News & Commentary:

October 2003 Archives


World Bank social and environmental policies: abandoning responsibility?
Bretton Woods Update No.36 Sep/Oct 2003
Plus: IFC decision pending on controversial Haiti free trade zone; Bank silent on corporate corruption in Lesotho; Gender at the World Bank: an uphill battle; PRSPs: Political space at whose expense?; Bank-Fund Annual Meetings 2003.

Bush and Foreign Aid Recommended!
Steven Radelet (Foreign Affairs) Sep/Oct 2003
The White House's recent call for a dramatic increase in U.S. foreign aid, in the form of a new Millennium Challenge Account and an HIV/AIDS proposal, is unexpected but welcome. By themselves, however, these programs can have only modest success in fighting poverty and combating AIDS. Much more must be done.

Hegemony or Empire? Recommended!
Niall Ferguson (Foreign Affairs) Sep/Oct 2003
Did the United Kingdom's influence in its heyday match the United States' today? Two Hegemonies provides an answer; but "empire" might be the better word.

The Renminbi Exchange Rate and the Global Monetary System
John Williamson (IIE) Oct 2003
It would be truly tragic if China's success in transitioning from socialism to a market economy were to be jeopardized by a banking crisis or by an international confrontation with countries that conclude they cannot live with a super-competitive China. Both threats seem altogether too likely if China retains the existing peg to the dollar. A substantial renminbi appreciation is indeed desirable, both from the standpoint of China's own needs and the world economy. Such an adjustment must be big enough to convince market participants that the change is complete, not a first step, since otherwise a revaluation may simply encourage more speculative inflows.

The Exchange Rate Of The Won
C. Fred Bergsten (IIE) Oct 2003
Korea should contribute to an exchange rate adjustment package involving a Chinese revaluation of 20 to 25 percent, which is necessary to check China's excessive reserve buildup and help convert the huge US current account deficit. A rise of 10 to 15 percent of the won against the dollar will result in a depreciation of the won against the renminbi that will roughly match its appreciation against the dollar. In addition, the Japanese yen should rise further against the won, in light of Japan's continuing huge global surpluses and massive reserve buildup.

Dollar's steep slide slows
IHT Oct 1, 2003
The dollar slowed a dizzying slide Tuesday after Japan intervened to weaken the yen in currency markets.

A very dangerous game Financial Times Subscription Required
Martin Wolf (FT) Oct 1, 2003
Asia is providing the US with goods and services in return for overpriced pieces of paper. When gullible foreigners can no longer be persuaded to finance the US, the dollar will decline.

Dollar rises against yen as BoJ intervenes
FT Oct 1, 2003
The dollar bounced sharply against the yen as Bank of Japan intervention reversed the latest of the US currency's downward lurches.

The world suddenly looks bleaker
Economist Oct 1, 2003
The Bush administration is playing with fire by adopting a weak-dollar policy for political ends

GC Chair Looking For Guidance On Way Forward
BRIDGES Weekly Trade News Digest - Vol. 7, Number 32 Oct 1, 2003
The Chair of the WTO General Council (GC), Uruguayan ambassador Carlos Perez del Castillo, indicated on 30 September that he would bring together the heads of delegations in Geneva to plan for the path ahead in the all-but-stalled Doha round negotiations. For the time being, WTO negotiating sessions on agriculture and non- agricultural market access scheduled for October have been cancelled. The special session of the Committee on Agriculture was to have met from 6-9 October. Members are, however, waiting for guidance from the next GC, scheduled for 20-22 October. This meeting will be preceded by at least one heads of delegation (HOD) meeting called by Perez del Castillo -- likely to be held early next week. Chair Perez del Castillo is currently in the process of meeting with delegations to get a sense of how Members hope to proceed following the collapse of trade negotiations in Cancun on 14 September. However, the regular meetings on services are proceeding as scheduled, and a special services negotiating session will be held starting 6 October as planned.

India to sign trade pact with Asean states
FT Oct 2, 2003
India is to sign an agreement with the 10 member states of the Association of South East Asian Nations leading to the creation of a full free trade area within a decade.

