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

10 Good Things About Obamacare

Key elements of the Affordable Care Ac have been delayed, most notably the mandate that employers with more than 50 employees must offer health insurance in 2014. In the case of the law's ill-formed, long-term care program, the provision wound up being abandoned. And when it comes to state decisions to expand Medicaid, the law's provisions have been denied in many states.

Opponents say these steps prove the entire law was misguided and should be tossed out. Supporters argue that such a sweeping set of changes is bound to encounter obstacles, and smart, well-intentioned people should adjust and put the beneficial provisions of the law into practice.

usnews.com

With Congress unlikely to agree on any meaningful changes to Obamacare, here is a look back at the many health care changes that have been triggered by the 2010 law. Here are 10 that Americans should be happy are in place:

1. Goodbye doughnut hole. Medicare drug plans (Part D of Medicare) stop providing insurance to people after their claims for covered drugs hit a certain level ($2,970 in 2013), and coverage doesn't resume until spending hits another level ($4,750 in 2013). Health care reform is closing this doughnut hole in annual stages, and it will be totally closed by 2020. Savings to Medicare beneficiaries will be in the tens of billions of dollars.

2. Free Medicare preventive services. Health care reform greatly expanded the menu of free preventive services to Medicare consumers.

3. Free preventive services to all women. Health insurance plans have added eight women's health benefits because of the law, in areas including breastfeeding, contraception, domestic violence, gestational diabetes, HIV screening and counseling, sexual diseases and wellness visits. These benefits are free, meaning they involve no co-payment or co-insurance, and women don't need to meet their plan deductibles to use these free services.

4. Pre-existing conditions. Beginning in 2014, no one can be denied health insurance because of a pre-existing medical condition.

5. Premium equity. Insurers can't gouge people with pre-existing conditions by forcing them to pay unreasonably high premiums. The law also limits insurers' ability to impose age-related premium increases for private coverage.

6. End of pre-existing restrictions on children's access to health insurance. The law has ended insurance denials based on pre-existing conditions for the roughly 20 million children under age 19.

7. Adult dependent insurance coverage. Adult children up to age 26 can now continue to get health insurance on their parent's policies.

8. Insurance payout limits. The law will end lifetime limits on insurance payouts. It also has been phasing out annual coverage limits, and these will be completely outlawed for insurance plans taking effect next year.

9. Minimum medical loss ratio for insurers. Health insurers must spend at least 85 percent of their premium dollars on health care (80 percent for smaller group plans) or rebate shortfalls to consumers.

10. New consumer health coverage reports. Consumers have begun receiving a standardized report explaining their health insurance. This seemingly modest accomplishment is actually a big deal. For the first time, different health insurance plans have to present their coverage details in the same format, using the same language. Consumers can now accurately compare different health insurance plans.}

Twitter: @PhilMoeller

Source: usnews.com

Spices exports up 22% in FY'13 to 7 lakh tonnes

The nutrition post

NEW DELHI: Spices exports rose by 22 per cent to 6,99,170 tonnes during 2012-13 on account of sharp jump in garlic shipments.

Total exports stood at 5,75,270 tonnes in the previous fiscal, as per the data of Spice Board of India.

In terms of value, spices exports increased by 14 per cent to Rs 11,171.16 crore during last fiscal from Rs 9,783.42 crore in 2011-12.

The exports, in terms of both quantity and value, were higher than the target. The board had fixed the spices exports target at 5,66,000 tonnes and Rs 8,200 crore for 2012-13.

According to the data, there was almost ten-fold jump in the exports of garlic to 24,000 tonnes in 2012-13 from 2,200 tonnes in 2011-12. In terms of value, garlic exports jumped more than four times to Rs 74.49 crore in the current fiscal from Rs 14.15 crore a year ago.

Exports of chili, which is the biggest contributor to the total exports of spices in terms of quantity, rose by 17 per cent to 2,81,000 tonnes during 2012-13 from 2,40,000 tonnes in the previous fiscal.

Besides garlic, fennel and cumin also recorded increase in the exports during 2012-13.

Shipments of fennel increased by 80 per cent to 14,575 tonnes in 2012-13 from 8,100 tonnes a year ago valued at Rs 114.02 crore.

Cumin exports increased by 76 per cent to 79,900 tonnes in 2012-13 from 45,500 tonnes previous year valued at Rs 1093.17 crore.

However, exports of pepper and cardamom registered a decline of 40 per cent and 52 per cent, respectively, in 2012-13 as compared to the previous fiscal.

India is the world's leading spice producer, exporter and consumer.

Source: economictimes.indiatimes.com

Uncompetitive imports call for relook at India's China trade policy

KOLKATA: Is India enriching China and allowing it to occupy our land?

