News, events and analyses related to global trade and snippets of changing trade matrix during the month of October 2014 South Korea - China Food imports Satiating the Dragon’s appetite

 South Korea is planning to capitalise on the Chinese fascination for imported food, especially powder milk, chocolate products and processed fruits and consolidate its exports to the world’s most populous country. A report by the Institute for International Trade of Korea International Trade Association claims the country’s agri-food exports to China will increase substantially if South Korea-China FTA, negotiations for which are on, becomes a reality and current tariff, which are in the range of 5% and 35%, are cut or eliminated. According to the report, since large number of Chinese consumers prefer imported food due to food safety issues and limited options in domestic products, the average growth rate of China’s imports of agri-food has been 20.5% over the last six years. The report also claims that Chinese import of agri-food from South Korea, during the same period, has grown at much lower 15.7%, mostly because of tariff barriers. It’s worth noting that most of South Korea’s competitors in the agri-food market – Thailand, Malaysia, Indonesia and New Zealand – have already signed free trade agreements with China.

Safety issues have ensured a surge in China’s edible animal products imports

Australia

Energy exports

Firing up global growth

Andrew Robb, Minister for Trade and Investment, Australia

If one goes by the projections of Australia’s Bureau of Resources and Energy Economics (BREE), then the country’s exports of energy and mineral resources, is all set for a massive surge. BREE, in its September quarter report, has forecasted that Australia’s resources and energy export earnings will rise at an average of 7% per annum between 2013-14 and 2018-19. BREE expects iron ore and LNG exports to increase by 13%, metallurgical coal by 2% and thermal coal by 1% in 2014-15. Australia’s Minister for Trade and Investment, Andrew Robb, attributed the uptrend to the ongoing transition in the resources and energy sector. It’s worth noting that according to Australian Bureau of Statistics, the country’s metal ores and minerals exports rose by 0.4% to $7.3 billion and coal exports by 3.7% to $3.2 billion in the month of August. After the release of the data, Robb said, “Australia’s trade relationship with ASEAN continues to strengthen, with exports increasing across ASEAN nations.” He went on to add, “Australia’s exports to United States also experienced a strong increase in a sign of strengthening economic activity in United States, Australia’s third largest trading partner and our largest source of foreign direct investment.”  

Africa

Ebola panic

Fighting propaganda and perception

With doomsayers projecting a gloomy outlook for Africa in the aftermath of Ebola, countries in the region are stepping up efforts to stop the spread of, not just the disease, but also damaging predictions for trade and commerce. Addressing delegates at a World Bank and International Monetary Fund meeting in Washington, President, African Development Bank, Donald Kaberuka cautioned the world to “be very careful with doomsday narratives.” He told delegates, which included the IMF’s Managing Director, President of the World Bank Group, Secretary General of the United Nations, Director of the US Centers for Disease Control and Prevention and presidents of three of the hardest Ebola-hit nations that “the narrative getting out of this room must be one which says we can overcome Ebola.” He asked the international community to increase the flow of resources and work towards boosting investor confidence in affected countries. He also urged the international community to help strengthen health systems in Liberia, Sierra Leone and Guinea.  

United Kingdom

Services exports

Economy’s shock absorbers

Buoyed by services exports, United Kingdom’s trade deficit has recovered from a record slump. According to the British Chambers of Commerce (BCC), UK’s trade deficit in goods and services in August 2014 was £1.9 billion as compared to £3.1 billion in July 2014. The deficit comes on the back of a £9.1 billion deficit in goods and a £7.2 billion surplus in services. Commenting on the trend, David Kern, Chief Economist, British Chambers of Commerce said, “The strong fall in the trade deficit is extremely positive. But we must point out that the main factor behind this was a fall in imports that was even larger than the decline in exports.” He added that while monthly figures could be volatile, even longer-term comparisons showed that UK’s export performance is inadequate. “Our own surveys and feedback from businesses paint a more positive and resilient picture. But as we have stressed repeatedly, the pace of UK’s rebalancing towards exports is much too slow. Unless this situation changes radically, not only will we miss out on the target of increasing exports to £1 trillion by 2020, but will also endanger UK’s long-term prospects,” Kern said.  

Brazil

Sugar exports

Bitter side of nature

Drought conditions in Brazil could result in the country biting the bitter and losing out on a considerable chunk of the global sugar exports market. According to United States Department of Agriculture (USDA) projections, Brazil’s sugar exports are likely to decline to a six-year low due to the adverse impact on cane production caused by a drought in the country. It’s worth noting that Brazil is the world’s largest sugar exporter, accounting for almost 25% of the market. The USDA has forecast that exports during FY2015 (May to April), would be down to 24 million metric tonne (MMT) from 26.2 MMT in FY2014. It would also be the third successive annual decline in exports for the first time ever. This year, Brazil’s cane crop has been impacted by unusually dry conditions in many central regions of the country. The extended drought has also been detrimental to the country’s coffee production and exports. According to Brazil’s National Coffee Council, the country’s coffee output might fall by 18% this year, following a 3.1% drop last year.  