Would Asia Un-Pegging Hurt U.S.?
William Pesek Jr. (Bloomberg) Oct 2, 2003
Avinash Persaud didn't set out to make a room full of currency traders squirm in their seats. Yet the director of GAM-Persaud Global Investment Fund did just that to the usually steel-stomached risk takers.

Trade: Riding Out A Storm Far Eastern Economic Review Subscription Required
FEER Oct 2, 2003
The barrage of criticism from the United States about China's currency policies is at best misguided. U.S. businesses operating in China have never had it so good. But if Beijing isn't about to float the renminbi, what can it do to assuage U.S. anger?

Developing nations are 'set to dominate world fishing'
FT Oct 3, 2003
Developing countries, particularly in Asia, are set to dominate world fishing as global consumer demand increases, according to a study.

Here's to Wim Wall Street Journal Subscription Required
WSJE Oct 3, 2003
His policies gave stability to the euro and the eurozone.

Currencies: USD/JPY 100 Is the Only Barrier I Truly Respect
Stephen L. Jen (MSDW) Oct 3, 2003
In my view, the USD will continue to weaken against a broad basket of currencies, including the EUR and JPY, with the EUR rallying by default, the JPY by merit. USD/JPY is likely to eventually drift below 110 and approach 100, in my view.

Global: America's Political Gambit
Stephen Roach (MSDW) Oct 3, 2003
Keep your eye on politics. As I see it, the struggle for control of America’s White House -- and all the policy options that spin out of this struggle -- could well be the single most important factor shaping world financial markets over the next 13 months.

What Does Fair Have to Do With Currencies?
David DeRosa (Bloomberg) Oct 5, 2003
U.S. President George W. Bush said last week that China should adopt a monetary policy that is ```fair.'' Forget about that. Monetary policy may or may not be prudent, cautious, or responsible. Since when does it have to be fair?

The dollar and the tyranny of the weak
Amity Shlaes (FT) Oct 6, 2003
While a current account deficit can be a disaster, it is sometimes a simple symptom of fast growth. That may be so for the US.

Global: The Global Labor Arbitrage
Stephen Roach (MSDW) Oct 6, 2003
A US-centric global economy is waiting with baited breath for sustained cyclical revival. Central to such a growth spark is the time-honored vigor of the great American job machine. That’s been missing up until now but there are hopes this piece of the macro puzzle is finally falling into place. Those hopes are not likely to be realized, in my view. At work is a new “global labor arbitrage” -- a by-product of IT-enabled globalization that is now acting as a powerful structural depressant on traditional sources of job creation in high-wage developed countries such as the United States. America’s jobless recovery could well be here to stay.

Capitalism and its Critics Recommended!
IMF Oct 6, 2003
Transcript of an IMF Book Forum held in Washington DC, September 9, 2003, to discuss Jerry Muller's book "The Mind and the Market: Capitalism in Modern European Thought".

Japan's financial sector Adobe Acrobat Required
IMF Survey Oct 6, 2003
Plus: IMF-World Bank annual meetings (overview, opening speeches, communiques, press conferences); G-7, G-10, and G-24 communiques; Focus on Middle East; African ministers press conference; Loan for Argentina; World Economic Outlook.

1 billion people live in slums
ST Oct 7, 2003
About a sixth of the world's population - nearly one billion people - live in slums, according to a United Nations report. This number could double by 2030 if developed nations do not reverse course and start giving the issue serious attention, it added.

2 Asean leaders seek common market
IHT Oct 7, 2003
The economic powerhouses of Southeast Asia - Singapore and Thailand - took the lead Monday in calling for fast and definitive action toward a common market in the region.

One size often fits all in poor countries, says World Bank
FT Oct 7, 2003
A report on reducing business regulation published today by the World Bank says poor countries could learn much from rich ones.

A false dawn in the land of the rising sun Financial Times Subscription Required
Richard Katz (FT) Oct 7, 2003
Reform will eventually return Japan to sustained growth of 3 per cent or so. But that will probably take another decade.

