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October 2002 Archives


From North-South to South-South
Robert J.S. Ross and Anita Chan (Foreign Affairs) Sep/Oct 2002
Competition in the production of export goods is depressing workers' wages in the countries of the South. Future trade deals must give labor rights their due.

Advancing Peace in the Middle East
A. Robert Abboud and Newton N. Minow (Foreign Affairs) Sep/Oct 2002
The conflict in the Middle East may seem hopeless, but the United States and the West still have a key resource to bring to the search for peace: economic development.

Bretton Woods Update 30 Sep/Oct 2002
New report queries World Bank influence over PRSP analysis; Bank "cornering market" in trade capacity building; Bank researcher rejects trade openness orthodoxy; UN report urges greater IMF and WB accountability; The IMF in Latin America: tough cop, social worker or skunk?; Krueger sets out IMF latest on debt arbitration; World Bank questions ethics of World Summit report response, and more.

The Roaring Nineties Recommended!Joseph Stiglitz
Joseph Stiglitz (Atlantic Monthly) Oct 2002
"Economies are like large ships: they cannot be turned around quickly." A Nobel laureate and former Clinton adviser offers a revised economic history of the 1990s.

Fund managers drive banks to despair
Euromoney Oct 2002
At the top of the market, every ambitious bank wanted to own a global asset management operation. But now that markets have plunged, what are these investment houses really worth?

Grim data unnerve markets worldwide
IHT Oct 1, 2002
Investors recoiling from the prospect of war in Iraq were hit with a barrage of bad economic news Monday, battering stock prices around the world.

A valuable stick Recommended!
FT Oct 1, 2002
Financial crises in developing countries happen. Thankfully, they are not as frequent as they were in the 1980s but, as anyone in Argentina could report, the mess is worth avoiding. Developing countries, private sector creditors, rich country finance ministers and the International Monetary Fund share the same goals in trying to prevent crises and improving crisis resolution but cannot agree a common strategy. They made little progress at the IMF meeting over the weekend.

Road to Recovery Recommended!
FEER Oct 3, 2002
Five years after the Asian financial crisis, many of the region's banks are being consolidated. Here's an overview of the progress made and two case studies of successful turnarounds.

UN warns on development goals
FT Oct 2, 2002
The United Nations warned yesterday that many countries were failing to meet the development goals leaders agreed two years ago at the UN's Millennium General Assembly. In his first progress report since the goals were agreed at the assembly, and then endorsed at the Johannesburg summit on sustainable development this summer, Kofi Annan, the UN's secretary-general, said the picture looked "decidedly mixed". "The world is falling short. If we carry on as we are, most of the pledges are not going to be fulfilled," he said.

A Good Compromise on the ICC Wall Street Journal Subscription Required
Per Stig Moeller (WSJE) Oct 2, 2002
How to preserve the integrity of the International Criminal Court.

Japan’s banking crisis
Economist Oct 2, 2002
Japan’s prime minister, Junichiro Koizumi, has replaced the top bank regulator with someone more willing to put public money into the bad banks that lie at the centre of the country’s financial chaos. But reshuffling the cabinet is a far cry from cleaning up dud loans.

Dispute Settlement I: Brazil - Sugar & Cotton
BRIDGES Weekly Trade News Digest - Vol. 6, Number 33 Oct 2, 2002
At a 27 September meeting of the Dispute Settlement Body (DSB), Brazil announced its intention (together with Australia) to begin consultations with the EC over sugar subsidies and with the US over cotton subsidies. In the latter instance, Brazil's case has been bolstered by a recent Oxfam report on the destructive impact of developed country cotton support on Africa, as well as potential support from West African countries.

