Cargo Ship Orders, a Global Meltdown Victim

♠ Posted by Emmanuel in , at 4/30/2009 09:19:00 AM
With the WTO expecting a 9% contraction in trade volume in 2009, it is no surprise that demand for container ships is ebbing fast. Orders for vessels placed when trade was still booming--in no small part attributable to shipments to and from the Middle Kingdom--are now in danger of mass cancellation. Just as many commodity producers massively expanded capacity on expectations that commodity prices would remain at an elevated level for the foreseeable future, many shipping lines massively expanded their orders for vessels on similar expectations for world trade. First, to the WTO blurb:The collapse in global demand brought...
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Pacquiao vs. Hatton? Try India vs. EU at WTO

♠ Posted by Emmanuel in ,, at 4/29/2009 02:58:00 PM
Fight fans are undoubtedly excited about this weekend's matchup between what many regard as the reigning pound-for-pound boxing champion, the Philippines' Manny Pacquiao, and hard-hitting Mancunian (British-speak for someone from Manchester) Ricky Hatton at the MGM Las Vegas. It's something of a departure as what may be this year's biggest match so far is in the junior welterweight category. Traditionally, fights in the middleweight and above classes have attracted more attention, but it seems today's boxers in those categories are not really big draws at the gate. If you read this blog on a regular basis, you can probably...
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Russian WTO Membership? Don't be Ridiculous

♠ Posted by Emmanuel in ,, at 4/29/2009 02:55:00 PM
For reasons still unclear to me, my formative years were permanently scarred by relatives watching the US sitcom Perfect Strangers. This show's signature character was Bronson Pinchot playing "Cousin Balki Bartokomous," a shepherd from the fictional Mediterrenean island nation of Mypos transplanted to the mean streets of Chicago. Every five minutes or so, he'd deploy his signature line in a thick accent of unknown origin: "Well of course not. Don't be ridiculous!"That, my friends, is my same exact response to the question of Russia joining the WTO. Instead of Balki, we have several WTO member countries, ah, balking at Russia's intent. A few weeks ago, Russian President Dmitri Medvedev again expressed wariness over the endless process of WTO accession. From RIA Novosti:President Dmitry Medvedev said Saturday that Russia would like to join the World Trade Organization but added that the process of joining it should not be endless. Russia has been negotiating its entry into the...
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South Korea Takes India to WTO Over Steel Curbs

♠ Posted by Emmanuel in ,, at 4/28/2009 01:25:00 PM
The Economic Times reports that South Korea is mulling a WTO case against India over the latter's recently imposed restrictions on certain steel imports, including some Korean ones. That is, unless Indian firms obtain import licenses, these products cannot be readily imported. Yes, it is reminiscent of times we thought we've left behind when India maintained a formidable barrier of red tape known as the "License Raj":Late last year, India put a number of items on the restricted list, including steel products like motor vehicle parts, hot-rolled coils and seamless tubes and pipes. This means only the user industry can import these items against licences issued by the government.But it may be difficult to explain these curbs as they were imposed without any specific reasons, said [an Indian] government official, requesting anonymity. There is already a feeling within the government that it is safer to impose special duties like anti-dumping duties or safeguard duties to check cheap...
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Must China Still Outsource Its Trade Lawyers?

♠ Posted by Emmanuel in ,, at 4/28/2009 11:16:00 AM
You know you've arrived in the world economy when you become embroiled in more and more trade disputes--at least that's the main idea from a recent Forbes article on China's recent spate of activity at the WTO. So it was for Japan in the eighties and nineties coming from a similar Confucian culture which values harmony over routinized conflict in dealing with thorny situations. Now, it's China's turn in the hot seat as it gets into almost everybody else's sights including regional export-led competitors and Western protectionists of every stripe.Probably the best career advice I can give to anyone interested in the sorts of topics covered on this blog such as trade, international organizations, world politics, etc. is to consider becoming a trade lawyer. Given that disputes are popping up all over the place as trade slows down, the conditions are favorable to future employment. Let's face it: IPE academics are a dime a dozen, and jobs at universities are by no means guaranteed....
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What BRICs Want from IMF in Exchange for $750B

♠ Posted by Emmanuel in , at 4/27/2009 02:33:00 PM
This is to update you on the results of the IMF convocations discussing ways to raise up to $750B from member countries. There is nothing quite surprising if you've read the previous post. In a concession to something desired by would-be major LDC funders, the IMF has agreed to issue bonds whose yields are not markedly lower than those on offer from major reserve asset issuers (read: America).Something which may raise an eyebrow though is the BRICs' stated intentions of developing a secondary market for SDR-denominated debentures. Indeed, this may be a play towards the development of an alternative (perhaps SDR-denominated) reserve currency discussed earlier with the important feature of serving as a medium of exchange in open markets as opposed to being a mere unit of account in intra-IMF transactions. (Recall the functions of money.) From the Wall Street Journal:A push by Brazil, Russia, India and China to have the International Monetary Fund issue its first bonds has become...
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How the Fed is Setting a Policy Rate of, oh, -5%

