What impacts economic change?

18/09/2013

By Daniel Hunter

New analysis of how countries respond to economic, political or societal change ranks the UK amongst the most robust when it comes to handling short-term negative shocks and longer-term technological risks, demographic changes, global competition and investment.

KPMG’s ‘Change Readiness Index’ (CRI) analyses 90 countries by focusing on reactions to change in their business environment, government and civil society. Produced in partnership with Oxford Economics, the CRI measures a range of indicators including the strength of national labour markets, trade policy, regulation, demographics and health.

It found that the UK ranks third in Western Europe - behind Sweden and Germany - but that its ability to recover from short-term shocks or capitalise on new opportunities is ahead of both the United States and China. According to the analysis, the UK is ranked in tenth place, marginally ahead of the US (12th place), with China coming in at twenty-eight.

Looking specifically at business environments and the ability of private and state-owned enterprises to manage change, the CRI ranks the UK 9th out of the 90 countries assessed. Britain fairs better, however, when it comes to its citizens’ ability to respond to the unexpected, only coming behind Sweden, New Zealand and Australia, in 4th place.

Alan Downey, head of public sector and KPMG’s UK lead on International Development, says: “In the face of sudden shocks and long-term change some countries are better than others when it comes to mitigating risks or seizing opportunities and it seems that the UK is amongst the most resilient.

“Of course, the way any country responds to, anticipates, and takes advantage of change has a significant impact on its ability to achieve sustained growth and share the benefits of that growth with its citizens. In Britain’s case, Government and business appear to be combining effectively to ensure that we are able to compete on the global stage, today, and become a major player, tomorrow.”

Other key findings show that Britain is well placed to handle significant societal or political changes. Closer analysis of the data shows, for example that Britain ranks:

- 1st when it comes to uptake of new technology
- 2nd when willingness and ability to develop new skills are considered
- 4th when regulation is considered, suggesting the UK’s legislative environment is ready to drive growth
- 12th when the health of the nation is factored into equations, suggesting that the workforce is able to perform at or near peak levels.

Among other key findings, the CRI revealed that wealth does not always determine a country’s ability to respond to and manage change, with a number of lower income countries ranked as having greater change readiness capability than some more developed countries. Chile, for example, ranked higher in the index than many high income countries, including the United States and France. The likes of Panama and the Philippines also outperformed the likes of Italy, Poland, Brazil and China.

“Wealth and high per capita income are closely correlated with change readiness, but income is not an insurmountable barrier to enhanced economic and social resilience,” said Alan Downey. “This is an encouraging message for lower income countries, where strong institutions and governance can provide stability in time of stress and potentially open the door to new opportunity.”

http://www.internationaltrade.co.uk/news.php?CID=&NID=2477&Title=What+impacts+economic+change%3F

The typical American family makes less than it did in 1989

The Census Bureau is out with the annual report on incomes and poverty. And while you might think that after years of stagnant incomes and elevated poverty rates, we would be inured to the depressing facts contained therein, it still somehow has the power to shock.

For my money, the most depressing fact about the economy is not the fact that household incomes were basically flat in 2012 (the real median household income was down to $51,017 from $51,100 in 2011, a statistically insignificant change). It wasn't even the fact that 15 percent of the U.S. population was living in poverty, according to the official, flawed definition of the term.

Nah, the most depressing result comes when you look at the longer view of household incomes in the United States. This chart shows real median household income over the past 25 years; that is, the money earned, in inflation-adjusted dollars, by the family at the exact middle of the income distribution.

Source: Census Bureau

Headlines about these numbers tend to focus on how we have now experienced a lost decade for the middle-class American family, with incomes back to their late 1990s level. But as the chart shows it's really worse than that.

In 1989, the median American household made $51,681 in current dollars (the 2012 number, again, was $51,017). That means that 24 years ago, a middle class American family was making more than the a middle class family was making one year ago.