Dispute Settlement II: Lumber, Sardines And Wine
BRIDGES Weekly Trade News Digest - Vol. 6, Number 33 Oct 2, 2002
On 27 September, the WTO issued the report of the panel (WT/DS236/R, available online at: that had examined Canada's complaint over the United States' preliminary determinations with respect to certain softwood lumber from Canada. As expected, the ruling was similar to a preliminary judgement released by the panel in July 2002, which in its essence found in favour of Canada. The dispute, in which Canada challenged countervailing duties imposed on imports of Canadian softwood lumber by the US, led to the formation of a panel on 5 December 2001 (see BRIDGES Weekly, 6 November 2001, The US contended that low stumpage fees in the form of royalties charged by Canadian provinces to loggers were an illegal subsidy for Canada's softwood exports. Consequently, the US imposed countervailing duties of more than 19 per cent and antidumping duties of 8 per cent. Canada filed a dispute arguing, inter alia, that its stumpage fees did not meet the definition of a countervailable subsidy, as they did not confer "a benefit", an argument that was upheld by the panel.

Agriculture: Negotiations Chair Calls On Membership To Meet Deadlines
BRIDGES Weekly Trade News Digest - Vol. 6, Number 33 Oct 2, 2002
Speaking to the special (negotiating) session of the WTO Committee on Agriculture (CoA) on 27 September, CoA special session Chair Stuart Harbinson imparted a sense of urgency on progress in the agriculture negotiations. In his summary of the previously held informal negotiations on domestic support, he called on Members to "reflect deeply and urgently on what your delegation can contribute" to reach an agreement on modalities (i.e. negotiating formulas) "acceptable to all by the end of next March." Besides Members' disagreement on various agricultural subsidy issues referred to by Harbinson, some sources further voiced concern about the newly launched WTO actions by Brazil against the EC on sugar subsidies and against the US on cotton. According to EC agriculture trade negotiator Jesus Zorilla, the Brazilian actions had served to "cloud the climate of the negotiations and radicalise positions".

Don't Worry About China's Yuan Wall Street Journal Subscription Required
Jonathan Anderson (AWSJ) Oct 3, 2002
The yuan has a relatively minor impact on the rest of the world.

Reforms based on realism
Bradley O. Babson (IHT) Oct 7, 2002
A first set of talks between James Kelly, U.S. assistant secretary of state for East Asia, and the government of North Korea concluded this weekend. Although Chairman Kim Jong Il and his Communist regime are part of President George W. Bush's "axis of evil," Washington has opted to pursue regime transformation rather than regime change. This engagement has been a long time in coming. But North Korea has been trying for years, in its own awkward and eccentric way, to get closer to the outside world, and Washington, together with Tokyo, has finally chosen to respond.

EU entrants set to wrap up talks by December
FT Oct 7, 2002
The European Commission will on Wednesday conclude that 10 countries, the majority former communist states, will be ready to wrap up enlargement negotiations by December at the summit of European Union heads of state in Copenhagen. But the Commission falls short of offering Turkey a date for starting negotiations and instead pledges to double the amount of "pre-accession" financial assistance to the Ankara government to nearly 300m euros ($296m) by 2006.

Bargaining With Russia
Mark Brzezinski (NYT) Oct 8, 2002
What is driving Russia's actions at the United Nations? Self interest, of course.

Towards a Better Globalization
Sérgio Pereira Leite (IMF) Oct 7, 2002
For us at the IMF, globalization is an opportunity for increasing world prosperity and eliminating poverty. We recognize, however, that globalization—by itself—does not ensure benefits for all. Irrespective of the virtues of the market, no invisible hand will alone resolve this challenge. Policymakers must be prepared to manage globalization.

Development, Ag Concerns Dominate WTO Negotiations Stocktaking
BRIDGES Weekly Trade News Digest - Vol. 6, Number 34 Oct 8, 2002
At a 3-4 October meeting of the WTO's Trade Negotiations Committee (TNC) -- the body established to monitor progress in the negotiations launched last November in Doha, Qatar -- many developing countries expressed grave concern over lack of progress on Special and Differential Treatment (S&D) and Implementation issues. Members also focused heavily on lack of advancement in agriculture, which many say could hold up decisions in other aspects of the negotiations.