♠ Posted by Emmanuel in , at 4/27/2009 01:17:00 PM
I do not call foreign exchange movements "special FX" for nothing as they often display more nonsensical gyration than your average episode of Dancing With the Stars. Here is another case in point: the US dollar has strengthened to start off the week despite revelations that the Federal Reserve is keen on replicating easy money conditions similar to having a policy rate of -5% by the Taylor rule based on prevailing inflation and employment trends. From the Financial Times:The ideal interest rate for the US economy in current conditions would be minus 5 per cent, according to internal analysis prepared for the Federal Reserve’s last policy meeting. The analysis was based on a so-called Taylor-rule approach that estimates an appropriate interest rate based on unemployment and inflation.A central bank cannot cut interest rates below zero. However, the staff research suggests the Fed should maintain unconventional policies that provide stimulus roughly equivalent to an interest rate...
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IMF = "I'm Missing Funds" or the $750B Fundraiser

♠ Posted by Emmanuel in , at 4/25/2009 02:45:00 PM
At the last G-20 meeting, participants pledged to increase IMF funding by $750 billion to help the institution firefight various balance of payment shortfalls now befalling virtually all regions of the globe. Let us recall from the previous communique...The agreements we have reached today, to treble resources available to the IMF to $750 billion, to support a new SDR allocation of $250 billion, to support at least $100 billion of additional lending by the MDBs [multilateral development banks like the World Bank and regional lenders such as the African Development Bank], to ensure $250 billion of support for trade finance, and to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries, constitute an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy. Together with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale.Well,...
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Bullish on Gold? China is Now Stockpiling Bullion

♠ Posted by Emmanuel in , at 4/24/2009 02:28:00 PM
With even a mainstream commentator (albeit a pretty good one) like TIME's Justin Fox agreeing that China's dollar blank check has hindered rather than helped America, I guess it's becoming conventional wisdom that so-called dollar hegemony has to go. Here is some hopeful news for those of you on board with this commonsense suggestion: The Financial Times reports that the most inaptly named SAFE (China's State Administration of Foreign Exchange) has been quietly stocking up on bullion. So, recent bellyaching about holding non-sovereign reserves [1, 2, 3, 4] may have been more than idle talk:China revealed on Friday that it built up its gold reserves by three quarters since 2003, making it the world’s fifth largest holder of bullion...Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE), told the Xinhua news agency in an interview on Friday that the country’s reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold...
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Malaysian Affirmative Action: Recession Victim?

♠ Posted by Emmanuel in , at 4/23/2009 05:22:00 PM
It is generally well-known that businessmen of Chinese descent dominate commerce in Southeast Asia. Malaysia is hardly an exception to this reality, and this has in the past inspired race riots such as the May 13 incident of 1971. Fearing reprisals from Malays who constitute a large share of the population, Malaysia has for over four decades maintained policies favoring Malays. And so various bumiputra ("son of the Earth"; presumably in contrast to lighter-skinned Chinese) policies have been instituted giving preferential treatment. In particular, the government has aimed to have 30% firm ownership in bumiputra hands--with, it must be said, mixed success. Although Malaysia's economic fortunes have waxed and waned over the years, the Asian financial crisis affected it badly, variants of the New Economic Policy (NEP) have remained in force.Perhaps we should add "...until now." As the Asian country with the third largest share of exports to GDP. Malaysia is once again being adversely...
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A Tired Story: American Steel Union Bashes China

♠ Posted by Emmanuel in ,, at 4/22/2009 01:06:00 PM
I guess this counts for more than just chicken feed in the arena of global trade contestation. I have been a bit tardy--not by much, mind you--on the latest protectionist squabble between the US and China. Once more, I believe the accretion of these sorts of trade squabbles have the potential to result in a bona fide trade war--not necessarily a bad thing if it means weaning the US off limitless Chinese capital it has clearly not put to good use. Now, American steelmakers have taken increased interest in laying into the PRC over the cost of steel products used in tire production.Given the backing of organized labor for Obama,...
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EU to China: Please Dump Steel On Us (Sort of)