This isn't a lost decade for economic gains for Americans. It is a lost generation.

http://americaneconomicalert.org/news_item.asp?NID=4762990

Hong Kong trade opportunities

17/09/2013

By Daniel Hunter

A London design and software firm has joined Hugo Swire, Minister for the Foreign and Commonwealth Office, in encouraging UK firms to take advantage of new trade opportunities in Hong Kong.

Keepthinking, with the help of UK Trade & Investment (UKTI) London, is already benefitting from a three-year contract in May worth almost £400,000 ($4.8m HKD) to design and deliver the website for the new West Kowloon Cultural District in Hong Kong.

After taking part in a UKTI London-led trade mission in May, Founder and Managing Director Cristiano Bianchi recognised the opportunities Hong Kong offers to a firm with Keepthinking’s expertise in digital design and software development for the museum and cultural sectors.

“Hong Kong has a wealthy and dynamic younger generation who is looking for something else that isn’t shopping. Their cultural needs have been somehow neglected and there is a massive heritage that is ready to be exploited," he explained.

"There are amazing collections in the current museums and galleries that aren’t displayed or even managed to their full potential and the differences with western capital cities are striking.

“In London, the number one tourist destination is the British Museum – you would not go to a museum in Hong Kong as you don’t even know they exist. Their museums and arts spaces are not promoted in the same way as the UK, which is partly why this project is in development."

Keen to expand on Keepthinking’s UK and US business, Cristiano attended a UKTI trade mission to the Asian Attractions Show in Hong Kong. As part of the visit, he had access to daily networking receptions, attended market briefings and met high-profile contacts.

“I wanted to find out what opportunities were available to us in Hong Kong. We did some background research and checked out the cultural space before going. UKTI London helped us to prepare for the visit and ensured that we met with senior people in the cultural services in Hong Kong,” said Cristiano.

http://www.internationaltrade.co.uk/news.php?CID=&NID=2474&Title=Hong+Kong+trade+opportunities

Shanghai Free Trade Zone Approved

By Annie Zhu

Shanghai has won approval from China’s State Council to set up a pilot free trade zone, according to a Ministry of Commerce statement.

A general plan governing the operation of the free trade zone, which spans 28.78 square kilometers in Waigaoqiao Free Trade Zone, Waigaoiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone in Shanghai, has yet to be released.

“When completed, the free zone will provide world-class transport and communications facilities and tax-free environment for domestic and foreign enterprises as a major hub of their supply chains in Asia,” said state-owned China Daily.

The pilot zone is a crucial move in adapting to global economic and trade development, the ministry said, adding that the pilot will help China explore a new path for opening to international trade, speed up transformation of government functions and promote economic restructuring.

 

 

Source: articles.washingtonpost.com 

 

New patent law expected to boost export links

By Daniel Hunter

UK small to medium-sized enterprises (SMEs) are expected to grow into Europe with the introduction of a new law which allows businesses to protect intellectual property across the entire EU, according to Andrew Walker, corporate partner at law firm HBJ Gateley.

The new legislation, which will come into force in January 2014, establishes a pan-EU patent law and specialised EU patent court which will help companies and inventors protect their patents across the EU while avoiding multiple litigation cases in differing legal jurisdictions.

It will replace the current system in which innovations have to be patented in each disparate legal jurisdiction, which can be extremely complex and incur significant costs.

Andrew said UK businesses with aspirations to grow across the EU or with technology which is patentable and used across the EU would be attracted by the prospect of quick and cost-effective patent protection throughout the whole EU area. According to HMRC, UK trade with the EU was worth £149.8 billion in 2012, compared with £158.2 billion in 2011.

“There’s never been an EU-wide patent before, so this represents a major change in how companies trading in the EU can protect and defend their IP," Andrew said.

“If you’ve invented a new mobile phone feature, for example, and wanted to launch it across a number of different countries in the EU and have patent protection in those countries, up until now you have had to register patents in every single country. That not only takes a lot of time but it can end up being very expensive, and it can also delay the process of protecting your intellectual property which could allow a competitor to beat you in the ‘race to register’.

