News & Commentary:

April 2004 Archives


A Normal Country
Andrei Shleifer and Daniel Treisman (Foreign Affairs) Mar/Apr 2004
Conventional wisdom in the West says that post-Cold War Russia has been a disastrous failure. The facts say otherwise. Aspects of Russia's performance over the last decade may have been disappointing, but the notion that the country has gone through an economic cataclysm and political relapse is wrong -- more a comment on overblown expectations than on Russia's actual experience. Compared to other countries at a similar level of economic and political development, Russia looks more the norm than the exception.

Foreign Economic Policy for the Next President
C. Fred Bergsten (Foreign Affairs) Mar/Apr 2004
Even in a time of terrorism and war, no successful foreign policy can neglect the global economy. The next U.S. administration will therefore need to balance the country's books, liberalize trade, and reduce its reliance on foreign energy. Above all, Washington must shore up domestic and foreign support for globalization, so that it can continue to benefit the United States and the rest of the world.

Special Report: The 2004 Globalization Index Recommended!
Foreign Policy Mar/Apr 2004
The fourth annual A.T. Kearney/Foreign Policy Globalization Index reveals that even as the world economy slowed, Internet growth in poor countries and increased cross-border travel deepened global links. In last year’s index, Ireland and Switzerland topped our ranking of personal, political, economic, and technological globalization in 62 countries. This year, who’s up, who’s down, and who’s the most global of them all?

How to Be a Free Trade Democrat Recommended!
Gene Sperling (Foreign Policy) Mar/Apr 2004
Trade is not much fun, particularly if you’re a Democratic presidential candidate. Many of your key supporters—unions, blue-collar workers, and student activists—oppose market liberalization. The Democratic presidential nominee must break the ideological gridlock over globalization and show how smart, open trade policy can boost economic growth while protecting workers in the United States and around the world. Here’s how to get started.

Bush Throws a Party
Kenneth Rogoff (Foreign Policy) Mar/Apr 2004
Any alert voter can see that U.S. President George W. Bush seeks to engineer a remarkable election-time economic boom. But before high-minded economists and commentators start crying foul, just how does Bush’s preelection spending binge rate against his predecessors?

Missing Links: From Normalcy to Lunacy?
Moisés Naím (Foreign Policy) Mar/Apr 2004
In 2003, Latin America had another normal year: Growth was meager, instability high, poverty widespread, inequality deep, and politics nasty. For decades, political and economic elites in Latin America have grown accustomed to this tragic normalcy. Recently, however, this acceptance has been disrupted throughout the region as new emerging actors embrace the politics of rage, race, and revenge.

The World Bank and IMF at sixty: plus ca change?
Bretton Woods Update No. 39 Mar/Apr 2004
Plus: 60th anniversary spring meetings protest plans; The World Bank's high-risk hypocrisy; Life under the IMF's magnifying glass: A Zambian civil servant chafes at the collar; World Bank, IMF: Helping peace or creating conditions for war?; Congolese groups unite to demand scrutiny of forest policies; Pakistani hunger strikers seek reparations for damaging project; Disengaging from the Fund: possible and worthwhile?; and IMF selection mess only a symptom

Trends and Prospects of Transatlantic Economic Relations
Johannes Linn (Trans-Atlantic Editors' Roundtable) Apr 2004
Transatlantic relations have been under stress. In the run-up to the Iraq war and since, it seemed at times that the former partners of Cold War days had turned into hostile camps, as their leaders embarked on unilateral action (the US) or inaction (Germany), threw invectives at each other or each other's supporters (Messrs. Rumsfeld and Chirac), and reinforced popular negative stereotypes. Of course, some of the strains preceded the 9/11/01 tragedy and the Iraq war in the wake of a rising tide of cross-Atlantic complaints, many of them having to do with the perception of US unilateralism on the European side, and of European indecisiveness on the US side. Since 9/11/01, much of the stress in transatlantic relations has centered on disagreements in the foreign and security policy arenas. Previously, however, a number of high-visibility conflicts had appeared in the economic and related areas (trade, finance and environment). This paper looks at the trends and prospects of transatlantic economic relations to determine whether there is a tendency towards increased stress also in this important aspect of the relationship, or whether transatlantic economic ties can be relied upon or reinforced to ensure that the historic partnership does not fall apart. The paper concludes that the economic partnership can indeed serve as a glue to bind the frayed partnership, but that it will take continued attention by governments on both sides of the Atlantic to areas of common interest and to achieve greater recognition among the general public of the great value of continued economic cooperation. The paper commends and recommends governance structures that can help ensure that common transatlantic interests are effectively pursued in an increasingly multi-polar and complex international economic environment.