WTO: Little Movement On Special & Differential Treatment Despite New Workplan
BRIDGES Weekly Trade News Digest - Vol. 6, Number 34 Oct 8, 2002
7 October saw the first formal meeting of the WTO's Committee on Trade and Development (meeting in special sessions) since the extension of the 31 July 2002 deadline on the review of special and differential treatment (S&D) provisions. With a new deadline of reporting "with clear recommendations for decision by 31 December 2002" and a detailed workplan in hand, developing country Members were hoping for a significant upturn in the pace of these talks. However, since Members for the most part maintained traditional positions on the same 'core' issues of the debate, sources reported little progress. Due to the meeting running overtime, Chair Ransford Smith (Jamaica) indicated that an additional date would be sought to complete the meeting's agenda.

European Union
Economist Oct 10, 2002
Europe’s finance ministers have abandoned plans to balance their budgets by 2004, after bitter wrangling about the stability-and-growth pact. The setback comes as the European Commission announces that ten applicant countries should be ready to join the European Union in 2004.

EU opens the door to 10 states by 2004
IHT Oct 10, 2002
The European Commission recommended Wednesday that 10 countries be admitted to the European Union by 2004. Turkey was not among them.

Risk hunters win Nobel prizes
FT Oct 10, 2002
US-based academics share the Nobel prize for bringing economics into the laboratory to see whether people behave as classical economic theory dictates.

The Market Laboratory Recommended!
Lynne Kiesling (WSJ) Oct 10, 2002
Experimental economics matters -- and wins prizes.

EU Credibility on the Line
Heather Grabbe (WSJE) Oct 10, 2002
Turkey is the litmus test. If the EU can't forge a constructive relationship with Ankara, it has little hope of becoming a serious foreign policy actor.

Financial markets
Economist Oct 11, 2002
Pessimism in international credit markets is unsettling equity investors, and vice versa. Neither market has any ready answers or yet knows which way to turn.

Report says financial corruption widespead
FT Oct 15, 2002
Financial corruption remains a serious problem in international business despite the widespread introduction of new laws against bribery, according to an business risk consultancy.

Investors pour back into stocks
IHT Oct 16, 2002
Investors desperately seeking shreds of good news finally got some Tuesday from big global corporations, and they responded by snapping up stocks in a powerful rally that spanned most markets.

The eurozone's economic course Financial Times Subscription Required
Martin Wolf (FT) Oct 16, 2002
It is no surprise that slow growth is creating tensions in the eurozone. But those tensions could be valuable if taken as an opportunity for significant reforms.

Burying the Competition Recommended!
FEER Oct 17, 2002
Rather than enriching foreigners blinded by its market size, China is proving victorious in the manufacturing war. Its power is adding to global deflation and changing the way industries supply the world. Plus: Asia's Woes Are Not Just China, Philips Switches Tack.

Sovereign Debt Restructuring: Where Stands the Debate? Recommended!
Jack Boorman (IMF) Oct 17, 2002
We are now almost one year into the renewed debate on the resolution of sovereign debt crises that began with a speech last November by Anne Krueger proposing the creation of a sovereign debt restructuring mechanism (SDRM). This is not, by any means, the first time this issue has been discussed, but it is the first time it has become a central item on the agenda of the official sector and the first time that there is real promise of something operational coming out of the discussion. The issue is rather more clearly drawn in this discussion than at any time in the past. That is partly the result of the clearer separation in these debates between the debt problems of the poorer countries, which are being dealt with under the Highly Indebted Poor Country (HIPC) initiative, and the issues that surround emerging market borrowers and the workings of the international capital markets. The SDRM debate is focused squarely on the latter.

Crisis Prevention and Resolution: The Role of Sovereign Debt Restructuring Recommended!
Anne Krueger (IMF) Oct 17, 2002
The ultimate goal of our efforts is indeed to promote growth and raise living standards in emerging market economies and in the developing world. The question is: How can we best do so in a world with sizable private capital flows to many of these countries and where private flows now dominate the size of official flows? For the most part, countries able to attract private capital flows are ones with good macroeconomic and structural policies; they are thereby able to manage their debt well and reap the benefits of the foreign capital.