Asia-Pacific Economic Cooperation (APEC)

Human Blood

Anything for saving lives

 Blood circulation, or to be more precise, export and import of human blood is all set for an extended lease of life. In what could be viewed as an innovative initiative, APEC (Asia-Pacific Economic Cooperation) Life Sciences officials have formulated a plan to maintain the efficacy and safety of blood, which is transported across borders and vast distances. The officials, in a meeting in Manila, have conceptualised the APEC 2020 Blood Supply Chain Roadmap – considered as a first-of-its-kind in the region. The primary objective of roadmap is to build capacities, infrastructure and governance and promote international blood safety and quality standards in APEC economies. Apart from these objectives, the roadmap also contains information on implementing and harmonising international standards; optimising blood processing, testing, and distribution systems; improving clinical transfusion practices and patient blood management and boosting capacities to develop and export plasma to help sustain blood systems in APEC economies. “The world is now seeing just how important a safe and adequate blood supply chain is to global health security,” declared Dr.    ( Global human blood trade was worth about $110 billion in CY2013)Enrique Ona, Secretary of Health, Philippines and Executive Board Chair, APEC Life Sciences Innovation Forum. “Ensuring the safety and availability of blood has become the cornerstone of developing health systems and public health in Asia-Pacific economies,” Dr. Ona added, after the release of roadmap.  

Turkey - Iraq

Falling exports

Economic terrorism in the Middle East

The Islamic State of Iraq and Levant (ISIL) taking over large parts of Iraq has badly hit Turkey’s exports to the country. According to Nevaf K?l?ç, President, Turkish-Iraqi Industrialists and Businessmen Association (TUSIAD), “Turkish companies are struggling to survive in an unfavourable business climate and have been faced with worsening trade relationships with their Iraqi partners since May, when ISIL began to disrupt Iraq’s stability.” It’s worth noting that Iraq is Turkey’s 2nd biggest export destination after Germany and is key to the country’s economy. Turkey, which had a trade deficit of close to $100 billion in CY2013, had a surplus of close to $12 billion – its highest against any country – with Iraq. K?l?ç said that Turkey’s $1 billion per month worth of exports to Iraq are down by almost 50%, since ISIL took control of several of Iraq’s main cities, including Mosul and Tikrit, earlier this year.   Israel - UK Flourishing Trade Trade wins over war and propaganda Despite frantic efforts by pro-Palestine pressure groups in UK, calling for a boycott of Israel, trade between the two countries has reached a record high. According to figures released by Israel Central Bureau of Statistics, trade between the two countries increased by 28% between January and August of 2014 as compared to that during the same period last year. Reacting to the figures, Nathan Tsror, Minister of Economy and Trade at the Israeli embassy in London, said, “Once again, the latest trade figures underline the strong business ties that exist between Israel and UK. This relationship brings great benefit to both countries and as such is of great value.” It’s worth noting that UK is Israel’s third largest export destination, following US and Hong Kong and there were fears that the war in Gaza, which was used by anti-Israeli forces to buildup propaganda against the Jewish state, might have affected the volume of trade between the country and some of its top partners.  

New Zealand

Fishing technology

For that perfect look and taste

Here is an innovation for all those at sea, fishing for the prize catch. And no prizes for guessing where this contraption comes from. New Zealand’s Primary Growth Partnership (PGP) has developed a new fishing technology called Precision Seafood Harvesting (PSH), which it expects to revolutionise the fishing industry. According to PGP, the technology does away with traditional trawl nets and allows fish to be landed on boats alive and in perfect condition, while safely releasing undersized fish. The design of the harvesting system allows fishing vessels to target specific species and fish size and greatly increases protection of small fish that can swim free through escape portals. It also ensured safe release of non-target fish. The technology, recently, won two awards –Supreme Award and Innovation in Sustainability and Clean-tech Award. Highlighting the advantages of the technology, Greg Johansson, a PSH co-investor said “This will lead to changes in vessel designs and layouts, the way we handle fish and get it to consumers. It will increase the value of New Zealand seafood products, when global markets see that we’re taking a big step forward by using this new way of harvesting fish.”   

Malaysia - EU

Investment

Tiding over domestic woes

With Europe eying overseas markets to tide over its own crisis, Malaysia seems to have rolled out the red carpet for investments. Malaysia, which already has massive amounts of investments from Europe, is looking to consolidate on this with what it terms as ‘second wave of technology transfer’. According to Malaysia’s Ministry of International Trade and Industry, more than 1,000 European companies, including Infineon Tech, Q-Cells, Siemens, B. Braun and BASF, have already made huge investments in the manufacturing sector in Malaysia, with German companies leading the way. Germany is also Malaysia’s largest trading partner in Europe, with total trade between the two countries valued at $12.5 billion in CY2013.  Rightly said: Someone’s pain is someone else’s gain!