Global Economic Prospects: Bright for 2004 but with Questions Thereafter Recommended!
Michael Mussa (IIE) Apr 1, 2004
Led by an upsurge in Asia and in the United States, global economic growth should reach 4¾ percent on a year-over-year basis for 2004-equal to the strongest performance in a generation. Although recovery in Western Europe will continue to lag, most of the rest of the world will participate in the general global upswing, with strong commodity prices aiding a number of developing countries. For 2005, global growth prospects are somewhat less buoyant, with year-over-year growth of 4 percent projected. This slowdown partly reflects the likelihood of necessary and desirable slowdowns from unsustainably rapid economic expansions in several economies, most notably China. It also reflects some risk that either market reactions or policy adjustments to evidence of economic overheating may begin to precipitate a more serious global economic slowdown by next year. In this regard, the sharp recent rise in world oil prices poses probably the most important near-term risk to global growth, while the possibility of a more general rise of inflationary pressures (and the policy reactions thereto) poses the greater medium-term threat.

What's That Sound?
Thomas L. Friedman (NYT) Apr 1, 2004
India and China are running off with jobs and markets Mexicans once thought they owned.

OPEC vows cutbacks in bid to keep prices high
IHT Apr 1, 2004
The company would press forward with its plan to cut production by a million barrels a day.

How India is saving capitalism
Katharine Mieszkowski (Salon) Apr 1, 2004
For one Silicon Valley company, hiring Indian programmers wasn't about greed, it was about survival. A special report from Chennai, globalization's ground zero.

A Rite of Spring
William L. Anderson (Mises Daily) Apr 2, 2004
In the spring of each leap year, we have an predictable—if tiresome—dog-and-pony show: the candidates for President of the United States denounce the newest gasoline price increases. We lived through this political purgatory four years ago, and it looks as though we will experience it again.How India is saving capitalism For one Silicon Valley company, hiring Recommended!
Joshua Kurlantzick (New Republic) Apr 5, 2004
The Web won't topple tyranny.

Stronger than expected growth spurs modest trade recovery
WTO Apr 5, 2004
Propelled by higher than expected economic growth in Asia and the United States, world trade recovered at an increased rate in 2003, and could expand further in 2004 should the global economy continue to improve, according to the WTO’s latest figures, released today (5 April 2004).

Global: Pondering Asia
Stephen Roach (MSDW) Apr 5, 2004
I was unprepared for what I found in Asia over the past two weeks. The role of China appears to be on the cusp of an important transition, as pressure builds on its leadership to confront the mounting imbalances of an overheated economy. With the exclusion of India — where I was stunned by the solid and increasingly powerful dynamic of its IT-enabled services transformation — the rest of the region is far too China-centric for my liking. A likely slowing in the Chinese economy could unmask a new instability in Asia — an outcome that could prove quite vexing for a still-unbalanced global economy.

Global: Dispelling Trade Myths
Rebecca McCaughrin (MSDW) Apr 5, 2004
The US has run a merchandise trade deficit every year since 1976. In the early 1980s, the deficit began to accelerate against the backdrop of an appreciating dollar and weak external demand, leading the world’s powers to engineer a depreciation in the dollar in September 1985. By the end of the 1980s, these efforts helped to reign in the deficit to 2.1% of GDP. The early 1990s recession and Gulf War contributed to a further narrowing, but by 1993 the deficit began to mushroom again, and averaged 2.6% of GDP during the rest of the decade. In the last four years, the deficit has continued to climb, reaching a record $549bn in 2003, or 5% of GDP. Each period of burgeoning deficits has spawned many misconceptions about international trade and the US trade deficit, in particular.

Goldman's `A-B-C' Mantra Seems to Be Working Recommended!
Andy Mukherjee (Bloomberg) Apr 6, 2004
Goldman Sachs Group Inc. has a mantra for the global currency market. It calls it, ``A-B-C,'' shorthand for ``Asia Becomes Confident.''