A study shows India pays more for goods from China that it could buy from elsewhere at a lower price since the era of cheap Chinese goods appears to be coming to an end. The land of dragons has struggled to keep its cost competitiveness going because of rising wages, land prices and taxes. The ascent of the renminbi or yuan has also made the world's largest manufacturer more expensive. The Sino-Indian bilateral trade took off during the last decade to nearly $70 billion (about 4.2 lakh crore) at the end of 2012 and is expected to touch $100 billion (about 6 lakh crore) in 2015. It certainly looks impressive, but the magnitude of uncompetitive imports calls for a relook at the bilateral trade policy, argues Prof SK Mohanty, who did a study on Sino-India trade relationship on behalf of the Reserve Bank of India

The volume of uncompetitive imports from China rose from $4.49 billion in 2007 to $7.15 billion in 2008, but declined to $6.6 billion in 2009. The relative size of this to total imports was very high, ranging from 18.6% in 2007 to 25.4% in 2008. In fact, nearly one-third of 3,876 items imported by India in 2009 proved costlier.

"It is a matter of concern as the share of uncompetitive products in total is increasing over a period of time. They are both in terms of the number of products imported and also in value terms," says Prof Mohanty of Research and Information System for Developing Countries in the study titled 'India China Bilateral Trade Relationship'.

Uncompetitive imports are concentrated in four sectors -- chemicals, textiles, base metals and machinery with about 75-80% share of total uncompetitive imports during 2007-09. Imports of minerals, plastics, gems & jewelleries, and automobile parts from China have also turned out to be uncompetitive. The combined share of these eight sectors exceeded 93% of total uncompetitive imports during 2007-09.

Many believe the rising labour cost in China is to be blamed primarily. In fact, China is gradually withdrawing from the lower end of the textile sector, and if the trend continues, the production base of textiles and clothing will slowly shift to other countries, as has been the case with the textile industries of a number of East Asian countries in the past.

This could prove a blessing for India which has a large textile sector. Prof Mohanty suggests India should start preparing itself by getting into partnership with foreign firms to establish production centres on its shore for mass production of garments. "The Chinese phase-out from the garment industry may be an opportunity for India to replace it in the global market in a phased manner."

The automobile industry both in India and China has expanded rapidly during the last two decades and India enjoys a competitive edge in auto components, small-cars and two-wheeler segments. However, the study showed that India's imports from China in these product segments are turning out to be uncompetitive, and imports of these products can be managed efficiently from other competitive suppliers. India is also emerging as competitive player in the niche area of auto designing, which is related to the IT sector.

These trends indicate Indian firms can venture into the Chinese market in certain segments though they are likely to face strong competition from various domestic firms and also from other foreign competitors. The distribution of uncompetitive imports was skewed across various technology intensive sectors. While uncompetitive import growth was 43% per annum for medium-tech, similar estimates for the high-tech sector was 102.2% during 2007-09. India's imports in these two sectors are likely to grow in future in view of the current emphasis on industrialisation as discussed in the country's new manufacturing policy.

As an emerging country, India's import of intermediate products has been important for fostering industrialisation, meeting domestic demand and addressing its export needs. India is likely to gain from its engagement with China, but a realignment of the product basket may be needed to preserve India's long-term interests. This requires restructuring of India's domestic and external policies in the first place.

Source: economictimes.indiatimes.com

Obama's Ambitious Trade Agenda

By Patrick Christy

At a time when the U.S. economy is struggling to recover, President Obama has thrown his support behind talks for two ambitious trade deals aimed at reducing trade and investment barriers in the Asia-Pacific and Europe. While the two free-trade agreements are far from completion, both would strongly benefit the United States economically and strategically.

Friends with Economic Benefits
First, the United States and the European Union are set to start negotiations for a comprehensive trade and investment pact sometimes known as the Transatlantic Trade and Investment Partnership (TTIP). With the two sides exchanging roughly $2.7 billion in goods and services each day, American and European economies already make up the world's biggest and most prosperous market – roughly 54 percent of global gross domestic product (GDP) in terms of value, or 40 percent of global GDP in terms of purchasing power.

At a time when the 27-nation European Union is still grappling with residually high unemployment and stagnant growth, further reduction of America's and Europe's already low tariff levels and trade barriers could reinvigorate elements of both economies. A study conducted by the U.S. Chamber of Commerce suggest that eliminating transatlantic tariffs alone "would boost U.S.-EU trade by more than $120 billion within five years."