♠ Posted by Emmanuel in ,,, at 4/22/2009 12:47:00 PM
While tariffs have already been given the go signal from Brussels on steel used in construction, it appears that European steelmakers are now taking a more conciliatory stance for other classes of products given that Chinese imports are dwindling as economic recession tightens its grip in Europe. Originally, the EU was set to widen its inquiry into whether various Asian steelmakers were guilty of dumping. However, the current economic climate seems to have damped such calls as the original complainant has since withdrawn its request. From the Steel Guru:Bloomberg reported that European Union ended a threat of tariffs on stainless steel from China, Taiwan and South Korea after the recession prompted EU producers to withdraw a complaint alleging price undercutting.The European Commission closed an inquiry into whether Chinese, Taiwanese and Korean exporters sold cold rolled flat products in the EU below cost. EU makers of this kind of steel, used in everything from cars and tanks...
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Eurocombat Over Cross-Border EU Banking

♠ Posted by Emmanuel in , at 4/22/2009 02:26:00 AM
Bundesbank President Axel Weber is an inescapably important figure in European finance given his post. At the same time, the EU has been accused of lording it over member countries to an extent that diminishes state sovereignty. The Financial Times now notes that Weber has criticized moves from the EU that aim to stabilize the banking crisis also raging there. Once more, it's a matter with collective EU versus individual member country implications.You are probably familiar with the woes now besetting various Western European banks that have lent not-insignificant amounts via their Eastern European operations. With efforts to shore up these banks being made contingent on scaling down their Eastern European operations, Weber is becoming wary of these being classified as "foreign" rather than "domestic" in an ever-closer union sense. It's interesting stuff that certainly will have implications for the future of European economic integration:Europe’s competition authorities risk...
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11/11/2001: A More Important Day Than 9/11

♠ Posted by Emmanuel in ,,, at 4/21/2009 04:31:00 PM
For better or worse, September 11, 2001 is a date known to all. Certainly, the attacks produced dramatic footage the likes of which even Hollywood disaster scenario specialists hadn't thought of. Still. I tend to think that attention given to 9/11 is more attributable to its symbolism than its financial or personal costs. By favoring the Democrats' emphasis on the economy over the Republicans' war on terror, Americans seem to agree. In general, Americans are incurious about international affairs in the Palin-esque manner; hence, this attack was quite a wake up call for them. Those of us in the rest of the world, however, have...
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China Takes US to WTO Over Poultry Exports

♠ Posted by Emmanuel in ,,, at 4/17/2009 01:49:00 PM
I haven't written anything involving the WTO for the longest time. Mostly, it's because there hasn't been much action at the international organization as other, more pressing domestic matters seem to be occupying the interests of member countries at the moment. Doha? Forget it. In December, I brought news that China would contest the US decision to impose countervailing duties on steel exports it believed were being dumped on the American market. Just last month, there were rumblings that China was showing increased displeasure over US legislation aimed at limiting chicken imports over safety concerns and that it was contemplating...
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Eye for an Eye: US Firms Wary of PRC Stimulus

♠ Posted by Emmanuel in , at 4/17/2009 12:48:00 PM
Many countries including China have expressed wariness over "Buy American" provisions in the US stimulus package. I guess it's time we looked at the other side of the coin. Unfortunately, many American firms are now complaining that China's own stimulus package is opaque in detailing how government contracts are awarded, possibly putting foreign firms at a disadvantage. Is this by design? Don't rule out the possibility that the PRC stimulus effort may be a lot of vaporware in the smoke and mirrors sense. From Reuters:U.S. companies are concerned that they are not getting a fair chance at contracts linked to China's 4 trillion yuan ($585 billion) stimulus package, a leading U.S. business group said on Friday.For its part, Beijing has strongly criticized the 'Buy American' provisions of the U.S. stimulus package finalized in February, saying it is opposed to any rise in protectionist measures in the wake of the global economic slowdown.But Myron Brilliant, senior vice president...
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Viva la France: Le Strike et "Bossnapping"

♠ Posted by Emmanuel in ,, at 4/16/2009 02:12:00 PM
As anyone unfortunate enough to ride Air France on a regular basis probably knows, France and strikes go hand in hand like the USA and foreclosures. The FT has an interesting take on the dynamics of French striking, which of course is reaching a crescendo during this time of economic slowdown. It seems lots of people are striking without knowing exactly what to push for. Really, they should give this "bossnapping" shtick (soon to be laid off workers waylaying executives) a go Stateside. Given Yankee lust for firepower, results should be tabloidally interesting. Anyway, returning to today's topic, this lack of definitive French...
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Geithner Wimps Out on PRC Currency Manipulation