Clean up the UN
IHT Apr 8, 2004
For the first time since last May, word came on Tuesday that U.S. forces were engaged in serious combat in Iraq, this time against Iraqi insurgents who attacked marines in a city southwest of Baghdad, and against an armed Sunni resistance in the town of Falluja. Reports of significant casualties on both sides in the pitched battle in the city of Ramadi were a grim reminder of how badly the United States needs a strong, credible and engaged United Nations.

Asia's Blueprint for Financial Union Far Eastern Economic Review Subscription Required
FEER Vol. 167, No. 14 Apr 8, 2004
Asian finance ministers will soon consider a proposal to unify existing bilateral agreements for lending foreign reserves and create a single multilateral facility. By accepting common rules for monitoring and assessing their needs, they will be surrendering a portion of their financial sovereignty.

WTO Development Committee Looking To Re-Invigorate Talks On S&D
BRIDGES Weekly Trade News Digest - Vol. 8, Number 13 Apr 8, 2004
On 1 April, the special (negotiating) session of the WTO Committee on Trade and Development (CTD) -- mandated to review all special and differential treatment (S&D) provisions for developing countries -- met for the first time after the Cancun ministerial conference in September 2003. Hoping to avoid the pitfalls of Members wading into well-entrenched positions, which hindered progress in 2002 and 2003, the body's new Chair, Faizel Ismail (South African), focused discussions primarily on process issues, including the way forward and the structure of the body's future work. Recognising the importance of reviving the talks, Members agreed to the Chair's request to begin informal consultations aimed at identifying areas of convergence and the best way to proceed. In a related matter, a group of developing and least developed countries circulated a submission on 5 April calling for, inter alia, "a clear road map with specific benchmarks to fulfil the mandate on the outstanding implementation issues and S&D issues in a time bound manner".

Industrial Market Access Hinges On Agriculture Outcome
BRIDGES Weekly Trade News Digest - Vol. 8, Number 13 Apr 8, 2004
The WTO Negotiating Group on Non-Agricultural Market Access (NAMA) met from 29-31 March, with delegates agreeing to seek to draft a negotiating framework by the end of July this year. The meeting, which failed to make any substantive progress, consisted of formal plenary sessions to start and wrap up the talks on 29 and 31 March respectively as well as of a number of informal open-ended negotiations. Trade sources indicated that progress on key agricultural issues was a precondition for talks on NAMA to move, and until such progress was seen, movement on NAMA would be slow or nonexistent. Any agreement on NAMA would have to reflect the level of ambition agreed in agriculture. The NAMA meeting, which was the first official negotiating session on the topic since the Cancun ministerial, followed a week of agriculture negotiations that had failed to show any concrete forward movement.

WTO Services Council: Members Find Services Offers Disappointing
BRIDGES Weekly Trade News Digest - Vol. 8, Number 13 Apr 8, 2004
The WTO Council on Trade in Services (CTS) met for a special (negotiating) session on 2 April, marking the end of two weeks of meetings of the bodies under the Services Council. At the meeting, Members generally signalled their disappointment with the results of the ongoing request-offer phase of the services negotiations. While developed countries focused their criticism on the low number of offers, most developing countries stressed that the quality of the offers made was unsatisfactory. Also during 'services week,' Members considered new submissions on special and differential (S&D) for developing countries, and on logistics services.

The Race to Run the IMF Challenges Tradition
David DeRosa (Bloomberg) Apr 8, 2004
European leaders are scrambling to find a new chief for the International Monetary Fund, and they are working under the curious tradition that they should fill the post with a European.

Global: Circling the Wagons
Stephen Roach (MSDW) Apr 8, 2004
I like Don Kohn. In ancient times, we actually used to work together as economists at the Federal Reserve Board in Washington. In fact, my final performance as a Fed staffer came in the summer of 1979 when Don and I gave a joint “pre-FOMC” briefing to the Board. The presentation actually got rave reviews. It was, at the time, viewed as something of a breakthrough from the backward-looking approach that had long characterized Fed discussions. Words like “analytical” and “forward-looking” still ring in my ears. I hopped the shuttle up to New York that summer — never to return. Don stayed and rapidly climbed the ranks. He became the Fed’s senior staff economist in 1987 and was appointed Governor in 2002. He deserves all that and more. Don Kohn is a solid economist and now a wise policy maker.

