Amid rising anti-trade rhetoric in ongoing US presidential campaign, the United States has brought a case against China to a World Trade Organisation (WTO) tribunal, accusing the latter of not doing enough to remove export taxes on certain raw materials, which it agreed to at the time of joining WTO 15 years ago. US argues that 5-20% duties that the Chinese impose on exports of nine raw materials put US manufacturers at a disadvantage by creating an uneven playing field. The nine raw materials include minerals like antimony, cobalt, copper, graphite, lead, magnesia, talc, tantalum and tin used in industries such as aerospace automotive and chemicals. In the latest challenge filed against China, US officials state that export duties on shipments out of China are making minerals cheaper within China, but more expensive outside the country. The trade enforcement case is the latest in a series of trade disputes between Washington and Beijing. In fact, it’s the 13th case by the Obama administration against China at WTO to demonstrate a tough stance on enforcing global trade agreements. Interestingly, China, in response to complaint, stated that it respects WTO rules and the taxes have been imposed as part of efforts to protect the environment.
PORT INVESTMENT
China Ocean Shipping Company (COSCO) is all set to invest in the Port of Piraeus, the largest seaport in Greece, with Greek Parliament finally ratifying the sale of a majority stake in Port to COSCO. In April 2016, COSCO had signed an agreement with TAIPED, Greece’s privatisation agency, which allowed COSCO to buy 51% stake in Piraeus Port Authority (OLP) for €280.50 million, with an additional 16% for €88 million after five years. The deal, which took seven years to materialise, is expected to lighten Greece’s debt, generate employment, and attract other foreign investors into the country that is still battling economic recession. Interestingly, as per the agreement, China has also assured Greece of investments worth €350 million in the country over the next decade. Privatisations are a major element of Greece’s bailouts since 2010, and the Piraeus deal with China is yet another step in that direction.
It’s worth noting that Piraeus is one of the largest seaports in Europe, which provides services to more than 40,000 ships and 20 million passengers annually.
POST BREXIT
Before exiting European Union (EU) in 2019, Britain is aiming to secure ground-breaking free trade deals with 12 nations, with Australia emerging as a front-runner to strike an agreement worthy of billions of pounds to UK economy. During a telephonic conversation in July, Australian Prime Minister Malcolm Turnbull told his British counterpart Theresa May that Australia wants to negotiate a free-trade deal with Britain ‘as soon as possible’. May, who took office 19 days after Britain voted to leave the 28-member bloc, says that she is keen to complete the agreement. The two leaders said that they will meet at the G-20 summit at Hangzhou in China in September. It must be recalled that Britain on June 23, 2016 took a decision to leave EU, which negotiates trade agreements on behalf of its members. Post Brexit, the world’s fifth largest economy is being forced to adjust to new trade patterns and negotiate deals with major markets that might take years. Interestingly, Britain cannot strike any trade deal until it officially exits EU, which is a complicated process and will take two years once the UK government triggers Article 50 of the Lisbon Treaty.
Beef exports
The Namibian beef export industry has got a shot in the arm. A recent ruling from US Food Safety and Inspection Service (FSIS) added Namibia to the list of countries eligible to export meat and meat products to United States. With this, Namibia has became the first African country eligible to export meat and meat products to US (w.e.f. September 12, 2016). However, under this ruling, Namibia will only be able to export boneless, (not ground) raw beef products, such as primal cuts, chuck, blade and beef trimmings, to US. “Namibia would need to submit additional information for FSIS to review before FSIS would allow Namibia to export other beef product or product from other types of livestock to the United States,” states the new rule. What’s worth noting is till date only 33 countries worldwide are allowed to export meat to US. The African country intends to export about 860 tonne meat to US in the very first year.
SME MASTERPLAN
The Malaysian SME sector, the backbone of its economy, has got a pat on its back from none other than The World Bank. The latest World Bank observation that Malaysia’s SME Masterplan 2012-2020 is producing significant results is the ultimate endorsement for the sector’s growth. According to The World Bank’s recent findings, innovation and technology adaptation are some areas where Malaysian SMEs have done really well. What’s more? Today, SMEs are responsible for about 36% of Malaysia’s GDP, 65% of the country’s employment, and nearly 18% of its exports. By 2020, the Malaysian government aims to push SMEs’ contribution to GDP to 41%, and their share in country’s exports to 23%. However, given the current annual economic growth rate of 5%, the target of 8% growth for SME through 2020 looks fairly tough. “Malaysia’s transition to a high-income economy will highly depend on SMEs’ contribution to GDP growth,” said Anabel Gonzalez, Senior Director of the Bank Group’s Trade & Competitiveness Global Practice.
LIVE ANIMAL EXPORTS
Two Australian livestock exporters have recently been asked to stop shipping cattle to Vietnam until they put in place proper measures for animal control, traceability and verification. While ordering the suspension, Australia’s Department of Agriculture stated that investigations were currently being conducted into allegations of animal cruelty in the burgeoning Vietnamese market. Interestingly, the inquiry started in June 2016 after a video footage by animal right activists showed that exported cattle were being mistreated (bludgeoned to death with sledgehammers) in Vietnamese abattoirs. The video was part of an ongoing campaign by Australian animal right activists to mount political pressure to ban the exports of live animals from Australia. A statement on the Department’s website also said that additional conditions have been placed on exporters including increased reporting requirements and extra monitoring by in-market staff.
IMF Grant
Iraq’s prayers have finally been answered with the executive board of International Monetary Fund (IMF) approving fund disbursement worth $5.34 billion to help the war-torn nation stabilise and reform its economy. As the country is struggling with falling oil prices and terrorism, it couldn’t have asked for anything better. The funding is a part of a three-year Stand-By Arrangement (SBA), which will pour $634 million into Iraq immediately. Going forward, the SBA will support Iraq’s economic reform programme and will address the balance of payments issue. It will also ensure that the country keeps up with its debt obligations and brings its spending in line with lower global oil prices. Last year, despite 13% increase in oil production, Iraq’s economy had contracted by 2.4% – the non-oil economy contracted by 19%. In July 2015, Iraq had received about $1.24 billion under the previous Rapid Financing Instrument programme. SBA gives the country a big chance at putting its economy back on track.
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