The public always comes last
John Kay (FT) Oct 8, 2003
The only victors from recent trade negotiations are high-cost producers, which will continue to enjoy subsidies in rich countries and protection in poor ones.

Miracles Happen Wall Street Journal Subscription Required
WSJ Oct 8, 2003
The World Bank discovers property rights.

Trade in South-East Asia
Economist Oct 8, 2003
Jealous of China’s surging exports and success in attracting foreign investment, South-East Asian countries plan to band together in a European-style economic community.

Agriculture: G-20 Group Discusses Way Ahead; Colombia, Peru Leave Alliance
BRIDGES Weekly Trade News Digest - Vol. 7, Number 33 Oct 8, 2003
With close to a month having passed since the collapse of negotiations at the fifth WTO Ministerial in Cancun, Mexico, from 10-14 September, the halls of the WTO remain quiet. No trade block has so far taken the leadership to get the talks back on track and the question of what Members, or constellations of Members -- if any -- might make a first move remains open. While the G-20+ Group of developing country Members reportedly is set to put the negotiations back on track, it has not come forth with any concrete proposals or positions. The EC has warned it is in a "listening mode," and will not take the initiative. Rather, Europe is taking its time and is set to release a comprehensive "reflection paper" in November. The US has been explicit in explaining that it will move ahead with "will do" countries on a bilateral basis, leaving others behind.

GATS: Business As Usual Despite Cancun Failure
BRIDGES Weekly Trade News Digest - Vol. 7, Number 33 Oct 8, 2003
Unlike in other WTO bodies -- such as the Committee on Agriculture, where negotiations are currently suspended -- Members have been meeting from 29 September to 6 October in sessions of the Council for Trade in Services (CTS) as well as its subsidiary bodies. Not much movement has, however, been seen in Members' positions or on the issues since the fifth WTO Ministerial in Cancun in mid-September.

DSB Update: GIs, Quarantine Laws And Lumber
BRIDGES Weekly Trade News Digest - Vol. 7, Number 33 Oct 8, 2003
The WTO Dispute Settlement Body (DSB) met on 2 October to discuss various issues, including the US-Canadian dispute regarding countervailing duties on softwood lumber from Canada, the Australian quarantine regime for imports and the European Community's protection of trademarks and geographical indications (GIs) for agricultural products and foodstuffs.

The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel 2003 Recommended!
Royal Swedish Academy of Sciences Oct 8, 2003
The Royal Swedish Academy of Sciences has decided that the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, 2003, is to be shared between Robert F. Engle, New York University, USA “for methods of analyzing economic time series with time-varying volatility (ARCH)” and Clive W. J. Granger, University of California at San Diego, USA “for methods of analyzing economic time series with common trends (cointegration)”. More advanced information (PDF required).

China in danger of overheating, say economists
FT Oct 9, 2003
China's economy may be growing much faster than official economic statistics suggest and is in danger of overheating, according to an emerging consensus among foreign and local economists.

Nobel Econometricians Wall Street Journal Subscription Required
David R. Henderson (WSJ) Oct 9, 2003
Abstruse research has a home in the markets.

Asean Moves Forward to Build a Single Market Wall Street Journal Subscription Required
Ong Keng Yong (AWSJ) Oct 9, 2003
Asean proposes an economic community.

Poverty's chains Economist Subscription Required
Economist Oct 9, 2003
A World Bank report analysing the obstacles to doing business in over 130 countries showed that light regulation promotes productivity, especially in developing countries. At the same time, a strong correlation exists between the ease of starting and running a new concern and the existence of a robust legal system. Predictably, the report concluded that onerous regulation retards economic growth.

European industry
Economist Oct 10, 2003
Europe’s industrialists are confident that things are looking up. But new output figures from the EU’s three largest economies cast some doubt on this.