Currencies: Short EUR/USD Now, USD/JPY Later
Stephen L. Jen (MSDW) Apr 8, 2004
The USD index has passed a critical point of inflection. The final phase of the USD correction will no longer be EUR-led, and will most likely take place against the Asian currencies and emerging market currencies. From this point forward, the right trades, in my view, will continue to be short-EUR/USD, short-EUR/JPY, and short-USD/JPY and in this chronological order. I believe the bias of risks to EUR/USD remains to the downside, particularly in the short run. Later this year, EUR/USD could very well experience another modest ascent into the low- to mid-1.20s. On the other hand, the bias of risk to USD/JPY is also skewed to the downside, though this is more of a trade for later this year. I continue to believe that 100 will remain a formidable barrier, which will take months and hundreds of billions of dollars to break through.

Free trade in South Asia needs synergy
Durgadas Roy (AT) Apr 9, 2004
If the success of regional economic integration in other parts of the world is any guide, a free trade arrangement among the South Asian countries - namely India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan and the Maldives - will be a big step towards their greater economic welfare.

World markets: Cash and carry
Economist Apr 9, 2004
Good news on jobs in America may have troubling repercussions for emerging markets.

Global: Announcements Signal End to M&A Drought
Rebecca McCaughrin (MSDW) Apr 9, 2004
After months of speculation that M&A has recovered yet little activity in the cross-border component, we are finally seeing evidence that executives are engaging in overseas transactions. Cross-border deals tend to be more modest and lag domestic activity because of higher cultural, regulatory, and other barriers. But in March, cross-border announcements rose to $46 billion, marking the highest level of activity seen in the last two years. Granted, one month hardly makes a trend, and the slew of false starts seen in the last two years suggests caution is warranted in over-extrapolating from the latest upswing. But encouragingly, the spike in announcements was related to a rise in the volume of activity, which would suggest that March is not just an outlier. At the same time, factors generally supportive of M&A look healthy, including rising equity markets, stronger economic growth prospects, accommodative monetary policy, stronger cash positions, healthier balance sheets, and pent-up demand for deal-making after a two-year hiatus. But this cycle is shaping up to be very different from prior years.

Asia Should Know There Is No Cheap Saudi Oil
David DeRosa (Bloomberg) Apr 11, 2004
Japan and South Korea are breathing a sigh of relief following Saudi Arabia's promise to supply each country crude oil no matter what problems the oil market might encounter.

Focus on Open Markets Wall Street Journal Subscription Required
Jim Gradoville (AWSJ) Apr 12, 2004
Open markets, not attacks on outsourcing, help American companies remain competitive.

Global: Shades of 1994
Stephen Roach (MSDW) Apr 12, 2004
While history never repeats itself with any great precision, it often offers important lessons that those of us in the macro business cannot afford to ignore. Such is the case of 1994 — the last time overly levered fixed-income markets had to come to grips with a Fed exit strategy from unusually aggressive monetary accommodation. Back then, the subsequent unwinding in financial markets led to the worst year in the modern history of the bond market. For an overly levered US economy, such an outcome today would not be without serious consequences. What are the chances that history repeats itself?

The IMF's Next Leader
WP Apr 13, 2004
If you expel the rhetorical hot air, you'll find a bipartisan consensus on the International Monetary Fund. When administrations of either party confront a currency crisis that threatens to spread across borders, they look to the IMF for economic expertise and bailout money. In Asia in 1997, in Russia and Brazil the following year, and in Argentina, Brazil and Turkey since the Bush administration took office, the IMF has played the lead role. Its bailouts have not always succeeded, just as emergency-room doctors do not save every patient. That does not imply that emergency rooms are dispensable.

Dollar regaining footing?
IHT Apr 14, 2004
The dollar appears poised to halt its long-term downward slide against the euro.

Free Trade is Cricket Wall Street Journal Subscription Required
Khalil Ahmad (AWSJ) Apr 15, 2004
Cricket matches and free trade could unite India and Pakistan.

Grim future for global foreign policies
Piyush Mathur (AT) Apr 15, 2004
The 9-11 Commission's retroactive stress on military solutions to complex problems such as terrorism has allowed top US luminaries to look savvy and even dovish. A close look at the history of US military adventures, especially as orchestrated by the discredited and supposedly disbanded - but merely renamed - US Army School of the Americas, reveals much.

Yuan Peg Presents China With Monetary Dilemma
David DeRosa (Bloomberg) Apr 15, 2004
China's central bank is learning a couple of lessons in monetary economics: A central bank that pegs its exchange rate risks destabilizing its domestic banking system in some circumstances. Call that proposition No. 1.