In a Wall Street Journal op-ed, Stormy-Annika Mildner of the German Institute for International and Security Affairs and Claudia Schmucker of the German Council on Foreign Relations add: "Eliminating tariffs could, in the long run, add 1.33 percent annually to U.S. GDP and 0.47 percent to EU GDP, according to the research firm Ecorys. Substantially lowering non-tariff barriers would add 0.28 percent annually to U.S. GDP and 0.72 percent to EU GDP."

Second, the United States is engaged in negotiations for a Trans-Pacific Partnership (TPP) agreement that would promote economic integration and liberalization with 11 other countries – namely, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The proposed pact would level the playing field throughout portions of the Pacific Rim for American goods by reducing tariffs from member states over a ten year period.
A number of Asian economies would also be forced to decrease support for state owned businesses, opening new markets for a number of U.S. companies. The TPP's eventual goal would be to create vast free-trade zone across the entire Pacific that would encompass approximately two-fifths of the world economy.

Friends with Strategic Benefits
In addition, these two agreements would enhance U.S. strategic interests.
The TPP is a key component of the Obama administration's "rebalance" to the Asia-Pacific. Similar to the U.S.-South Korean free-trade agreement (enacted in 2012), the TPP would strengthen long-term strategic ties with key allies and partners, and ensure America's economic presence in the region for years to come. At the same time, new market opportunities would decrease the region's overreliance on trade with China

Equally important, the agreement would encourage further economic and political reforms among TPP nations, notably non-democratic Vietnam. Asia's post-World War II history shows that close economic cooperation with emerging nations can profoundly advance America's pro-democracy agenda – look no further than Japan and South Korea, both of which once had militaristic regimes. As President Obama stated in his November 2011 address to the Australian Parliament, "over the long run, democracy and economic growth go hand in hand. And prosperity without freedom is just another form of poverty."

The U.S.-E.U. agreement would reinvigorate relations between Europe and the United States at a time when many European leaders worry  that the Obama administration's "rebalance" to the Asia-Pacific will come at the expense of transatlantic ties. Despite occasional differences on both sides of the Atlantic, the United States and Europe are bound by history, common interests, and shared values.
In particular, European nations who are aligned with NATO remain America's strategic partners of "first resort" – countries that the United States works with in concert on key international matters. Indeed, NATO's 2011 mission in Libya and ongoing efforts in Afghanistan reflect these common interests and shared values.

Rising Challenges and Opportunities
In order to realize the economic and strategic benefits of these two agreements, there are important steps that policymakers and lawmakers in Washington should take.

First, the Obama administration must genuinely lead on the trade agenda. Trade negotiations can be long, difficult and sometimes frustrating, even more so when they involve multiple countries. TPP negotiations are still behind schedule, despite President Obama's 2009 words of support for the TPP and 16 rounds of multilateral talks.

Without strong and proactive U.S. leadership on trade, talks with the European Union could get bogged down as well. French trade minister Nicole Bricq is already urging negotiators to move at a slower pace. President Obama must make clear that these two pacts are key pillars of his second term agenda. Failure to do so risks endless delays and fewer economic opportunities – and jobs – for Americans.
Second, lawmakers should use congressional oversight hearings, public statements, and even legislation to make clear to the Obama administration that these two trade pacts are top priorities. Despite political gridlock in Washington, trade enjoys broad support on Capitol Hill. For example, when President Obama finally submitted free-trade agreements with Colombia, Panama, and South Korea for congressional approval in 2011, lawmakers moved quickly to ensure their passage with bipartisan support.

Third, lawmakers should renew the White House's trade promotion authority (TPA). House Ways and Means Committee Chairman Dave Camp has argued TPA would give the President "the tools to move more job-creating trade agreements." Previous "fast-track" authority – which expired in 2007 – had authorized the President to enter into trade agreements with foreign nations and required lawmakers vote on those agreements, without amendments, within 90 days of being submitted to Congress. However, Democrats in the House of Representatives changed the rule in April 2008 in order to block consideration of President Bush's free-trade agreement with Colombia, effectively shelving the agreement for the next three years.
President Obama noted in his State of the Union address that free-trade deals with Europe and the Asia-Pacific are in America's economic and strategic interests. With Democrats and Republicans behind him, the White House should work quickly to ensure both agreements become reality.

Source: usnews.com

3 Key Trade Trends the U.S. Can't Ignore

By Edward F. Gerwin Jr

When America debated the North American Free Trade Agreement in 1993, Groundhog Day – a film about doing the same things over and over – was a box office hit. Since then, our trade debates have often been like Groundhog Day, with trade supporters and critics repeatedly recycling well-worn talking points. But before everyone dusts off old scripts for upcoming debates about trade deals with Asia and Europe, it's worthwhile to consider what America might learn from more recent trade developments – especially those currently happening outside the United States.

