News & Commentary:

May 2003 Archives


IMF Research Bulletin Recommended! Adobe Acrobat Required
IMF Research Bulletin Mar/May 2003
Research summaries on shocks to balance sheets and emerging market crises and on banking systems in a financially integrated world; country study: South Africa; call for papers for Fourth Annual IMF Research Conference; summaries of Third Annual IMF Research Conference and Global Linkages Conference; contents of special issue of IMF Staff Papers; visiting scholars at the IMF; titles of recent IMF policy discussion papers and working papers; list of external publications by IMF staff.,

Focus on the Middle East and North Africa Recommended!
Finance & Development Mar/May 2003
The issue focuses on the Middle East and North Africa: the problems it faces, the reasons its economic performance has been disappointing over the past decade, and the measures it could take to become better integrated with the global economy. Articles explore the region’s social policies, high unemployment rate, large and inefficient public sectors, underdeveloped financial sector, exchange rate regimes, and dominant role in world energy markets. Two other articles look at the political economy of oil-exporting countries worldwide and describe how they can protect themselves against fluctuating oil prices and dwindling reserves, while a third describes how the currencies of commodity-dependent countries are affected by fickle commodity export prices. Two new features are introduced with this issue: “People in Economics,” which profiles Nobel Prize winner Vernon Smith; and “Back to Basics,” which delves into the concept of Dutch disease. In his regular column, Kenneth S. Rogoff, the IMF’s Economic Counsellor and Director of the IMF’s Research Department, explains why he opposes the rigid coordination of dollar, yen, and euro monetary policy.

A Struggling Economy? It Depends on Your Perspective
Clive Crook (Atlantic) May 2003
Most nations would be only too grateful to have America's current set of economic problems.

Köhler on Latin America Adobe Acrobat Required
IMF Survey May 5, 2003
Plus politics of IMF lending; draft financial indicators guide; follow-up on Monterrey Consensus; public policies and poverty; stock market volatility; African stock markets.

WTO paper out on key issues in the tariff negotiations
WTO May 6, 2003
The WTO Secretariat, on 6 May 2003, issued a comprehensive discussion paper on “Industrial Tariffs and the Doha Development Agenda”. Containing many tables and charts, the paper focuses on the basic mandate given to negotiators at Doha and looks at specific issues facing developed, developing and least-developed countries.

The neoconservatives unmasked
Joshua Muravchik (IHT) May 6, 2003
Suddenly an obscure ideological label, the stuff of doctoral dissertations, appears daily in newspapers around the globe. "Neoconservatives" are supposedly responsible for the war in Iraq, the "axis of evil" rhetoric, and America's militant "war against terrorism" that has much of the world on edge.

U.S., Singapore Sign Free Trade Pact
ST May 7, 2003
US President George W. Bush and Singapore's Prime Minister Goh Chok Tong signed a free-trade agreement on Tuesday that would wipe out tariffs and other trade barriers on about US$33 billion in annual trade.

Currencies: Dollar falls as Fed leaves rates unchanged
IHT May 7, 2003
The dollar slid Tuesday after Federal Reserve policymakers left benchmark U.S. interest rates unchanged at a 41-year low. Traders said comments from the Fed indicating that there was still a chance the rates might be lowered at a later date contributed to the dollar's decline.

Listen less to the market Financial Times Subscription Required
Martin Wolf (IHT) May 7, 2003
Investment banking is today a discredited business. But that is not the heart of the matter. The question is how far stock-market driven capitalism itself is also discredited.

Chinese Mercantilism Wall Street Journal Subscription Required
Jonathan Mirsky (AWSJ) May 7, 2003
"Internationalizing China" describes how reformist leaders broke the constrictions of China's economic life.