Inflation looks to be next export from China
IHT/NYT Apr 16, 2004
Prices for goods from rice to steel are rising sharply, and the prices for exports would have to follow.

Teamsters Give Nafta a Flat Tire Wall Street Journal Subscription Required
Mary Anastasia O'Grady (WSJ) Apr 16, 2004
When will Mexican trucks be allowed on American highways?

Global: Pitfalls of Asian Central Banking
Stephen Roach (MSDW) Apr 16, 2004
I have been critical of America’s Federal Reserve for failing to normalize monetary policy in this post-bubble climate. But the Fed is not alone in deserving blame for nurturing the persistent imbalances that continue to plague a lopsided, US-centric global economy. Other central banks have played an equally important role in condoning this unstable and increasingly risky arrangement. Nowhere is that more evident in Asia, where monetary policy is now moving into the danger zone.

EU/Mercosur trade talks: Good for the few, bad for the many
Economist Apr 16, 2004
The prospects of a trade deal between Mercosur and the European Union look good. The prospects for the Doha round of world trade talks look ever worse.

South Korea's Politics May Contain Won's Move
David DeRosa (Bloomberg) Apr 18, 2004
South Korea's pro-government Uri Party won narrow control of parliament last week, and the won is beginning to feel the heat.

The Law of Outsourcing Wall Street Journal Subscription Required
WSJ Apr 19, 2004
States aren't allowed to have their own foreign policies.

There's No Such Thing as a Free Drug Wall Street Journal Subscription Required
Jim Gilbert & Paul Rosenberg (WSJE) Apr 19, 2004
European pharmaceutical companies are falling behind in their global competitiveness and their capacity for innovation.

Visions of U.S. Aid
WP Apr 19, 2004
George W. Bush presents his foreign policy in messianic terms, as many previous presidents have done.

Helping Labor Through Trade Recommended!
WP Apr 19, 2004
By now the ritual has become familiar. The Bush administration concludes a new free-trade agreement that wins broad support from nearly every sector.

Special-Interest Add-Ons Weigh Down Tax-Cut Bill
Jonathan Weisman (WP) Apr 19, 2004
Congress's task seemed simple enough: Repeal an illegal $5 billion-a-year export subsidy and replace it with some modest tax breaks to ease the pain on U.S. exporters.

Global: Asia Needs a New Consumer
Stephen Roach (MSDW) Apr 19, 2004
An unbalanced global economy has come to rely on two major sources of growth — the Chinese producer on the supply side of the equation and the American consumer on the demand side. This is not a recipe for sustainable global growth, in my view. An overheated Chinese economy now faces the imperatives of a slowdown. And overly extended American consumers face the need for a sobering adjustment of their own. This poses a profound challenge for Asia’s externally led growth paradigm: Unless the region uncovers a new source of autonomous domestic demand, it may well be confronted with a serious challenge to its growth potential in the years ahead.

Currencies: USD Again Dominated by Cyclical Factors
Stephen L. Jen (MSDW) Apr 19, 2004
The texture of the multi-year structural dollar correction has gone through a critical inflection point in two important ways. First, the USD is likely to have registered a low for the year against the likes of EUR, GBP, and AUD. Second, the path of the USD in the weeks ahead is likely to be dominated by cyclical rather than structural factors. I believe, as a result, EUR/USD will trade solidly in the 1.15-1.20 range, while USD/JPY could drift toward 1.10 as the USD asserts itself. However, by the summer, this surge in the USD may end.

Sea Changes in the Corporate World -- Outsourcing and Adam Smith
Robert Galvin (SFC) Apr 19, 2004
The cry against outsourcing is a familiar one, almost as old as international commerce itself. Like today’s protectionist proposals, 18th-century “mercantilism” was structured to promote government-favored exports while restricting imports, based upon the flawed theory that wealth was static: The only way one nation became richer was for another to become poorer.

China expected to cede ground to U.S. on trade
IHT Apr 20, 2004
The country appears willing to strike a conciliatory tone with the US and give in to several longstanding demands.

Development bank looks east to aid poor nations
IHT Apr 20, 2004
With the most advanced economies in the former Communist bloc set to join the European Union next month, the multinational bank that was set up to aid the transition to capitalism said Monday that it would pay greater attention to poorer countries farther to the east.