The Jersey Journal, Reena Rose Sibayan /AP Photo

Three trends in global trade highlight why it's more vital than ever that America continue to play a strong role in writing robust rules for trade.


1. America's Not the Only Game in Town. As America works to conclude a Trans-Pacific Partnership trade deal and to ramp up new trade talks with the European Union, it's important to remember that other major economies are also pursuing a bevy of new trade deals.

There are already hundreds of trade agreements in force among groups of countries that don't include the United States, with many more under negotiation. The EU, for example, is negotiating agreements with Canada, India and Japan. And China, Japan and South Korea have begun talks on a pact that would boost trade among the world's second-, fourth- and twelfth-largest economies. These three countries – together with 13 regional neighbors – are also negotiating a massive Regional Comprehensive Economic Partnership that would tie together 16 countries with a combined GDP of over $26 trillion. For the United States, the implications of growing trend are clear – if we don't continue to engage in developing new norms for global trade, global competitors like China surely will.

2. Not Everyone Shares America's Priorities. In negotiating for the Trans-Pacific Partnership and other trade initiatives, America traditionally seeks comprehensive agreements that cover the full range of trade-related challenges in the global economy: expanding market access for American goods and services, advancing rules to protect U.S. investments and intellectual property, eliminating non-tariff barriers and promoting important ideals like labor rights and environmental protection.

In contrast, other countries often take a much more limited, low-standard approach to the role and content of new trade agreements, frequently excluding a wide range of products and services and ignoring vital issues. Take the new China-Japan-Korea trade negotiations: When they recently outlined the key topics for their trade talks, China, Japan and Korea did not include issues that the United States regards as critical, such as information technology, the environment and labor and employment.
For American businesses, workers and consumers, this means that we can't count on others to forge new trade rules that reflect our priorities and values.

3. Other Countries Lack America's Leverage.  Over the last two decades, America has concluded comprehensive trade deals with 20 countries. We've significantly opened up foreign markets and advanced U.S. commercial interests – and key values – by employing our significant leverage in two ways:

• First, access to our $15+ trillion economy provides a major inducement to other countries to eliminate barriers, adopt fair rules and enforce environmental and social protections.

• Second, because U.S. trade agreements are comprehensive – with few carve-outs or exclusions – our negotiating partners must broadly open their markets if they want to reach a trade deal with the United States.

The many other countries currently negotiating new trade deals often have much less leverage than the United States. Smaller countries that share important values with the United States have often had less success in advancing these principles because they offer only limited market access. And larger economies that take large numbers of products and issues off the negotiating table often lose the leverage they need to get the concessions they want. This is likely one reason, for instance, why Japan was recently unsuccessful in including labor and the environment as priority issues in its trade talks with China and Korea.

The United States brings substantial leverage to trade negotiations. But to maximize this leverage our own trade offers must remain truly comprehensive, and we must resist the urge to keep protected sectors off the negotiating table.

The global economy will continue to see a proliferation of new trade agreements in the years ahead. But who will write them? What will they say? Will countries like China increasingly be able to advance low-standard deals that ignore commercial priorities and values that are critical to America? Or will America stay in the game, work with like-minded nations, and use our considerable leverage to forge deals that reflect our key interests and vital principles?

As America prepares for important trade debates, it's time to revise our scripts to ensure that they answer these critical new questions.

Source: usnews.com

What Paintbrush Makers Know About How to Beat China

By  ADAM DAVISON Published: June 18, 2013

As I toured Israel Kirschner’s Bronx paintbrush factory earlier this month, I couldn’t stop feeling amazed that it was still in business. Many days, Kirschner feels the same way. The charming, energetic 69-year-old joked about his ancient equipment (“That could be 100 years old,” he said of a bristle-cleaning machine); his two least-committed employees, his son and daughter (“They come late, they leave early”); and how his business has been increasingly undercut by Chinese manufacturers. After introducing me to his star brush maker, Fermin Gil, a Mexican immigrant who “can just see” when a brush isn’t right, Kirschner handed me a one-inch boar-bristle brush with a wooden handle. A Chinese manufacturer sells it for 30 cents. If he made it himself, he told me, it would cost significantly more. 

Chinese manufacturers long ago wreaked havoc on the U.S. textile, apparel, toy and electronics industries, but the disruption came slowly to the brush business. There are simply so many types of brushes for so many applications that many Chinese manufacturers thought the business wasn’t worth the hassle. For decades, China lagged behind in the main categories (toothbrushes, brooms, mops and, of course, paintbrushes) and only dominated the lowest rung of the business — extracting bristles from boars. “It’s dirty, smelly, foul work,” David Parr, executive director of the American Brush Manufacturers Association, told me. “Nobody wants to go to West Texas to try to catch a boar and figure out how to get the bristles off him.”

