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

 

China-Russia

Bilateral agreements

To challenge the existing world order

In a move signaling its eastward drift, Russia has signed a plethora of deals, ranging from energy to transportation and infrastructure, with China. The bilateral agreements, including deals on Russian gas supplies to China, opening a currency swap line to boost bilateral trade, and Chinese investment to build a high-speed railway link in Russia, came on the sidelines of celebrations commemorating the end of World War II, an event which was shunned by most Western leaders. The most significant of these deals was Russian gas giant Gazprom signing a MoU with China National Petroleum Corp (CNPC) to build a gas pipeline to China. The two sides also signed deals to boost Chinese lending to Russian companies and investment funds, targeting agricultural projects, and a credit line for Russian banks from China Development Bank. China’s biggest hydropower developer also signed an agreement with its Russian counterpart to jointly build a hydropower plant in Russia.

 

Malawi

Restrictions imposed on foreign retailers

An unwelcoming Malawi?

Come July, foreigners won’t be allowed to do business in Malawi. While difficult to digest in today’s globalised world, the Malawi government has actually come up with a novel law to keep ‘illicit’ foreign traders at bay and attract only meaningful investors. The law bars foreign retailers from working in rural areas with effect from July 1, 2015 and allows them to carry out retail business only in designated urban areas like Blantyre, Zomba and Lilongwe. The Malawi government has introduced the law in the wake of complaints by Malawian business owners, who have been affected by the invasion of foreign traders in rural growth centers, and Malawi’s citizen who view foreigners as encroachers. Expected to hit Chinese retailers operating in the rural region badly, the new law makes it mandatory for a foreign trader to have a licence, from the Chief Business Licensing Officer by paying a fee of $2,50,000, before starting a new business. Local traders are of the view that the fee will attract only meaningful investment into the country and help its development.

 

Costa Rica

Avocados

Nothing fruitful here

There’s bad news for Avocado lovers in Costa Rica as their prices are set to soar, thanks to a decision of the government to ban imports from about nine countries. Citing ‘sunblotch’ virus attack affecting the crop across the globe, Costa Rica has halted avocado imports from Mexico – the world’s largest producer and single biggest exporter of avocados to the country – and Spain, South Africa, Australia, USA, Ghana, Israel, Venezuela and Guatemala. The move is likely to push up prices of the fruit by 25%, since only 20% of the local demand is catered to by domestic producers, making imports mandatory. It’s worth noting that in CY2014, Costa Rica had imported avocados worth $21.1 million, mostly from Mexico.

 

Norway-North Korea

Salmon exports

Having the fish and eating it too

Norway’s exports of Atlantic salmon to North Korea have got a major boost as even the country’s foreign ministry has affirmed that they don’t represent a violation of the sanctions imposed against the dictatorship. This, because instead of exporting salmon fishes, Norwegian exporters export salmon fish eggs to North Korea, which are then raised to full-size in fish farms. It’s worth noting that Norway is the fourth biggest frozen fish (whole) exporter in the world, with exports worth over $1.7 billion in CY2014 and the third biggest variety in these exports are Atlantic and Danube salmon, a big chunk of which is exported to North Korea.

 

South Africa-Iran

Oil imports

In damage control mode

A recent visit by the South African International Relations and Cooperation Minister Maite Nkoana Mashabane to Iran has brightened the chances of resumption of trade ties between the two nations. Referring to Iran as a friend and a strong international ally, Mashabane said, “Iran was at the forefront of the fight against apartheid, and pledged solidarity to the South African people.” Terming the economic sanctions against Iran ‘irrational and illegal’, she said, “We want to see natural resources being utilised for peaceful means.” Many see the statement as a signal for resumption of trade between the two nations.

 

Israel-Germany

Navy ships

To keep the coastline safe

Giving a push to its navy’s defensive capabilities, Israel has signed a deal with German shipmaker to purchase four advanced surface vessels for €430 million to protect its gas drilling rigs. According to the deal – ThyssenKrupp Marine Systems (TKMS) will build the patrol ships and deliver them to Israel within five years – Germany will finance about a third of the deal, with a special grant of €115 million. The announcement of the purchase deal was made on the sidelines of celebrations marking 50 years of diplomatic ties between the two countries. Once delivered, the patrol ships are expected to secure Israel’s Exclusive Economic Zone in the Mediterranean and search efforts off the coastline. It’s worth noting that the Jewish state has vast untapped gas fields that face possible sea-borne threats.

 

Russia-Ukraine

Anti-Dumping

Opening new battlefronts

Russia has approached the World Trade Organisation (WTO) against anti-dumping measures adopted by Ukraine on a few products, including ammonium nitrate, originating in the Russian Federation. “The Russian Federation notified the WTO Secretariat of a request for consultations regarding anti-dumping measures adopted by Ukraine on imports of ammonium nitrate,” WTO said in a statement. It’s worth noting that in 2008, Ukraine had first imposed anti-dumping duties on Russia’s ammonium nitrate shipments and extended the protectionist measure in July, 2014. Russia alleges that Ukraine has failed to establish and properly evaluate the relevant facts while deciding the duty increase and extension on ammonium nitrate. Going by WTO rules, Ukraine has 60 days for addressing Russia’s concerns and settling the dispute through talks. If the talks fail to find a resolution, Russia can ask the WTO to adjudicate.

 

Zimbabwe

Elephant exports

Desperate measures

This news is certainly going to upset jumbo lovers. In a move that has angered the animal welfare community, Zimbabwe has decided to export over 60 baby elephants to raise badly-needed funds for conservation and restrain elephant population in the country. If reports are to be believed, the cash-strapped Zimbabwean government will be exporting elephants to China, France and UAE. The decision has not gone down well with animal rights groups, which are terming the plan ‘cruel’. However, the Zimbabwe government has shrugged off international pressure and vowed to go ahead with the exports and raise money for the country’s wildlife management that has been hit following a slump in the tourism industry. The move is being cited as a fallout of USA’s ban on the imports of elephant ivory. According to the Convention on International Trade in Endangered Species (CITES), the African nation can export the animal as long as the trade is properly regulated.