Will Asian Bond Fund Foil Crisis, or Cause It?
Andy Mukherjee (Bloomberg) Apr 20, 2004
The usually taciturn Asian central bankers are waxing eloquent. About bonds. Last week, a group of 11 central banks announced an initial structure for the second Asian Bond Fund.

The Economics of Outsourcing
William L. Anderson (Mises Daily) Apr 20, 2004
The latest political fallout of the current "outsourcing" debate came recently when the Bush Administration's designated "manufacturing czar" turned out to be Anthony F. Raimondo, whose "crime" was to be the head of a firm that recently opened a factory in China. The embarrassed Bushies quickly urged Raimondo to withdraw his nomination, as the Democrats (and a number of Republicans) made hay over the whole thing.

IMF projects stronger world economy Recommended!
IHT Apr 22, 2004
The global economy, after being battered by recession, terrorist attacks and war, should grow strongly this year and next with growth in the United States hitting the fastest pace in 20 years, the International Monetary Fund predicted Wednesday.

The Curse of Currency Autarky Wall Street Journal Subscription Required
Benn Steil (WSJ) Apr 22, 2004
Does the IMF's salvation lie in dollarization.

A Dangerous Form of Outsourcing
Grant M. Nülle (Mises Daily) Apr 22, 2004
Many of my fellow Austrians have shown the outsourcing of the production of goods and services in the marketplace to be beneficial to society at large.The same cannot be said, however, for subcontracting foreign policy. Indeed, the American government's propensity to outsource certain aspects of its military activities to regional governments or local non-state organizations has rendered Washington's already reckless and aggressive brand of adventurism all the more dangerous to the world and America itself.

Dr. Supachai: “We must redouble our efforts”
WTO Apr 22, 2004
Director-General Supachai Panitchpakdi, in his remarks on 21 April 2004 as chairman of the Trade Negotiations Committee, warned negotiators that “the coming days and weeks are critical”. He said Ministers “are more determined than ever to succeed,” and that “the onus is clearly on the negotiators in Geneva to turn this political will into concrete results”.

Market Access Discussed During Second 'Agriculture Week'
BRIDGES Weekly Trade News Digest - Vol. 8, Number 14 Apr 22, 2004
Members are meeting from 19-23 April for a second 'agriculture week' seeking to rebuild momentum in the agriculture negotiations. In a formal plenary session held on Monday, 19 April, New Zealand's Timothy Groser, who chairs the talks, called on Members to focus on market access -- the issue where the widest gaps in positions prevail. Sources reported that members of the G-20 group of developing countries and the Cairns group of agricultural exporters were trying to 'kill' the so-called blended tariff reduction formula championed by the EC and US, replacing it with a banded formula developed by former agriculture chair Stuart Harbinson in a 2003 modalities drafts. Developed countries such as the US, EC, Canada, Switzerland and Japan were reportedly rejecting this move. The current 'agriculture week' will be concluded with informal and formal special (negotiating) sessions on 23 April.

Supachai Says Framework For Negotiations Needed By June
BRIDGES Weekly Trade News Digest - Vol. 8, Number 14 Apr 22, 2004
The WTO Trade Negotiations Committee (TNC) met briefly on 21 April to take stock of negotiations, with only a few Members making interventions. The TNC meeting was the first since the Cancun Ministerial in September 2003, and included statements by the TNC Chair and WTO Director General Supachai Panitchpakdi as well as the Chairs of the various negotiating groups established under the TNC. It took place at the same time as the agriculture talks (see related story, this issue), widely seen as the key to the Doha round. While Supachai urged Members to focus on finding solutions and building bridges, there were no imminent signs of progress.

WTO Environment Committee Considers Environmental Goods
BRIDGES Weekly Trade News Digest - Vol. 8, Number 14 Apr 22, 2004
The WTO special (negotiating) session of the Committee on Trade and Environment (CTE) met on 19 April, and a regular CTE session took place on 20 April. The CTE special session considered an EC submission on the CTE and global governance, and continued discussions on environmental goods. The regular session of the CTE focused on how to move on the mandate to consider sustainable development implications of negotiations in all areas of the Doha round. Delegates also considered a Canadian proposal for how to create a more focused debate in the CTE.

IMF/World Bank Report Calls for Urgent Action on Poverty Reduction by All Countries
IMF Apr 22, 2004
Most developing countries struggling to meet Millennium Development Goals by 2015; Report offers agenda for policies and actions by all partners in global campaign to reduce poverty.