Global: The Blame Game
Stephen Roach (MSDW) Oct 10, 2003
Tough economic times always produce scapegoats. Politicians and policy makers are invariably quick to point the finger elsewhere rather than face up to their own failings. Such is the human condition. America’s jobless recovery is a case in point. The US body politic is now taking dead aim at China -- making it the poster child for the latest outbreak of scapegoatism. The risk is that the blame game won’t stop there. America’s multinational corporations could well be next in line, as protectionism morphs into old-fashioned populism. As always, those pointing the finger usually have the most to hide. That’s precisely the case today. As I see it, the real problem is made in America. Washington is engaged in the most reckless fiscal policies since the “guns and butter” blunders of the late 1960s.

Japan to propose free trade talks with Seoul
FT Oct 13, 2003
Japan is to propose the start of free trade talks with South Korea at this month's Asia-Pacific Economic Co-operation forum in Bangkok.

Global: Payback Time
Stephen Roach (MSDW) Oct 13, 2003
The world economy sprang back to life in the summer of 2003. Needless to say, following two and a half years of unusual sluggishness, this resurgence came as welcome relief. Hope is widespread that this growth spark is the start of a cumulative and increasingly synchronous upturn in the global economy. While such a possibility can’t be ruled out, I fear that a significant portion of this year’s growth dynamic was artificial in that it may have borrowed from gains that would have otherwise occurred in late 2003 and early 2004. If that’s the case, a payback is coming that could take ever frothy financial markets by great surprise.

Free markets demand protection Financial Times Subscription Required
Richard Epstein (FT) Oct 13, 2003
Defenders of labour laws often scoff at the proposition that employers will demand less labour as its cost increases.

Genetically Modified Food and the Poor
NYT Oct 13, 2003
The real crime of genetic modification is not its risks but that it is squandering its promise, widening the gap between rich and poor.

Don't Look Down
Paul Krugman (NYT) Oct 14, 2003
During the 1990's I spent much of my time focusing on economic crises around the world — in particular, on currency crises like those that struck Southeast Asia in 1997 and Argentina in 2001. The timing of such crises is hard to predict. But there are warning signs, like big trade and budget deficits and rising debt burdens.

Germany now No.1 in export growth
ST Oct 15, 2003
Germany has recorded the world's fastest export growth in 11 years, a surge that could lead to a re-evaluation of the causes of its economic crisis, which had always been blamed on the lack of competitiveness of its products abroad.

Dollar loses ground on Bush comments
IHT Oct 15, 2003
The dollar fell against the euro and yen Tuesday, erasing earlier gains after President George W. Bush said markets should determine the value of currencies.

Currency Kabuki Wall Street Journal Subscription Required
R. Glenn Hubbard (WSJ) Oct 15, 2003
Stemming inflation in Japan would help the U.S. economy.

Members Back Efforts to Put Negotiations Back on Track
WTO Oct 15, 2003
General Council Chairman Carlos Pérez del Castillo and Director-General Supachai Panitchpakdi, during an informal meeeting of Heads of Delegation on 14 October 2003, reported that their consultations show members are willing to get back to work in line with the mandate agreed by Ministers at Cancún.

The Buttonwood column: Hard money
Economist Oct , 2003
Money used to be backed by gold. Now it is backed by the promises of central bankers. Are these worth less than they were?

Trade Talks: Chair Castillo Sets Out Process Forward
BRIDGES Weekly Trade News Digest - Vol. 7, Number 34 Oct 15, 2003
WTO Members convened in a Heads of Delegation (HOD) meeting on Tuesday, 14 October, to consider the way forward after talks collapsed at the ministerial meeting in Cancun, Mexico, in September. Although the meeting was the first to be held at the level of heads of delegation, Director-General Supachai Panitchpakdi and the Chair of the General Council, Carlos Perez del Castillo, had already been holding informal talks to sound out Members on a way forward. In a green room meeting the week before, chaired by Supachai, Members had discussed the status of various possible draft texts that negotiations might proceed on the basis of, as well as the status of the so called Singapore issues of investment, competition, transparency in government procurement and trade facilitation.