♠ Posted by Emmanuel in , at 4/16/2009 06:37:00 AM
The US Treasury is mandated by Congress to make biannual reports on the currency practices of America's trading partners. Just yesterday, the Treasury released its first report under the leadership of Secretary Geithner. As you are well aware, Geithner caused a ruckus in US-China trade relations by reiterating his boss Barack Obama's opinion that China was a currency manipulator [1, 2]. As I have pointed out again and again, he was not expressing his own opinion but that of Obama. Why is this difference important? Well, let's look at the statement of Geithner accompanying the latest report as to why China hasn't been branded a currency manipulator yet again:With respect to China, which has been highlighted in the Report in recent years, our conclusion is based on the following factors. First, China has taken steps to enhance exchange rate flexibility. Chinese officials reaffirmed in January 2009 their commitment to greater flexibility and the need to allow the exchange rate to...
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Yo Ho Ho! Maritime Piracy Then and Now

♠ Posted by Emmanuel in , at 4/14/2009 11:14:00 AM
A recent post by our friends over at IPE@UNC jogged my memory about the International Maritime Bureau's Piracy Reporting Centre. (As you've probably figured out by now, I am a repository of useless information that sometimes becomes relevant ;-) Anyway--where was I--it maintains comprehensive mapped data about incidents relating to maritime piracy going back to 2005 all over the world. The IMB is the authority when it comes to reporting such incidents. For those interested in the dark side of trade transportation, it certainly makes for fascinating reading. Please visit and see for yourselves as you can click on each indicator...
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Thai Rioters Can Teach Anti-Globalization Flunkies

♠ Posted by Emmanuel in , at 4/13/2009 04:02:00 AM
This is getting ridiculous. In December, an ASEAN summit that was supposed to be held in Thailand was derailed when anti-Thaksin supporters waylaid the proceedings. Now that Thaksinite influences have been purged from the government, we find another ASEAN gathering there canceled because pro-Thaksin supporters stormed the proceedings. Overwhelming numerous riot police and trashing the convention center are no small achievements. My best advice to ASEAN: do not hold any more meetings in Thailand for the time being.The FT's Gideon Rachman is reliably entertaining and insightful; I've had him on our blogroll from day one. However,...
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I'm a (White American) Sailor, Get Me Outta Here!

♠ Posted by Emmanuel in at 4/13/2009 03:04:00 AM
Readers are doubtlessly familiar with trash TV reality show I'm a Celebrity, Get Me Out of Here! Recently, the capture of an American hostage on the high seas has upped the stakes--at least in the media arena. What we have here is the emergence of a full-blown circus, and not many concerned who've been neglected are very happy about it.Call it the white sailor's burden: for months now, international sailors plying their trade in the lawless seas off the now-infamous coast of Somalia have fallen victim to pirates emanating from that collapsed state. However, while the media has widely reported these incidences of piracy, few media outlets have covered the personal aspects of these kidnappings. A maritime group has decided that the time is right to point out that, gee, there are far more sailors of other nationalities who've found themselves unwilling captives. What about them? From Reuters:The international community is showing hypocrisy by suddenly focusing on Somali piracy because...
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Same Old: Turkey to Get $20 to $45B IMF Lifeline

♠ Posted by Emmanuel in ,, at 4/10/2009 07:23:00 PM
Turkey is a country which has never really weaned itself off IMF loans; take a look at its borrowing activity for a more or less uninterrupted history of obtaining lender of last resort support in the new millennium. Unfortunately, the current crisis is no different as it seeks another lifeline from the IMF, the last arrangement having expired in May of last year. Estimates put the size of the agreed deal somewhere between $20 to $45 billion. From Reuters:Turkey and the International Monetary Fund have agreed in principle on the conditions of a new loan deal worth up to $45 billion to help the country weather the global crisis, newpapers reported on Friday. Pressure for an accord has mounted as the economy slumped in recent months, putting it on course for deep recession. Gross domestic product tumbled 6.2 percent in the fourth quarter and industrial production slid by a quarter in February.The reports, citing Economy Minister Mehmet Simsek, said the deal would meet Turkey's...
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Attack! US Steelmakers Claim Chinese Dumping

♠ Posted by Emmanuel in ,, at 4/10/2009 11:30:00 AM
The WSJ reports that US steelmakers are scheduled to bring a hefty anti-dumping case to the US International Trade Commission:The U.S. steel industry filed an antidumping suit against China, covering $2.7 billion of imports, alleging that steelmakers there unfairly dumped specific types of tubular and pipe steel onto the U.S. market last year. The case, one of the biggest ever filed by the U.S. against China, is likely the beginning of a string of steel-dumping cases against China, say attorneys representing steel workers and manufacturers."I think there are going to be a lot of trade cases, steel and nonsteel, filed against China," said Roger Schagrin, one of the lead attorneys representing the seven domestic companies and the United Steelworkers union, which filed a petition with the U.S. International Trade Commission and the Department of Commerce. "China continues exporting massive amounts of products despite decreasing U.S. demand."Within the past two years, U.S. steel...
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