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

 

United States

Federal funds rate

Are we there yet?

Putting an end to speculation over whether it would raise interest rates for the first time since June 2006, the Federal Open Market Committee (FOMC) maintained its 0-0.25% target range for the federal funds rate. FOMC reaffirmed that it will raise the target range for the interest rate only when it sees some further improvement in the labour market and is reasonably confident that inflation will move back to 2% over the medium term. “Committee expects inflation to rise gradually toward 2% over the medium term as the labour market improves further and the transitory effects of declines in energy and import prices dissipate,” Fed said in a policy statement. The decision has sparked fresh worries over the state of a weak world economy,  and is a clear indication that US policymakers remain fearful of a sustainable global economic recovery. Fed, however, has left open the possibility of a modest policy tightening later this year. It seems that the US central bank wants some time to make sure things have settled down and there isn’t any threat that will have a substantial impact on the American economy.

 

 

JAPAN

Seafood Exports

Effects and side-effects of a changing palate

While the world is going gaga over Japan’s covetable seafood, the Japanese are increasingly choosing meat over fish. Thanks to a growing appetite for pork and beef among Japanese, the demand for seafood in the country has been constantly falling over the past few years. In fact, the consumption of meat in Japan already exceeded that of fish this year for the first time since 2006. Result: Japan’s very own $11.6 billion seafood industry is forced to look at overseas markets for consumers, leading to a surge in Japan’s seafood exports, which, in the first half of 2015, reached 293,806 MT, witnessing a growth of almost 30% (volume-wise) over the same period last year. A weakening yuan is also being attributed to this rise in exports from the country as it has made Japanese seafood cheaper for some importers. Meanwhile demand for seafood is surging in places like China, Europe and South Korea, with emerging economies going for high-value products such as salmon and tuna.

BRAZIL

Credit rating downgrade

They call it junk!

Brazil’s sovereign rating was cut to junk by Standard & Poor’s (S&P) on September 9, 2015, taking away the prized investment grade enjoyed by the country for seven years. S&P’s Ratings Services downgraded Brazil’s rating one step to BB+, with a negative outlook. According to S&P, Brazil now stands at the same rating level as Hungary, Indonesia and Russia. What’s more? The US rating agency has even warned the country of another cut in the coming months, threatening to worsen the situation for the faltering economy. The downgrade comes as a major blow to President Rousseff’s government, which is already under pressure and is struggling hard to shore up country’s fiscal accounts. Interestingly, the country’s finance ministry has rejected S&P’s claim. “Brazil has low external vulnerability because it holds the fifth largest volume of international reserves among G20 nations,” it said in a statement. It’s worth noting that the largest Latin American economy has been suffering from slow growth that averaged about 2% for the past few years. Although the government has tried to revive the economy with tax cuts and increased social spending, it has been widely criticised for resorting to some opaque accounting moves to meet budget targets.  

 

PAKISTAN

Export ban

‘Hide’ your donkey

 

Russia-Bulgaria

Food Ban

Oops! ...It does it again

Russia has banned imports of all agri-products from Bulgaria over forged certificates from the EU country. Russia’s food safety watchdog Rosselkhoznadzor said the decision was taken after it was notified by Bulgaria that a number of phytosanitary certificates issued on its behalf were counterfeit. The watchdog suspects that the food items, which as per Bulgarian certificates were being re-exported from China, Brazil and Morocco, were actually coming from EU countries.

 

PHILIPPINES

Monkey Exports

Virus attack!

Philippines government has suspended the exports of monkey after an Ebola virus strain, which is non-lethal to humans, struck 20 monkeys in a small-sized breeding facility. Philippines is one of the world’s major exporters of laboratory monkeys. The country had shipped 600 monkeys to Japan last year and has exported close to 300 monkeys so far this year. Officials claimed that 11 out of the 20 quarantined and captive monkeys have died ever since the outbreak of the Ebola in mid-August. Philippines’ Agriculture Undersecretary for Livestock has said that the ban can last up to four years until the surveillance of a total of 7,300 monkeys in the nationwide breeding facilities is completed. Following the detection of the virus in August, the facility workers too have been examined and all of them have been tested negative for the infection. Ebola virus strains have killed over 11,000 people in last two years in West Africa.  

CALIFORNIA

Ivory ban

An even wider blanket ban

 

Thinking of selling your ivory figurines? If you happen to be in California (United States), think again! For, the lawmakers in California have effectively expanded the ban on the sale or purchase of ivory regardless of when it was first imported. The State Senate voted in favour of the bill – a move that will close major loopholes in the existing ban on sale and purchase of ivory in the state and deter killing of the mammoth animal. Although California had made the sale of ivory illegal in 1977, the state law allowed a legal trade of elephant parts imported before 1977. However, the traders continued the sale of fresh ivory items illegally by artificially aging them. Further, in a measure aimed at discouraging the alarming slaughtering of rhinos, the state has also banned sale of rhino products. Once signed by the governor, bill will become law and the sale or purchase of elephant ivory or rhino horn would become a misdemeanour. Owners of ivory or rhino products would be allowed to sell their items until July 1, 2016. Thereafter, the sales would be subject to a $10,000 per violation fine. The bill exempts antiques and musical instruments with less than 5% and 20% ivory respectively. California, in 2013, had also banned the sale of shark fins to reduce their killings. It’s worth noting that the ivory trade practice is rampant in California, San Francisco’s Chinatown and Los Angeles, as well as New York City. The material is often used for carved figurines.