Illustration by Jasper Rietman

The collapse of the housing market in 2007 and the subsequent recession turned out to be a boon for China’s brush exports. With far less construction and far fewer jobs, not as many people needed paintbrushes (or brooms or toothbrushes). Those who did need them chose cheap imports over more expensive products made in America. Retailers, who stood to make more from the cheaper products, jumped at the opportunity to sell them. Now everyone in the business has to account for the Chinese.

That’s a familiar story for U. S. manufacturing. The strange thing here is that there are still more than 200 brush, broom and mop makers in the U.S. These companies have employed two strategies to stave off Chinese competition: 1) change everything all the time, or 2) don’t ever change a thing. Kirschner hasn’t changed a thing. He makes brushes the very same way, employing many of the same machines, that his father did 50 years ago. He told me that he sticks with the old ways because, unlike with toys and T-shirts, a big chunk of the brush business caters to professionals who aren’t merely shopping for price but rather for quality. 

Michael Wolf, who runs the Greco Brush Company, a supplier to professional house painters, told me that his customers need to know before each job that every single bristle on every single brush will be attached properly. One loose fiber left on a wall can damage a painter’s reputation, which in turn can hurt Wolf’s too. Wolf said that he can buy brushes for between a quarter and a dollar cheaper in China, but he is never sure exactly what he’ll get. Some orders are shoddy; others never arrive. So Greco sticks with the company he knows. “My father did business with his father back in the ’50s,” Wolf told me. “We’re keeping it going, the two of us.”

At the other end of the business is Lance Cheney, 53, the fourth-generation president of Braun Brush, who told me that he would close his company rather than make the same kind of brush, the same way, for 50 years. He is constantly creating innovative brushes so that he never has any competition. Cheney makes a beaver-hair brush that’s solely for putting a sheen on chocolate. He sells an industrial croissant-buttering brush and a heat-resistant brush that can clean hot deep fryers. His clients, he said, now include General Mills (he made a brush for their cereal-manufacturing line) and the energy industry (a line of expensive brushes for cleaning pipes in nuclear reactors). He even developed Brush Tile, fuzzy panels used in artistic wall hangings. He said his proudest creation is a tiny brush that helped Mars rovers dust debris from drilling sites. When 

Cheney sees other firms making one of his brushes, he often drops the product rather than enter a price war. Braun Brush, he said, has grown at 15 to 20 percent annually for the past five years.

Kirschner’s don’t-change-a-thing strategy has not brought anything like this kind of growth. Last year, he says, “was a disaster.” As was this spring. But June, so far, has been “unbelievably good.” Many of his customers are governmental agencies that prefer “Made in the U.S.A.” products or have precise needs that Chinese imports can’t yet fill. Some of the paint on New York City subways and Texas prisons, for example, was applied by Kirschner brushes. 

(Extract)

Sourse: ntymes.com 

Japanese, Australian Stock Futures Advance on U.S. Retail Sales

Japanese and Australian stoc futures rose after a report showed U.S. retail sales unexpectedly advanced in April, buoying the earnings outlook for Asian exporters.

American Depositary Receipts of Toyota Motor Corp. (7203) a Japanese carmaker that gets 75 percent of its revenue overseas, rose 1.1 percent from the closing share price in Tokyo. Those of Nomura Holdings Inc. (8604), Japan’s biggest brokerage by market value, gained 1.3 percent after its shares surged yesterday to the highest level since 2008. ADRs of BHP Billiton Ltd. (BHP), Australia’s biggest oil producer, fell 0.7 percent after crude slid for a third day.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 14,870 in Chicago yesterday compared with 14,820 in Osaka, Japan. They were bid in the pre-market at 14,850 in Osaka at 8:05 a.m. local time. The Nikkei has been the top-performing major equity gauge since mid-November, surging more than 70 percent amid unprecedented monetary easing from the Bank of Japan. Futures on Australia’s S&P/ASX 200 Index added 0.3 percent today. New Zealand’s NZX 50 Index was little changed.

The U.S. retail sales report “indicates that perhaps sequester spending cuts haven’t had a bigger impact on the underlying economy than expected and that’s a good thing,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “BOJ quantitative easing is still going to have a big impact on Japanese markets, driving equities higher and potentially driving bond yields higher.”

RWI/ISL Container Throughput Index increased in May

Essen, 06/25/2013
The seasonally adjusted RWI/ISL Container Throughput Index increased to 115.7 in May after a corrected 115.1 in April. However, the increase was not strong enough to even out the previous month’s decrease. All in all, the index indicates that the trend underlying world trade remains weak.