“Under the new EU patent, UK SMEs are now in the much more favourable position of being able to protect their inventions across the EU in a single application. This will no doubt provide added reassurance to inventors and businesses in what is becoming an increasingly global market.”

Together with the recently introduced UK Patent Box legislation which, among other things, offers a hugely reduced (10%) corporate tax rate on profits from patents, UK-based companies are now in a much more favourable position when it comes to taking advantage of their in-house patent creations.

The change in legislation will also significantly streamline litigation for those companies which need to defend their patents across the EU, allowing a central court to make decisions applicable across all 25 European Union countries. However, Andrew warned any litigation process, whether centralised or not, is likely to be expensive and might still involve hiring more than one legal representative.

Andrew added: “Litigation is expensive whatever the circumstance. This legislation will make it easier and somewhat cheaper for companies which find themselves in court over EU patent issues and I’d always advise anyone who’s keen to defend their intellectual property to apply for the broadest protection possible.”

U.S. and China in a snowballing trade fight

BEIJING -- Trade disputes between Beijing and Washington over exports of tires, chickens, steel, nylon, autos, paper and salt are multiplying and further damaging the already tense relationship between the two economic powers.

The Obama administration says it only aims to protect the country's rights, but the Chinese counter that the United States started the whole thing by launching an unprovoked attack.
The current tensions began in September, when the United States imposed a staggering 35 percent import fee on tires from China.

Economically speaking, the tariff was minor; it only applied to a couple of billion dollars in annual imports, less than 1 percent of the total annual trade volume between the two countries. But it infuriated the Chinese, who felt it was a political concession to U.S. labor unions rather than a legitimate punishment for something they did wrong.

The feeling was that "China should not just sit there and do nothing," said Lu Bo, a researcher with the Chinese Academy of International Trade and Economic Cooperation, a think tank under the Chinese Ministry of Commerce.

China fired back at the United States with a full arsenal of its own trade complaints.
As the world begins to emerge from the worst economic crisis since the Great Depression, there is growing concern that a rising tide of tit-for-tat protectionism is slowing the recovery.

Despite world leaders' repeated promises to minimize trade barriers, protectionist measures have spiked, according to a recent study by Global Trade Alert.

At least 130 protectionist measures such as state funds, higher tariffs, immigration restrictions and export subsidies are being planned by governments around the world, the trade analysts found. The World Trade Organization, in a report released in September, noted that many members largely had avoided the protectionist measures that exacerbated previous economic crises, but it still pointed to some "slippage." The WTO estimated that "anti-dumping" disputes (which involve accusations of predatory pricing by selling goods abroad below the price in one's home country or below the cost of production) will reach 437 this year -- more than double from 2008.

The European Union, for instance, may extend duties on leather-capped shoes from Vietnam and China for another 15 months. India banned toy imports from China for six months last year and recently levied duties on Chinese telecom gear. China last month imposed provisional duties on some Russian and U.S. steel products.

Extract from http://articles.washingtonpost.com/2010-01-04/world/36768176_1_protectionist-measures-world-trade-organization-trade-disputes

Entering Trans-Pacific Partnership would boost exports by $15.7B

VANCOUVER—Canadian exports could grow by as much as $15.7-billion if the federal government pulls the trigger on entering into the Trans-Pacific Partnership (TPP), according to the Fraser Institute.

According to a new study from the public policy think-tank, joining the TPP would provide a huge boost to the national economy and help move Canada away from its dependence on the United States as a trading partner.

“With the Conservative government signalling that international trade is a top priority, the TPP offers a chance for Canada to gain a foothold in the prosperous and growing Asian markets and move the country away from trade dependence on the United States,” international trade specialist and study co-author Laura Dawson said in a statement.

“Participating in the TPP is also important to safeguard Canada’s current trade agreements, particularly (the North American Free Trade Agreement) NAFTA.”
While Dawson calculates that the TPP could provide a $9.9-billion increase in Canada’s gross domestic product (GDP), she said the agreement could be equally as important in shaping the rules of future trade agreements and ensuring gains already made, such as NAFTA, are protected so Canada does not have to undertake costly reforms to adapt to a new system.

