billion mark. In fact, of the top three sources of Thailand’s crude oil imports – UAE, Saudi Arabia and Russia – Russia was the only country from which the Southeast Asian nation’s imports saw an (y-o-y) uptick in CY2014. Moreover, although trade between Thailand and Russia has always been in favour of the latter, western sanctions against the former means that several Thai exporters, particularly those exporting food material, are hopeful that total trade between the two nations will see new heights in the current year.

 

Ecuador

Shrimp Exports

For the world’s palate

Ecuador has launched a new marketing campaign to boost exports of shrimp. Named ‘First Class Shrimp’, the campaign was launched at Seafood Expo North America held in Boston, USA, between the 15th and 17th of March. Speaking on the occasion, Antonio Camposano, Chief Executive, National Aquaculture Chamber (CAN), said, “We seek to position Ecuador as a supplier of this first class shrimp, conceived as something that goes beyond the taste, texture, colour, and promotes business principles, corporate values of respect for environmental, health, social and sustainability product.” It’s worth noting that Ecuador is the world’s biggest exporter of frozen cold water shrimps and prawns (HS Code 030616), a big chunk of it to US, and the world’s third biggest exporter of crustaceans (HS Code 0306), behind India and Canada.

 

Argentina-Mexico

Automobiles

Love thy neighbour

Argentina and Mexico have signed a four-year quota-based trade agreement for automobiles, wherein, trade between the two nations will be duty free under a system of quotas and compensated trade. As per the agreement, till a fixed ceiling, the two nations will be able to trade in automobiles duty free. For CY2015, the ceiling has been fixed at $575 million. It’s worth noting that Mexico is the world’s fourth biggest exporter of automobiles and in CY2014, almost 80% of its automobiles exports of $86 billion was done to US. But its exports of automobiles to Argentina more than halved during the year, which probably prompted the country to negotiate for such a deal, with a country, which had seen automobiles production slump by 22% last year.

 

Denmark-Bangladesh

Port Project

Taking age-old friendship to the next level

Denmark’s Minister for Trade and Development Cooperation, Mogens Jensen has said that Danish companies are interested in investing in Bangladesh’s Pyra Port Project. Other than the port, Danish companies were also interested in participating in the New Mooring Terminal in Chittagong, Jensen said. It’s worth noting that Denmark was one of the first European countries to recognise Bangladesh as a sovereign nation after it split from Pakistan in 1971, and both the countries have very cordial relations. This warmth in diplomatic relations can also be seen in trade ties, with over $500 million worth of trade – mostly Bangladeshi T-Shirt exports to Denmark – between the two nations in CY2014.

 

Zimbabwe-USA

Trade Surplus

Light at the end of the tunnel

 

There finally seems to be some light at the end of a very long tunnel for Zimbabwe as the country has recorded its first double digit (in $ million) trade surplus with US since CY2008. This, despite a $3.3 billion overall trade deficit, which was more than the African nation’s total exports. While many have shrugged this jump in exports to US (led by a big jump in exports of iron and steel) as an aberration, some claim it is a sign of a slightly brighter future for Zimbabwe. It’s worth noting that although the sanctions on Zimbabwe were imposed only on 106 individuals and 69 other entities, they have had far reaching implications, leading to an implosion of the local economy, hyper-inflation, high unemployment and increasing dependency on South Africa – its top trading partner – for survival. In fact, in CY2014, a staggering 42.2% of ZImbabwe’s imports were from South Africa, as thanks to the sanctions, most other countries refused to trade with it.