Top-Down Or Bottom-Up? Members Deliberate How To Address WTO-MEA Relationship
BRIDGES Weekly Trade News Digest - Vol. 6, Number 35 Oct 17, 2002
At the third meeting of the special (negotiating) session of the WTO Committee on Environment (CTE) on 10-11 October, WTO Members continued to disagree on how to examine the relationship between the WTO and multilateral environmental agreements (MEAs). Major discussions took place over whether Members should adopt a 'top-down' approach, such as that favoured by the EC and Japan, or a 'bottom-up' approach, such as that advocated by Australia and a number of other Members.

CTD Looks At Technical Assistance For 2003
BRIDGES Weekly Trade News Digest - Vol. 6, Number 35 Oct 17, 2002
On 8 and 9 October, the 42nd session of the WTO's Committee on Trade and Development (CTD) met to address, inter alia, the planning of technical assistance for 2003, the ongoing work on the participation of developing countries in world trade, and a review of the flexibilities for developing countries under GATT 94 Article XVIII (i.e. Government Assistance to Economic Development). The discussions of the first day focused specifically on technical assistance matters, with the second day looking at the other items. While some headway was made on the TA issues, most of the others saw limited discussions, with many being pushed forward to the next CTD meeting on 11 November.

Euro rules 'stupid', says Prodi
FT Oct 18, 2002
The economic rules underpinning Europe's single currency suffered another blow after Romano Prodi, the president of the European Commission, said they were "stupid".

Ecuador Survives on a Dollar Diet Wall Street Journal Subscription Required
WSJ Oct 18, 2002
But don't cheer yet.

Putting GM technology in context
Joseph D. DeVries (CheckBiotech) Oct 18, 2002
As the global debate over the use of genetically modified crops grinds on, it seems increasingly clear that much of the argument is about context. Anti-biotech campaigners in food-secure, developed countries see no reason to take the risks involved in biotechnology in order to make food more abundant. For the billion or so chronically hungry individuals of developing countries, the issue is far from clear-cut.

Don't Ignore the Sanctions
Martin Indyk (Brookings) Oct 15, 2002
President Bush is currently pursuing a policy of "regime change" in Iraq. But, by seeking a UNSC resolution that tightens the rules on inspections, the Administration is leaving Saddam Hussein with the option of accepting its new requirements and cooperating for a time with the inspectors. As the President noted on October 14, "It's his choice to make." If Saddam does so, the Administration will then be hard-pressed to avoid returning for a time to a policy of "containment." With new rules of engagement, inspections will become a stronger mechanism for attempting to contain Saddam's WMD threat. But an effective containment regime cannot depend on inspectors alone since at best they can only hope to find existing WMD capabilities and monitor dual-use facilities. Effective containment has always depended on a tightened sanctions system that shuts down Saddam's ability to acquire more WMD capabilities. Without closing off Saddam's $2-3 billion a year smuggling operation, new inspections may strengthen the bars on Saddam's cage only to leave the cage door open.

Pressure mounts against a strong dollar
IHT Oct 21, 2002
To hear many American manufacturers tell it, their biggest competitive threat is not China or South Korea and certainly not Europe.

Anti-euro inconsistency Financial Times Subscription Required
Philip Stephens (FT) Oct 21, 2002
Why should anyone think it is better to endure a damagingly misaligned exchange rate outside the euro than to seek a competitive and permanently stable rate within it?

Irish Yes vote paves way for EU enlargement
FT Oct 21, 2002
Ireland ratified the Nice treaty at the second attempt, with an emphatic Yes vote that removes the biggest obstacle in the path to the enlargement of the European Union.

The Euro's Broken Promises Wall Street Journal Subscription Required
David Malpass (WSJE) Oct 21, 2002
The EU needs good monetary policy, not just a single currency.