Does Democracy Threaten the Free Market?
N. Joseph Potts (Mises Daily) May 7, 2003
Although Ludwig von Mises wrote approvingly of the just qualities of democracy, the incompatibility of democratic forms of government with wealth creation has been noted even within the institute bearing his name (e.g., Democracy, the God That Failed by Hermann Hoppe). World on Fire by Amy Chua (Doubleday 2003) is perhaps the most sweeping account of the visceral tension between democracy and free markets published to date. Subtitled "How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability," this methodical review of history and the present state of affairs seems at first to be merely another antiglobalist screed, complete with praise from the doyenne of the Liberal Left, Barbara Ehrenreich (Nickel and Dimed: On (Not) Getting by in America) on its dust jacket.

UN System Heads Urge Doha Progress for Global Development
UN May 7, 2003
The executive heads of the 27 organizations of the UN system at their spring session in Paris on 25-26 April 2003 said progress in the Doha negotiations is “urgent because there are still more than 1 billion people in today's world living without enough food to eat, without safe water to drink, without primary schooling or healthcare for their children”.

Europe’s single market
Economist May 7, 2003
Ten years after the European Union’s single market began, member countries are still flouting its rules and dragging their feet over implementing it fully. Brussels now plans a crackdown on the red tape that is tying up trade in many services.

MEA-WTO Relationship: Debate Matures, No Solution Yet
BRIDGES Weekly Trade News Digest - Vol. 7, Number 16 May 7, 2003
WTO Members convened on 1-2 May for a special (negotiating) session of the Committee on Trade and Environment (CTE), where discussion focussed on the relationship between the WTO and so-called 'specific trade obligations' in multilateral environmental agreements (MEAs). Although the question of formal observer status has yet to be decided, secretariats from six trade-related MEAs attended as ad-hoc invitees, and responded to questions from Members. Countries used the opportunity to further explore how to define a specific trade obligation (STO) and other aspects of the environmental mandate contained in the Doha Ministerial Declaration, though there was little agreement on how to move forward with the mandate or on the continuing status of MEA secretariats in the negotiations.

TRIPs Council: GI Extension Issue Crops Up In Negotiations On Multilateral System
BRIDGES Weekly Trade News Digest - Vol. 7, Number 16 May 7, 2003
During its special session from 29-30 April, the Council for Trade- related Aspects of Intellectual Property Rights (TRIPs) continued negotiations on the establishment of a multilateral register of geographical indications (GIs) for wines and spirits, based on a first draft text circulated by TRIPs Council Chair Ambassador Eui-yong Chung of Korea on 16 April. The contentious implementation issue of whether the higher level of protection awarded to wines and spirits should be extended to other GIs arose for the first time in the negotiations, sparked by Bulgaria and supported by a number of other countries.

Brussels sets ultimatum in US trade dispute
FT May 8, 2003
The EU raised the stakes in the biggest trade dispute ever to hit the World Trade Organisation, issuing an ultimatum to the US over a long-running battle on corporate tax breaks.

Dollar under pressure amid deflation worries
FT May 8, 2003
The dollar remained under pressure on the foreign exchange markets, falling against the yen after the Federal Reserve's signal about the risks of deflation.

Dealing Justly With Debt
Jack Boorman (IMF) May 9, 2003
I presume that there are few dissenters from the general proposition that we should try to deal justly with debt. That's the simple, and positive, part. The real issue turns on what that means in practice and how it is to be achieved.

Up or down, euro leaves exporters complaining
IHT May 9, 2003
The Euro is pole-vaulting ahead of the dollar, nearing levels it has not achieved since its introduction in January 1999. So are Europeans cheering? Hardly.

Make odious debt too risky to issue Financial Times Subscription Required
Michael Kremer and Seema Jayachandran (FT) May 9, 2003
The international community should make clear in advance which loans will be considered illegitimate.

Japan reveals $20bn of currency interventions
FT May 9, 2003
Japan said it had sold yen to the tune of $20bn in the first three months of the year, raising the prospect that it would continue to prevent the currency becoming too strong.

Negotiate, Don't Posture Wall Street Journal Subscription Required
Supachai Panitchpakdi (WSJ) May 9, 2003
Developing countries need freer trade.