The World Bank/IMF meeting: The best use of aid?
Economist Apr 23, 2004
As the World Bank holds its spring meetings with the IMF in Washington, it reports that aid is flowing a little more generously, but a lot more strategically. For that, thank—or blame—the war on terror.

EU paradox: a success taken for granted
IHT Apr 26, 2004
The benefits of the Union are taken for granted, its shortcomings scrutinized and underscored.

Greenspan's Rate Warnings Big Risk for Japan
William Pesek Jr. (Bloomberg) Apr 26, 2004
Alan Greenspan, like it or not, is a global central banker of sorts. While the Federal Reserve chairman sets interest rates with the U.S. in mind, many investors care more about what he does than their own central bankers.

Global: Fireworks at Boao
Stephen Roach (MSDW) Apr 26, 2004
The Chinese invented fireworks. Historical lore dates the breakthrough back to the second century BC. So it was only fitting that the third Boao Forum for Asia — a gathering of the region’s leaders modeled after the World Economic Forum in Davos — ended with a glorious display of pyrotechnics over the waters at Dongyu Island in China’s island province of Hainan. The show in the sky, however, was nothing in comparison to the fireworks that had taken place a couple of hours earlier in the conference. A leading Chinese central banker put the world on notice that China’s policy makers mean business — and did so in the most direct and fiery language I have ever heard from any member of this normally reticent species.

Global: Shifting Production Patterns
Rebecca McCaughrin (MSDW) Apr 26, 2004
Multinationals continue to expand their overseas networks, capitalizing on a more flexible cost structure, reduced exchange rate risks, fewer trade barriers, and greater access to resources. This was especially evident in the latest survey on foreign affiliate operations released by the US Bureau of Economic Analysis. Before delving into the specifics of the survey, we first highlight how multinational strategies are helping to transform the way global production is organized.

Currencies: Relative Yield Curves and the G-3 Currencies
Stephen L. Jen (MSDW) Apr 26, 2004
The relative shape of the yield curves matters. In thinking how the shape of the US yield curve may affect the bilateral G-3 exchange rates, it is important to consider the relative shape of the yield curves. I suggest four scenarios with different implications for the G-3 currencies. The most likely outcome is: (1) neutral to positive for the USD index, (2) ambiguous for USD/JPY, but (3) negative for EUR/USD. However, if I am wrong and a more severe version of 1994 materialises, the USD would be hurt.

Currencies: Be Patient on the Down-Trade in USD/JPY
Stephen L. Jen (MSDW) Apr 26, 2004
Large portfolio outflows have helped support USD/JPY without official intervention in the past weeks; the general bounce in the USD was also a contributing factor. I reiterate my expectation that USD/JPY will trade toward 100 again, but it will not do so until these new fiscal year flows abate. However, 100 will likely remain a formidable barrier, one that will only be allowed to be broken if the Nikkei continues to rise. I see this as an early-2005 risk.

Latin America's Fragile Democracies
NYT Apr 26, 2004
Democratization in much of Latin America, if it is to be completed rather than reversed, requires a bold set of reforms.

Global Poverty and Global Development: Is the United States Doing its Part?
Brookings Apr 26, 2004
The World Economic Forum's Global Governance Initiative released a new report Tuesday that suggests the international community is failing to live up to its commitments to reduce poverty, protect the environment, ensure human rights, and improve health and education. The report, which was released at a Brookings Briefing, gave a failing grade to global efforts to achieve humanitarian benchmarks such as those outlined the United Nation's Millennium Development Goals, a 189-nation agreement signed in September 2000 that laid out specific goals to be achieved by 2015. According to the report, international efforts are only achieving a third of what is necessary to reach the UN targets.

Those Illegal Farm Subsidies
NYT Apr 28, 2004
America's lavish handouts to its farmers harvest poverty throughout the developing world.

WTO ruling against America: Unpicking cotton subsidies
Economist Apr 28, 2004
In a landmark ruling, the World Trade Organisation has sided with Brazil in its case against America’s cotton subsidies. Controversial they have always been, but are the rich countries’ agricultural subsidies now illegal too?