Rich countries urged to lead by example on trade access
IMF Survey Oct 21, 2002
Expanded trade access for developing countries; capacity building; central banks in globalized economy; financial soundness indicators; U.A.E. avoids "oil curse"; global inequality; Bhalla on growth and poverty reduction.

Paying for EU enlargement
Economist Oct 23, 2002
European heads of government will have to work hard to keep the enlargement process on track when they meet this week. The cost of admitting new members is the biggest hurdle still to be overcome.

Linking Taiwan to China
AWSJ Oct 23, 2002
The race for economic integration before official political separation is on.

Basel II: Modernizing Asia's Banks
Philip D. Sherman and Corinne Neale (AWSJ) Oct 23, 2002
Modernizing financial institutions is worth the heartache.

Anti-dumping investigations decline in first half of 2002
WTO Oct 23, 2002
The WTO Secretariat reported, on 23 October 2002, that in the period 1 January to 30 June 2002, 17 members initiated 104 anti-dumping investigations against exports from a total of 39 different countries or customs territories. During the corresponding period of 2001, 19 WTO members had initiated 149 anti-dumping investigations.

WTO Rules Negotiations: Deep Divides Prevail On Harmfulness Of Fisheries Subsidies
BRIDGES Weekly Trade News Digest - Vol. 6, Number 36 Oct 24, 2002
At a 16-18 October session of the WTO Negotiating Group on Rules, Members continued their debate over whether and, if so, to what extent WTO subsidy rules needed to be improved with respect to government support granted to the fishing sector. Korea argued that "no reasoned determination" had so far been made on the "causality between fisheries subsidies and the depletion of stocks". However, the US -- supported by 'Friends of Fish' Argentina, Australia, Iceland, New Zealand and Peru -- countered Koreas argument by pointing to the Plan of Implementation adopted at the World Summit on Sustainable Development (WSSD) in September, which it said called for countries to eliminate harmful fisheries subsidies "exacerbating the overexploitation of fish stocks". Also at the Rules talks, negotiations focused on antidumping and subsidies issues in general, with new submissions tabled inter alia by the US, India and Brazil.

Developed Countries Seek To Relegate Most S&D Provisions To Relevant WTO Bodies
BRIDGES Weekly Trade News Digest - Vol. 6, Number 36 Oct 24, 2002
In an ongoing quest for 'progress' in the review of special and differential treatment (S&D) provisions, the WTO's Committee on Trade and Development (CTD) met in special sessions on 17, 18, 21, 22, & 23 October. Generally speaking, agreement-specific proposals were not responded to favourably by developed countries -- who reportedly made requests for further clarifications, commented on the inefficiency and/or impracticality of the solutions proposed, and suggested that the topics were best dealt with outside the CTD (i.e. in the relevant WTO bodies). Discussions covered the following agreements (date in brackets): Subsidies & Countervailing Measures (21st), Anti-Dumping (21st), Technical Barriers to Trade (TBT) (17th), Safeguards (23rd), and Services (23rd). Cross-cutting issues, including the latest proposal from Hungary, were addressed at the 18 October session, which also took up elements of the 7 October agenda (see BRIDGES Weekly, 9 October 2002). Ongoing discussions around a monitoring mechanism for S&D were taken up an informal 22 October session.

Brazil Investors Aren't Racing for Exits Wall Street Journal Subscription Required
Mary Anastasia O'Grady (WSJ) Oct , 2002
"Lula" da Silva courts the IMF.

Bad Science, Worse Trade Policy Wall Street Journal Subscription Required
Nao Matsukata (WSJE) Oct 25, 2002
The European Commission lifts the moratorium on agricultural biotechnology products.

APEC, Terrorism, and Trade
Economist Oct 25, 2002
Terrorism has overshadowed the economic agenda of Asia-Pacific leaders at their summit in Mexico. Free trade depends on safe trade.