Bush's offer to Arabs: Trade for peace
ST May 11, 2003
In a major foreign policy speech, President George W. Bush proposed the creation of a US-Middle East free trade area by 2013, one which would spur the creation of wealth in the region and bring about greater peace and stability for all.

The Euro-Sky Is Not Falling II Wall Street Journal Subscription Required
WSJE May 12, 2003
If euro weakness was bad before, why isn't its rise good now?

Currency fluctuations
Economist May 12, 2003
The world’s currency markets are unusually volatile, reflecting the contrasting economic circumstances of the big industrial countries and concern about the global outlook. Gyrating currencies make economic policymaking even more difficult than usual.

Capital idea that will hurt poorer countries Financial Times Subscription Required
FT May 13, 2003
The Basel II proposal would overestimate the risk of international bank lending to developing economies, writes Stephany Griffith-Jones, professor at Sussex University.

Dollar falls to new low after Snow comments
FT May 13, 2003
The dollar sank to a new four-year low against the euro following weekend comments by John Snow, Treasury secretary, that a weaker currency would help US exporters.

Time for the GM Moratorium to Go Wall Street Journal Subscription Required
Gregory Conko & C.S. Prakash (WSJE) May 13, 2003
Farmers in less developed countries stand to win big if the U.S. decides to file a complaint.

The Euro Also Rises Wall Street Journal Subscription Required
Melvyn Krauss (WSJE) May , 2003
The war in Iraq and higher interest rates helped strengthen the euro and make Europe more attractive to aggressive investors.

Cooperation in Trade and International Financial Integration
Horst Köhler (IMF) May 13, 2003
The end of the war in Iraq has improved the balance of the risks. But in order for the world to seize the upside potential, the overriding priority must be to work toward restoring global confidence to consumers and investors. In a world of growing economic and political interdependence, this requires the credible demonstration of international cooperation. Strengthening international trade is a vital ingredient of confidence-building. It will support the emerging economic recovery, and by demonstrating a forceful commitment to the development agenda, it is also the most appropriate anti-dote to the risk of fragmentation among nations. That is why a successful Doha Round is so important.

The Root of all Evil Recommended!
Slate May 13, 2003
Will derivatives kill us or make us stronger?

Showdown over genetically modified crops Financial Times Subscription Required
FT May 14, 2003
The Washington-led challenge to the European Union moratorium will take trade disputes into untested areas, further straining the legitimacy of the World Trade Organisation.

Euro Up, Dollar Down Wall Street Journal Subscription Required
WSJ May 14, 2003
Relax, the common currency is doing fine.

Around the markets: Dollar could careen even lower
IHT May 15, 2003
How far will the dollar fall and the euro rise? A lot further than forecasters thought even a few weeks ago.

How SARS could cause a trade war Recommended!
Philip Bowring (IHT) May 15, 2003
The epidemic of severe acute respiratory syndrome is helping perpetuate the undervaluation of Asian currencies. That will negate many of the benefits for the U.S. economy of the weaker dollar and prevent a much-needed major reduction in the U.S. trade deficit, now running at an unsustainable $500 billion a year.

Success in weathering external shocks helped by radical reforms
WTO May 15, 2003
WTO members, in concluding their review of the trade polices and practices of New Zealand on 14 May 2003, said the country is a "vivid example of the benefits of unilateral market-oriented reform". They hoped that New Zealand would take other members' concerns in the negotiations, especially with regard to tariff peaks and SPS measures.

US Requests WTO Consultations With EU On Biotech Moratorium
BRIDGES Weekly Trade News Digest - Vol. 7, Number 17 May 15, 2003
The US on 13 May officially requested WTO consultations with the EU over its continued de facto moratorium on the approval of genetically modified organisms (GMO). Canada has also filed a request while Argentina and Egypt have expressed their intention to follow suit. The countries allege that the moratorium poses an unjustified trade barrier in violation of various WTO Agreements. The European Commission expressed regret at the request, which it described as "legally unwarranted, economically unfounded and politically unhelpful". Civil society groups were also quick to attack the decision, accusing the US of trying to force biotech foods on European consumers.