WTO Interim Report On US Cotton Case: Brazil Claims Victory
BRIDGES Weekly Trade News Digest - Vol. 8, Number 15 Apr 28, 2004
Brazil has claimed victory after the WTO panel hearing Brazil's challenge against US cotton subsidies released its interim report on 26 April. Briefing reporters, Clodoaldo Hugueney, Brazil's lead WTO negotiator, said the panel agreed with the key elements of Brazil's arguments. The report itself is confidential at this stage, but will be released on 18 June. Echoing the sentiment of other cotton producing developing countries, some of which are third parties in this dispute, Hugueney warned that "this panel is going to show how important it is that you really change this policy of developed nations". The wider repercussions for agricultural subsidies may also be far reaching.

Agriculture Talks Fail To Meet Expectations
BRIDGES Weekly Trade News Digest - Vol. 8, Number 15 Apr 28, 2004
The second set of post-Cancún negotiations on agriculture in the Committee on Agriculture (CoA) special session concluded on 23 April without making any substantive progress. As reported last week, the talks primarily focused on market access -- the area widely considered as being most difficult to resolve. The dozens of informal meetings between various groupings of Members held from 19-23 April revealed that major divergences on an appropriate formula for tariff reductions still persist, and CoA special session Chair Timothy Groser expressed some disappointment over the outcome. Wrapping up the agriculture week in a formal session, he said that even his "modest expectations" had not been met. A source from G-10 group, which includes countries such as Switzerland and Japan, said he was "not quite sure it's a setback (...) but there are certainly more divergent views".

"Byrd Amendment" Crops Up In Rules Group
BRIDGES Weekly Trade News Digest - Vol. 8, Number 15 Apr 28, 2004
The WTO Negotiating Group on Rules convened on 26 and 28 April, with delegates meeting informally between the official meetings. The Negotiation Group -- which focuses on the review and improvement of WTO rules that govern issues such as dumping, antidumping measures, subsidies and countervailing measures -- discussed antidumping at the 26 April meeting, while the 28 April meeting centred on fisheries subsidies.

Cotton Candy
Llewellyn H. Rockwell, Jr. (Mises Daily) Apr 29, 2004
What is and what is not free trade is a source of unending confusion, as the new World Trade Organization ruling on US cotton demonstrates.

EU enlargement: A May Day milestone
Economist Apr 30, 2004
After years of often tortuous preparations, the European Union is expanding from 15 countries to 25. The new entrants should catch up with its founder members eventually. But they might not want to emulate them too closely.

EU enlargement: Policy in the balance
Economist Apr 30, 2004
How will enlargement change the balance of power on the EU’s biggest issues?

EU enlargement: Ever-expanding Union? Recommended!
Economist Apr 30, 2004
There are worries that a European Union of 25 member countries will prove unmanageable. But the queue to join continues growing. Could the Union one day expand to take in the whole of continental Europe and beyond?

EU enlargement: A double-edged sword
Economist Apr 30, 2004
For a decade and a half already, western companies have been exploiting the EU newcomers’ proximity and cheap labour to establish low-cost manufacturing plants. Joining the Union will bring the new members a few more benefits—and some headaches

Four Questions IMF Candidate Rato Should Answer
David DeRosa (Bloomberg) Apr 30, 2004
Former Spanish Economy Minister Rodrigo Rato has broad support to become the next managing director of the International Monetary Fund. If investors were part of that not-too-transparent selection process, these are the four questions they should ask him.

Global: Trouble Brewing in Asia
Stephen Roach (MSDW) Apr 30, 2004
After two extended visits to Asia in the past six weeks, I’m starting to feel Asian. But I know of no better way to peer inside such a vast and diverse region. For most of the past 35 years, Asia, which accounts for 34% of world GDP (as measured on a purchasing-power-parity basis), has also been the fastest-growing region in the global economy. Quite simply, you have to know Asia in order to understand the global growth dynamic. Yet, as the pan-regional crisis of 1997-98 painfully demonstrated, the Asian growth model is not without its pitfalls. While critical lessons have been learned from that wrenching period, Asia still has lingering vulnerabilities. And that’s what worries me. I leave Asia more concerned about those vulnerabilities than when I began this trek.

Emerging Europe: Enlargement Day -- An Anticlimax For Currencies
Riccardo Barbieri & Oliver Weeks (MSDW) Apr 30, 2004
Even with all of Europe’s malaise in the past year, the enlargement of the EU to ten new member states is a political and economic milestone. Yet, for the currency markets, it will probably be close to a non-event. The reason is twofold.

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