“The era of easy trade policy gains may be over but the disciplines imposed by the TPP on investment, regulatory alignment, rules of origin and market access will, in the longer term, help increase certainty, reduce risk, and lower costs for Canadian exporters and investors in emerging markets,” Dawson said.

Entering the TPP trade agreement would secure a trade alliance between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore the U.S. and Vietnam, representing a combined economy of more than $27-trillion and about one third of global trade.

Additionally, the TPP has the potential to expand to include all Asia-Pacific Economic Cooperation (APEC) countries, providing for greater market-access gains in the future, the study.
“A significant attraction of the TPP is engaging China,” Dawson continued. “If China were to join, the TPP would become the first regional agreement to include the world’s three largest economies: the United States, China and Japan.”

The study also notes that when Canada negotiated the NAFTA and World Trade Organization (WTO) agreements in the early 1990s, issues such as electronic commerce, digital media and third-party logistics had not yet entered the commercial mainstream.

The TPP agreement provides a platform for discussing and resolving these and other emerging issues.
“If Ottawa is serious about diversifying Canada’s trade relationships, then TPP membership is a golden opportunity to do so,” Dawson said.

Souce: www.canadianmanufacturing.com

Carton board challenges wood as the base for transport packaging

PRESS RELEASE

Aug 5, 2013

Industries in all parts of the world are now thinking of replacing traditional transport packaging solutions made of wood and plywood with almost equal products made of substantially lighter and easily recyclable paper board. 
The spearhead developer and manufacturer of pallets and transport boxes as well as other transport packaging solutions based on paper board, is the Finnish Eltete Group. The company has its own factories in 15 countries and a sales network reaching in excess over 60 countries.

“But since we can’t keep pace with the growing demand alone, we are also offering turnkey production lines for the open market”, says Marko Virtanen, Eltete’s sales director of technology. “The beauty of our products is that they form a modular system that can be combined into different lightweight transportation solutions. Dimensions and other specifications are easily adaptable according to the customers' demands.”

Long track record

Eltete has been on the market for almost 40 years. The company started by producing edge boards to protect and support products and is now conquering the world with automatic lines producing paper board pallets at a pace of 10 or more pallets a minute.

Virtanen says: “When you combine a pallet with a transport box that both are made of carton and can take several tons, you can really talk about an environmentally friendly transport packaging solution.”

The package as a whole consists of honeycomb boards, stabilizing edge boards with a couple of different profiles, glue and paper cores to stabilize the feet.

“It may sound easy, but in practice it is impossible to make similar products with the same quality and low price per unit without using our technology”, Virtanen states.

New business opportunities

As an example of the possibilities to save time and money by using paper pallets, Virtanen mentions that IKEA has reported that the company reduced its transportation costs by tens of millions of euros per annum by switching to thin and light paper pallets that let them load significantly more goods into trucks and containers.

““We have not contributed to IKEA’s solution, but we can help other companies to make the same difference in their businesses”, Virtanen says” We can either supplement the products or the production lines and raw material knowledge. The investments’ payback time can be calculated accurately.”

In the beginning of June Eltete shipped an automatic production line for producing paper pallets to a Japanese paper roll core manufacturer that is broadening the line of business into logistics.

“We have had a business relation with the company regarding other products for a decade, but the new plant will be a totally new line of business for them”, Virtanen says. ”With relatively small additions to the pallet production line it possible for them to manufacture for example boxes, since they will already have many of the production modules ready at hand.”

Source: www.joc.com

Trade protectionism still on rise across the world

Brussels, 09/02/2013
Global efforts to battle trade protectionism need to be reinforced to help shield the fragile economic recovery across the world. In a report released today, the European Commission identified about 150 new trade restrictions introduced over the last year, whereas only 18 existing measures have been dismantled. A total of almost 700 new measures have been identified since October 2008, when the European Commission started monitoring global protectionist trends.
Although the trend is slower than it was in 2011 and 2012 and despite signs of a recovery in the global economy, there has been a worrying increase in the adoption of certain highly trade-disruptive measures.