Reviving The S&D Process: GC Chair Circulates Proposals
BRIDGES Weekly Trade News Digest - Vol. 7, Number 17 May 15, 2003
The next step in looking at how to revive the mandated review of special and differential treatment (S&D) provisions at the WTO's Committee on Trade and Development (CTD) was taken on 5 May, when General Council (GC) Chair Perez del Castillo (Uruguay) circulated a categorised list of agreement-specific proposals. These proposals were broken down into three categories -- basket one for agreement at/before the Cancun Ministerial Conference (10-14 September 2003), basket two for those to be "addressed" in relevant WTO bodies, and basket three for which "wide divergences of views" existed among Members. While most Members have had positive initial responses to the process, developing countries have generally emphasised that it still remains to be seen how things develop.

Does IMF Fiscal Policy Advice End Up Hurting The Poor?
IMF May 15, 2003
The purpose of this forum is to present and discuss the IMF rationale for its fiscal policy advice and the IMF view on the impact of its advice on growth and poverty.

Currencies: Euro sinks on news of stalling economies
IHT May 16, 2003
The euro fell Thursday after the European Union said growth stalled across the 12-nation monetary union in the first quarter, bolstering speculation the European Central Bank will lower interest rates next month.

The world needs to take some risks for growth Financial Times Subscription Required
Francis Mer (FT) May 16, 2003
The G8 leading industrial countries must work together to bolster confidence in the market economy.

Joint Statement by Heads of IMF, World Bank and WTO
IMF/WB/WTO May 16, 2003
At this critical time, political commitment to multilateralism in economic policymaking is more important than ever to enable all countries to share in the prosperity that globalisation offers, and to ensure that a more prosperous and equitable world becomes a more stable and secure world as well.

Euro Beginning to Flex Its Economic Muscles Recommended!
Mark Landler (NYT) May 18, 2003
The euro is growing into a cheeky rival to the dollar, one of the most visible symbols of America's power in the world.

Japan braces for threat of systemic crisis
FT May 19, 2003
Japanese markets will be braced for turmoil after the government invoked emergency legislation on the weekend to bail out Resona, effectively nationalising the bank.

A declining dollar will put Europe on edge
Moises Naim (FT) May 19, 2003
The greenback's fall will have serious consequences for the transatlantic relationship.

Financial globalization Adobe Acrobat Required
IMF Survey May 19, 2003
Lessons for Latin America; Lawlessness and economics; Case against corruption; IMF fiscal policy advice.

Cooperation or Confrontation
Economist May 19, 2003
Finance ministers from the world’s biggest economies have promised to co-operate and help contribute to global growth. Fine words—but is it empty rhetoric?

Euro back at debut value
IHT May 20, 2003
The euro, propelled by fresh evidence that the Bush administration is content to watch the dollar slide in value, surged to a four and a half year high against the dollar Monday.

The false optimists of the emerging markets Financial Times Subscription Required
FT May 20, 2003
The global slowdown is fuelling a rally in emerging market debt prices but in the long run a correction is inevitable, writes Desmond Lachman of the American Enterprise Institute.

Deflation Is Only a Symptom Wall Street Journal Subscription Required
George Melloan (WSJ) May 20, 2003
The world economy is in a rather sad state.

The Dollar and the Balance of Trade
Frank Shostak (Mises Daily) May 20, 2003
Since January 2002 the U.S. dollar has fallen by 25.6% against the Euro and 13.2% against the yen.

In or Out Wall Street Journal Subscription Required
WSJE May 21, 2003
Don't repeat the currency crises of the early 1990s.

Asia's Unease Over the Dollar Wall Street Journal Subscription Required
Ruchir Sharma (AWSJ) May 21, 2003
A weak dollar may not revive the U.S. economy.