The April value of the index was corrected upwards by 0.4 point since last month. This was first and foremost a result of the recalibration of seasonal factors. The unadjusted index was increased by a mere 0.1 per cent, a minor revision compared with the to-date average. Just like last month, the current flash forecast for May is based on a sample of 41 ports handling roughly 75% of the traffic represented in the Index.

The Index is based on data of 73 world container ports covering approximately 60% of worldwide container handling. The ports are continuously monitored by the ISL as part of their market analysis. Because large parts of international merchandise trade are transported by ship, the development of port handling is a good indicator for world trade. As many ports release information about their activities only two weeks after the end of the respective month, the RWI/ISL Container Throughput Index is a reliable early indicator for the development of international merchandise trade and hence for the activity of the global economy.

Source: internationaltradenews.com 

Regional integration key to Africa’s future competitiveness

By Daniel Hunter

The strides made by African economies in achieving economic growth must be accompanied by efforts to boost long-term competitiveness if the continent is to ensure sustainable improvements in living standards finds a new report, the Africa Competitiveness Report 2013.

The report, themed Connecting Africa’s Markets in a Sustainable Way, is jointly produced by the African Development Bank, the World Bank and the World Economic Forum. Regional integration is a key vehicle for helping Africa to raise competitiveness, diversify its economic base and create enough jobs for its young, fast-urbanizing population. The report maps out the key policy challenges in establishing closer regional integration:

- Closing the competitiveness gap: Africa’s competitiveness as a whole trails other emerging regions – especially in quality of institutions, infrastructure, macroeconomic policies, education and technological adoption – while big gaps persist between its highest and lowest ranked economies. The report assesses Africa’s success in creating the social and environmental factors that are necessary to address or mediate these gaps.

- Facilitating trade: Africa’s exports remain too heavily focused on commodities and its share of world trade remains low, despite numerous regional economic communities and domestic market liberalization. Intra-African trade is particularly limited. The report identifies cumbersome and non-transparent border administration, particularly import-export procedure, the limited use of information communication technologies (ICT) and persistent infrastructure deficit as major barriers to higher levels of regional integration. It also shows that these challenges are particularly pronounced for Africa’s landlocked economies.

- Building better infrastructure: Africa’s infrastructure deficit presents a serious impediment to regional integration, a problem that is made more pronounced by growth in consumer markets and urbanization. Developing adequate and efficient infrastructure will assist African economies to increase productivity in manufacturing and service delivery, contribute to improvements in health and education and help deliver more equitable distribution of national wealth. The report examines how developments in energy, transportation and ICT can be deployed to maximize the benefits of regional integration.

- Investing in growth poles: Defined as multi-year, generally public-private investments aimed at accelerating export facing-industries and their supporting infrastructure, growth poles represent important ways of building productive capacity and boosting regional integration through the attraction of investment. As the World Bank has invested in growth poles for a number of years, the report looks at how best practice can be deployed to deliver further benefits across the continent.

“Africa’s growth needs to be seen in the wider international context, where encouraging gains in economic growth belie an underlying weakness in its long-term competitiveness. Regional integration is key to addressing this weakness through the delivery of wider social and economic benefits and should be prioritized by Africa’s leaders as they look to ensure that Africa delivers on its promise,” said Jennifer Blanke, Chief Economist, World Economic Forum.
Source: internationaltrade.co.uk

British companies look to emerging markets for growth

By Daniel Hunter

Asia has over-taken the European Union as the market in which exporters expect to see the most growth over the next five years, new research from the Institute of Directors (IoD) and the All Party Parliamentary Group on Trade and Investment reveals.

The report, launched yesterday (Tuesday) in the Houses of Parliament, also shows that Asia has moved ahead of North America as a destination for UK exports.

The report presents the findings of a Policy Voice poll of 1,162 IoD members which ran from Wednesday 14th November until Friday 23rd November 2012.

Key Findings

EU is still the top destination for exports…

The European Union remains the market in which most IoD members are active. However, the percentage of IoD members trading in the EU is falling (from 84% to 82% between 2010 and 2012), whereas the percentage in Asia is on the rise (from 39% to 47%). The EU was the only market to see a decrease in activity, with strong growth in the Middle East in particular (38% in 2010 to 44% in 2012). For the first time, IoD members are more likely to trade in emerging Asian markets than with the mature markets of North America (47% to 46%).

…but businesses expect faster growth elsewhere

Asked which markets they expected to deliver export growth over the next five years, Asia came out top, with 50% of IoD exporters optimistic about their prospects there. Compared with two years ago, members are far more pessimistic about future trade with Europe. Only 43% anticipate their export activity to grow in the EU over the next five years, a fall from 58% in 2010.