A better way of helping eastern Europe Financial Times Subscription Required
FT Oct 25, 2002
The EU should avoid creating large bureaucracies to handle regional development aid, says Heather Grabbe, research director of the Centre for European Reform. Europe Strains to Put Laggards Back in Line Recommended!
NYT Oct 27, 2002
Nearly four years after the establishment of the euro, Europe's grand experiment in a monetary union is fraying badly. Bush Opens Way for FTAs with ASEAN Countries
ST Oct 28, 2002
Enterprise for Asean Initiative offers prospect of bilateral trade pacts PRESIDENT George W. Bush has launched a new scheme that will make it easier for Asean countries to conclude free-trade agreements with the United States, and thus gain even broader access to its market. Will Brazil avert a default? Financial Times Subscription Required
FT Oct 29, 2002
The president's handling of the weakened economy will have repercussions for emerging markets generally and for the IMF. Pass the Check Wall Street Journal Subscription Required
WSJE Oct 29, 2002
EU brinkmanship threatens enlargement. IMF tells eurozone to heed stability pact
FT Oct 30, 2002
The IMF has weighed into the debate over the eurozone's stability pact, arguing that the big three countries should heed its message and tighten fiscal policy. IMF Executive Board Discusses the Monetary and Exchange Rate Policies of the Euro Area and the Trade Policies of the European Union
IMF Oct 30, 2002
On October 18, 2002, the Executive Board of the International Monetary Fund (IMF) concluded the discussion of the monetary and exchange rate policies of the euro area and the trade policies of the European Union. The background section of this PIN reflects information available at the time of the Executive Board meeting.

Commission clears plan to boost access to medicines for developing countries
EU DGT Oct 30, 2002
On 30 October, the European Commission cleared a plan to boost access to key medicines for developing countries. Under this plan, producers will be able to increase supplies of medicines to poor countries at lower prices, while ensuring that these medicines are not diverted back to the European Union.

Free Trade: Nothing's Free
FEER Oct 31, 2002
Misgivings surface over an Asean-China free-trade zone. Leaders need to decide on a launch date.

Fixing Asia's Bad-Debt Mess Recommended! Wall Street Journal Subscription Required
Laurence W. Berger, George R. Nast and Christian Raubach (AWSJ) Oct 31, 2002
The aftereffects of the 1997-98 financial crisis.

Looking beyond Kyoto Financial Times Subscription Required
FT Oct 31, 2002
Debate has begun on how to combat climate change after 2012. The challenge will be to design a framework that can satisfy both the US and the developing world.

Services: Developing Country WTO Members Join Forces To Move Ahead On 'Horizontal' Issues
BRIDGES Weekly Trade News Digest - Vol. 6, Number 37 Oct 31, 2002
At a 28 October special session of the Council for Trade in Services (CTS), discussions centred on two 'horizontal' services issues of major importance to developing countries: 'credits' for autonomous liberalisation (AL), and review of the implementation of GATS Article IV (facilitating developing countries' integration into global services trade).

Farmers' Groups Meet In Geneva and Bolivia To Impact On WTO Negotiations
BRIDGES Weekly Trade News Digest - Vol. 6, Number 37 Oct 31, 2002
Convening in Geneva from 23-25 October, farm leaders from Asia, Europe, West Africa and North America discussed options for establishing fair and equitable agricultural trade rules at the WTO in an overall effort to "balance" the ongoing farm trade negotiations held under the Doha mandate. Shortly beforehand, several farmers' organisations from the Cairns Group of agriculture-exporting countries met on the sidelines of the Cairns Group's 18-21 October Ministerial Meeting at Santa Cruz de la Sierra, Bolivia, where they expressed their support for a recent Cairns Group proposal on export subsidies, market access, and domestic support. However, in a parallel international seminar on "Peasants in International Trade Agreements," Bolivian peasant organisations criticised the Cairns Group for acting in the interests of agro- business only, and called on the Bolivian government to leave the Cairns Group so as to be able to safeguard its vulnerable rural producers.

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