WTO Market Access Paper Gives Members Food For Thought
BRIDGES Weekly Trade News Digest - Vol. 7, Number 18 May 21, 2003
On 16 May, Pierre-Louis Girard, Chair of the WTO's Negotiating Group on non-Agricultural Market Access, issued a first draft 'modalities' paper that offers a series of formulas for reducing tariff and non-tariff barriers in industrial goods as part of the Doha round of trade negotiations launched in November 2001. The compilation document comes ahead of a 26-28 May meeting of the Negotiating Group, which is mandated to agree on modalities -- or targets for achieving the objectives of the negotiations -- by the end of May.

Singapore: Engaging The U.S. With Trade Far Eastern Economic Review Subscription Required
FEER May 22, 2003
A new free-trade deal between Singapore and the U.S. could benefit all of Asean and keep America involved in the region.

Bush letting dollar do the talking now
IHT May 22, 2003
The Bush administration, unable to jawbone Europe and Japan into helping it stimulate a sluggish global economy, has decided to let its money do the talking.

Euro's rise no luxury for high-end businesses
IHT May 26, 2003
Because many of the baubles and high-fashion products in luxury stores are made, or at least marketed, in Europe, the euro's climb has meant a cost increase for shoppers armed with dollars or yen.

Battles among regulators could damage trade Financial Times Subscription Required
Guy de Jonquières (FT) May 26, 2003
The fragile state of US-EU relations increases the danger that tempers will run out of control.

Is the world stumbling into an economic quagmire?
Paul Krugman (IHT) May 26, 2003
Suddenly the d-word is on everyone's lips. The International Monetary Fund has just released a rather ominous report titled "Deflation: Determinants, risks and policy options." The report made headlines by suggesting that Germany is likely to join Japan in the falling-price club.

The Challenges of Globalization and the Role of the IMF
Horst Köhler (IMF) May 27, 2003
Globalization means a process of increasing international division of labor and the accompanying integration of national economies through trade in goods and services, cross-border corporate investments, and financial flows.

Industrial Market Access Modalities Approval Awaits Agriculture
BRIDGES Weekly Trade News Digest - Vol. 7, Number 19 May 28, 2003
WTO Members convened on 26-28 May for what was supposed to have been the final date for approving market access modalities for non- agricultural goods. However, as was widely expected, the Negotiating Group on Non-agricultural Market Access deadline passed without agreement on a Chair's draft paper submitted on 16 May.

WTO Limits NGO Access To Cancun Ministerial
BRIDGES Weekly Trade News Digest - Vol. 7, Number 19 May 28, 2003
At an informational session hosted by the Mexican government in Geneva on 27 May on logistics for the Fifth WTO Ministerial Conference in Cancun (10-14 September), the WTO Secretariat and the Cancun Organising Committee informed attending non-governmental organisations (NGOs) of accreditation and logistical matters for Cancun.

A floating currency would be good for China Financial Times Subscription Required
Fred Hu (FT) May 29, 2003
If the renminbi were allowed to appreciate, it would vindicate the country's macroeconomic and structural policies, writes Fred Hu.

Two Cheers for Chile Wall Street Journal Subscription Required
WSJ May 29, 2003
Securing another bilateral plank in the U.S. global free-trade strategy.

Economic harmony likely to elude leaders
FT May 30, 2003
If the Evian summit is intended to begin to rebuild transatlantic relationships, its success is threatened by the alarmingly shaky foundations of the world economy.

Evian prepares for world’s elite
IHT May 30, 2003
Visitors descend on this Alpine spa town for the Group of Eight summit meeting of the world’s largest industrialized nations.

It's Time for Mexico to Dollarize Wall Street Journal Subscription Required
Steve Hanke (WSJ) May 30, 2003
The peso is just too expensive to keep.

The Evian summit
Economist May 30, 2003
The leaders of the world’s richest nations gather in Evian, France, from June 1st, for their annual summit. They must quickly patch up their differences over the war in Iraq and get to work on a long list of economic worries.

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