Exporting remains difficult for small businesses

In order to reduce our trade deficit, more businesses must be encouraged to export. The survey reveals that 57% of IoD members export, considerably higher than the national figure of 31%, indicating that there is scope for more UK companies to begin exporting. Half of members gain less than a third of their turnover from exports, showing that there is also significant potential for expansion by existing exporters.

However, the risks associated with exporting still put off small companies. 35% of businesses said their organisation was just too small to export. Worryingly, 72% of companies which had never exported said they had no plans to do so.

Commenting on the research, Alexander Ehmann, Head of Enterprise Policy at the IoD and author of the report, said: “Given the on-going troubles in Europe, it is perhaps not surprising that exporters are looking to emerging markets for growth. Expansion into new markets is critical if the UK is to address its truly alarming trade deficit. Policy-making should focus first on encouraging those firms for which export activity is only a small part of their business to expand to greater levels.”

Margot James MP, Chair of the APPG on Trade and Investment, said: “I’m delighted that the APPG and the IoD are able to contribute to the debate around Britain’s international trade activity and pleased by the positive conclusions in this report. Growing exports is fundamental to the success of the government strategy of re-balancing the economy, and it is our job to help remove the barriers facing exporters whilst also working to encourage more of our world class British businesses to take their products and services abroad.”

|International Trade News|

European Leaders’ Softening on Austerity May Accelerate

By Patrick Donahue

Europe may accelerate a shift away from its austerity-first agenda this week as the new Italian government changes course and a German-Spanish investment pact underscores a renewed focus on combating record unemployment.

Yesterday’s swearing in of Italian Prime Minister Enrico Letta ends a political deadlock nine weeks after voters rejected the country’s budget-cutting course. German Finance Minister Wolfgang Schaeuble, a champion of austerity, will travel to Spain today to unveil a plan aimed at spurring investment in Spanish companies. Later this week, the European Central Bank may also cut interest rate at a meeting.

 

“You have to react to economic developments -- we do so in Germany,” Schaeuble told members of Chancellor Angela Merkel’s Christian Democratic Union in Berlin last week. “We are not bureaucratic; we are not stupid.”

The new Italian government’s pledges to dismantle parts of the budget-cutting project undertaken by ousted premier Mario Monti open a new front in the debate over the German-led policy of austerity to overcome the bloc’s debt crisis. As the 17- member euro area remains mired in recession, European leaders are joining global critics in urging the bloc to devote more resources to boosting economic growth.

 

Italian bonds strengthened for a fourth week last week, with 10-year yields dropping below 4 percent for the first time in almost 2 1/2 years. As the two-month political gridlock ended, speculation also about the ECB’s possible rate cut.

|Bloomberg| Fragment

 

 

 

How foreign companies evaluate the Russian market

A clear verdict – falling both positively and negatively – is how member businesses of the Committee on Eastern European Economic Relations and the German-Russian Chamber of Commerce (AHK) evaluate the business climate in Russia in 2013 according to a recent survey. International Trade News lays out the arguments on both sides

ADVANTAGES:

 

Securing growth and profit
The companies surveyed see opportunities for growth and profit as the greatest advantage of the Russian market. They are followed by the market’s great consumer demand, and in third place, its perceived low tax burden.

Where the action is: the energy, automobile and construction industries
The energy market – including electricity, oil and gas – is an unchallenged market primed for the future. Industry leaders also expect strong chances for growth in the coming years in the automobile industry and in construction.

Business situation looking slightly up
Compared with 2011/2012 figures, the business situation is improving for many survey respondents. Roughly 13% describe their situation for 2012 as being ‘very good.’ Just a year before, only 10% evaluated it in such a way. At mere 3% (in 2011, 9%) said their situation was ‘bad.’

Hungry for investment
The survey’s respondents want to invest in new employees and facilities. Almost two thirds (65%) plan new hires. Roughly half (49%) are pursuing con-crete investment plans, which they estimate at about 800 million EUR. Since just a third of businesses provided concrete sums, the total amount being invested is assumed to be in the billions.

Russia’s joning into the World Trade Organization shaking up business
Over three fourth of respondents expect Russia’s joining into the World Trade Organization to invigorate Russia’s business climate in 2013.

Top locations Moscow and St. Petersburg
A ranking of Russian business locations with the best investment climates: Moscow, St. Petersburg, Tatarstan, Krasnodar (in the Olympics region) and Nizhnij Nowgorod.
                                          
DISAVANTAGES:

The industrial ‘Mittelstand’ does not exist in Russia
Russia’s midsize businesses are still not a motor for industrialization, which also has negative consequences for foreign businesses. An estimated three fourths of all medium-sized Russian firms are considered part of the service industry or come from trade.