"All of us need to stick to our pledge to fight back against protectionism. It is worrisome to see so many restrictive measures still being adopted and virtually none abolished," said EU Trade Commissioner Karel De Gucht. “The G20 agreed a long time ago to avoid protectionist tendencies because we all know these only hurt the global recovery in the long run."
Trade protectionism is an important point on the agenda of the G20 Summit taking place in Saint Petersburg on 5 and 6 September 2013.
Main conclusions of the Report

• There has been a sharp increase in the use of measures applied directly at the border, especially in the form of import duty hikes. Brazil, Argentina, Russia and Ukraine stand out for having applied the heaviest tariff increases.
• Measures forcing the use of domestic goods and relocation of businesses have continued to spread, especially in government procurement markets. Brazil accounted for more than one-third of restrictions related to government procurement, followed by Argentina and India.
• The EU's partners have also continued applying stimulus measures, in particular supporting exports. Some of them took form of comprehensive, long-term and highly competition-distorting policy packages.
• Some countries continue to shield some of their domestic industries from foreign competition to the disadvantage of their consumers and other industry sectors. Brazil and Indonesia provide the most striking examples of this approach.

Background

The 10th “EU Report on Potentially Trade-Restrictive Measures" provides the latest state of play regarding potentially trade-disrupting measures implemented by the EU's main trading partners between 1 May 2012 and 31 May 2013. The European Commission's Directorate General for Trade prepared the Report with the support and approval of the EU Member States. Reporting activities started in October 2008 after the outbreak of the economic and financial crisis. Their objective is to take regular stock of the extent to which G20 countries comply with their commitment – made initially at the G20 Summit in November 2008 in Washington DC – not to resort to trade restrictive measures and to remove those in place without delay. The EU is firmly committed to this pledge. Its own current report complements and confirms findings of the monitoring report issued by the WTO in cooperation with UNCTAD and the OECD on 17 June 2013.

The report covers 31 of the EU's main trading partners, including the G20 countries. These are: Algeria, Argentina, Australia, Belarus, Brazil, Canada, China, Ecuador, Egypt, Hong Kong, India, Indonesia, Japan, Kazakhstan, Malaysia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, Russia, Saudi Arabia, South Africa, South Korea, Switzerland, Taiwan, Thailand, Turkey, Ukraine, USA, and Vietnam.

Source: www.internationaltradenews.com

Business Secretary suspends 49 export licences to Egypt

By Daniel Hunter

On 21 August 2013, in response to the increasing levels of violence in Egypt, the member states of the European Union agreed to suspend all export licensing for equipment which might be used for internal repression. Following advice from the Foreign and Commonwealth Office, the Department for Business, Innovation and Skills has suspended 49 extant licences.

This suspension applies to licences for the Egyptian Army, Air Force and internal security forces or Ministry of the Interior. It applies to applications for new licences as well as extant licences and will continue until further notice.

Business Secretary Vince Cable said:

The UK position is clear: we will not grant export licences where there is a clear risk that goods might be used for internal repression. The government takes its export responsibilities very seriously and operates one of the most rigorous arms export control regimes in the world.

We have already taken action to restrict exports to Egypt. As a result of the developing situation in Egypt, we have agreed with EU partners in this instance to go further and suspend all export licences for goods which might be used for internal repression. By acting together, we want to send a clear signal that we condemn all violence in Egypt.

This suspension will be kept under review until such time as conditions in Egypt indicate that it is appropriate to lift these restrictions.

In July 2013, five licences were revoked to Egypt after the government assessed that they were inconsistent with internationally recognised criteria used to assess export licences - specifically concerns about the potential for exports to be used for internal repression. The licences were for small arms/firearms components, armoured vehicle components and communications equipment.

The 49 licences now suspended cover a wide range of equipment, including spares for helicopters and aircraft, specialist software and communications equipment.

Source: www.internationaltrade.co.uk