G-20 Meets In Buenos Aires, Calls For Resumption Of Trade Talks
BRIDGES Weekly Trade News Digest - Vol. 7, Number 34 Oct 15, 2003
Members of the so called G-20 group of countries met on 10 October in Buenos Aires, Argentina, to discuss the group's post-Cancun agenda. While Argentina's foreign ministry had invited all 22 current and former members of the informal alliance of developing country WTO Members, only twelve countries -- including Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, India, Mexico, Paraguay, South Africa and Venezuela -- signed the final political statement of the Group. In the document the alliance urges all WTO Members to "resume the task in Geneva in a constructive spirit on all of the issues of the Doha programme," while focusing "on those issues that are priorities for improving and elevating the standard of living in developing and less advanced countries". Moreover, the Group confirmed its commitment to continue the agricultural reform process and to "achieve the total integration" of agriculture in WTO disciplines. In this context, the Brazilian Ambassador to the WTO, Luiz Felipe Seixas Correa, declared that the grouping was ready to resume negotiations on agriculture "at any time" in Geneva. In doing so, the Group was ready to use the agricultural framework text tabled at Cancun by Ministerial Conference Chair Luis Ernesto Derbez, which, however, was never discussed in detail. Also the EC and US had declared earlier at a 9 October informal WTO consultation that they would be prepared to use both the Derbez text as well as the one prepared by General Council Chair Carlos Perez Del Castillo as a basis for further discussion.

GATS: Discussions Continue Without A Finish Line On The Horizon
BRIDGES Weekly Trade News Digest - Vol. 7, Number 34 Oct 15, 2003
Two special (negotiating) sessions of the WTO Council for Trade in Services (CTS) were held on 6 October and 9 October, prior to a Heads of Delegation (HOD) meeting called by General Council Chair Carlos Perez del Castillo on the general process forward after the collapse of trade talks at a ministerial meeting in Cancun in September. Since Cancun, all negotiating sessions apart from those of the CTS have been suspended. According to a trade diplomat, the current CTS meetings "lacked luster," and basically covered routine items -- the 9 October meeting mainly focussed on a report by the OECD on the Assessment of Trade in Services. The major concern delegates expressed was related to a lack of clarity as to how negotiations should proceed. The HOD meeting reconfirmed that the regular CTS would meet as planned in December. No decision was taken on potential future negotiating sessions in the services area, as the HOD focussed on the most contentious issues in the trade round, such as agriculture.

ASEAN Members Agree To Deepen Integration
BRIDGES Weekly Trade News Digest - Vol. 7, Number 34 Oct 15, 2003
The ten members of the Association of Southeast Asian Nations (ASEAN) signed an ambitious accord on 7 October to establish an economic community similar to that of the EU. The agreement, called the "Bali Concord II," was signed during the ninth ASEAN Ministerial Summit held from 7-8 October in Bali, Indonesia. It aims to create a community in Southeast Asia based on three pillars: economic cooperation, political and security cooperation and socio-cultural cooperation. The ultimate goal of the agreement is to create a competitive region with a free flow of investment, goods, services, and skilled labour combined with a freer flow of capital, stable and equitable economic development, and reduced poverty and socio-economic disparities by the year 2020.

No Message for Asia
WP Oct 16, 2003
President Bush is about to spend six days in Asia visiting vital U.S. economic and political partners that haven't gotten much of the administration's attention during the past two years. Yet Asians hoping for a revitalization of their relations with the United States will probably be disappointed: Though he will zip through six countries in six days, Mr. Bush will not be guided by any coherent vision. There is, of course, the war on terrorism: The governments of the Philippines and Indonesia will be rewarded with presidential stopovers of eight and three hours, respectively, in recognition of their efforts to stamp out alleged Asian affiliates of al Qaeda. There is also the hunt for help in Iraq: Mr. Bush is hoping to extract pledges of money, troops or both from Japan and South Korea. But American engagement with Asia itself -- its continuing struggle with globalization, its mix of developing democracies and dictatorships, its shifting security balance amid China's military buildup -- seems to have been all but squeezed off the agenda.