Supply structures are weak
German investors complain about the lack of supply structures for midsize firms in Russia.

Acute lack of skilled professionals
Russian businesses and foreign investors alike are suffering from an acute lack of highly specialized skilled professionals – especially outside of metropolitan areas.

Exasperating bureaucracy
Bureaucratic structures can create time-wasting barriers to investment projects. One example here is the very long process to obtain permits.

Corruption
Businesses see bureaucratic hurdles as the second greatest hindrance to investment. On the Corruption Perception Index of 2012, put together by Transparency International, Russia is far down the list – at 133rd place.

|International trade news|

UK targets Brazilian market for automotive sector growth

By Daniel Hunter

British businesses in the automotive sector were given a boost when the Business Secretary confirmed the opening of a new Vehicle Certification Agency (VCA) office in Sao Paulo. The VCA office will allow manufacturers in the auto sector to export more easily to emerging markets in South America.

Automotive exports from the UK are at an all time high, with five out of every six cars produced in the UK being exported. Brazil has been identified as an important growth market for the sector.

The government is determined to build on the success of the automotive sector and is aiming to publish its automotive strategy in the summer. Ahead of this, the government has taken the decision to open a Vehicle Certification Agency (VCA) office in Sao Paulo, the first to be opened in Latin America.

VCA offices support the automotive industry by verifying that cars and parts imported into local markets from the UK and elsewhere, comply with EU Directives and Regulations, as well as UN environmental and safety standards. The VCA office in Brazil will also allow manufacturers based locally to export from Brazil to the wider region, opening up new markets and further benefiting the UK economy.

"I want to make it as easy as possible for the automotive manufacturers to export to emerging markets," Business Secretary Vince Cable said.

"UK manufacturers are planning to more than double their sales in Brazil in the coming years. By opening a VCA office in Sao Paulo we can make sure exports are not being held up unnecessarily."

Mike Baunton, Interim Chief Executive of the Society of Motor Manufacturers and Traders said: "We are delighted the UK government is taking steps directly to support the export of UK built vehicles, particularly with Brazil being one of the growing global markets. Almost 15% of UK automotive exports go to the Americas but we expect exports to the region to grow as recently launched premium brands and advanced technology vehicles are increasingly sought by Brazilian motorists."

The VCA is already providing safety certification services for automotive components, working with the Brazilian Transport Ministry. It is also in discussions with the Brazilian Environmental Ministry to explore how it can provide additional services, such as providing certification on environmental standards and emissions.

Eleven of the world’s global vehicle manufacturers are based in Britain and 74 per cent of all cars and commercial vehicles manufactured in Britain are exported. Britain is also a world leader for engine production with 2.5 million units produced in 2012 by companies including Ford, Toyota, BMW, Honda, Nissan, Perkins and JCB. 62 per cent of UK engine production was exported in 2012.

The VCA office in Sao Paulo will also open up wider markets for UK manufacturers as countries such as Argentina and Chile base their environmental and safety regulations heavily on the Brazilian legislation.

|International Trade|

 

China to enhance relations with Argentina

Li calls on nations to push forward cooperation in trade and investment

China is seeking to deepen its ties with Argentina "with a more comprehensive and strategic vision", Premier Li Keqiang told a visiting high-ranking Argentine official on Sunday.
Li made the remarks when meeting Julian Dominguez, president of the Chamber of Deputies, the lower house of the Argentine parliament, in Zhongnanhai, the headquarters of the central government in downtown Beijing.

China and Argentina are both important emerging economies and developing countries, and the two should develop bilateral relations "with a more comprehensive and strategic vision", Li told Dominguez during the meeting. He called on the two nations to push forward cooperation in trade and investment and seek joint development.

Li also briefed Dominguez on the economic situation in China, saying the Chinese dream of national revival will become a great opportunity for the world. According to Chinese customs, bilateral trade reached $14.4 billion in 2012. China is Argentina's second-largest trading partner, while Argentina is China's sixth-largest trading partner in Latin America.

Jiang Shixue, an expert on Latin American studies with the Chinese Academy of Social Sciences, said China's business ties with Argentina are in excellent shape, except for Argentina's frequent anti-dumping investigations against China. "In that regard, at the moment it is significant for the two sides to realize the importance of each other," Jiang said.

China is a market with huge potential for Argentina, while Argentina, a G20 member, also plays a big role in China's business in Latin America, he said."And I think Beijing has sent signals that it would like to see the two sides have their eyes more on the comprehensive picture of cooperation and develop it in a strategic way," he said.

By Li Xiaokun (China Daily)