Bolivia's Poor Proclaim Abiding Distrust of Globalization
Larry Rohter (NYT) Oct 17, 2003
Indian protesters choked the streets and highways of La Paz with a powerful antiglobalization demonstration.

How to help the renminbi find its own level Financial Times Subscription Required
FT Oct 17, 2003
Further delay in adjusting the exchange rate could raise the danger of inflation, writes Haruhiko Kuroda, special adviser to the Japanese cabinet.

Bush's Bad Currency Wall Street Journal Subscription Required
WSJ Oct 17, 2003
The president's exchange-rate politics could backfire on his own re-election.

Bush Pushes Protectionism on Asia Wall Street Journal Subscription Required
Hugo Restall (WSJE) Oct 17, 2003
Bush shouldn't turn his Asian tour into a harangue for currency revaluation.

Increased IMF transparency Adobe Acrobat Required
IMF Survey Oct 20, 2003
Pkus: Per Jacobsson Lecture on Arab region; Geithner to head NY Fed; gender issues at IMF; Annual Meetings seminars on regional/global prosperity; euro-area debt; Asian crisis output recovery; Kato to be Deputy Managing Director.

China rejects US plea for renminbi revaluation
FT Oct 20, 2003
Hu Jintao, the Chinese president, ruled out any quick revaluation of his country's currency.

WTO chief urges effort to revive Doha talks
FT Oct 20, 2003
The director-general of the World Trade Organisation made an impassioned plea for flexibility and strong political commitment to reinvigorate the stalled Doha talks.

The APEC summit
Economist Oct 20, 2003
Liberalising trade and investment were supposed to top the agenda of the APEC summit in Thailand this week. But George Bush has other things on his mind.

Currencies: Tracking the Final Phase of the Dollar Correction
Stephen L. Jen (MSDW) Oct 20, 2003
The final phase of the structural USD correction appears to be progressing according to script. After the G-7 meeting, the USD indeed began to correct against a broad basket of currencies. On the issues of “speed” and “magnitude,” I continue to see minimal risk of a USD crash. Regarding “symmetry,” I believe it is very “healthy” that the recent decline in the USD has not been EUR-led. From here, I believe EUR/USD’s ascent will be “bumpier” than USD/JPY’s descent, making the latter a “higher-quality” trade. I still believe there will be no change made to the exchange-rate regime of the Chinese RMB before 2005.

The End of Dollar Supremacy? Recommended!
Antony P. Mueller (Mises Daily) Oct 20, 2003
Given the current account deficit in the United States of more than five per cent and a negative net foreign investment position of over twenty per cent of its gross domestic product, it is the relative stability of the US dollar that needs explanation and not the fact that the effective exchange rate of the dollar has declined by twenty per cent since late 2002. It is even more remarkable that U.S. interest rates did not have to rise as might have been expected in order to attract foreign investment as a compensation for the deficit in the current account.

Negotiating Freer Trade -- or Just Bigger Bureaucracies? Recommended!
Alvaro Vargas Llosa (Independent Institute) Oct 20, 2003
The collapse of WTO talks in Cancun was predictable. The “rich” wanted to discuss customs rules so as not to discuss farm subsidies; the “poor” wanted to discuss farm subsidies so as not to discuss investment regulations. They all left vowing to negotiate bilateral or regional deals, better suited to their fragmentary idea of free trade – and their political interests.

APEC wants trade talks to get going
ST Oct 21, 2003
Talks by Asia-Pacific leaders got off to a fruitful start yesterday with agreement to back a resumption of global trade talks that were stalled in Mexico last month - support that will be crucial as the 21 economies represented here account for almost half the world's trade.

`Thaksinomics' - Asia's Future or Debt End?
William Pesek Jr (Bloomberg) Oct 21, 2003
John Maynard Keynes. Milton Friedman. Karl Marx. Adam Smith. Thaksin Shinawatra. The last name, that of Thailand's prime minister, rarely gets grouped with modern history's best-known economic theorists. But Thaksin, a self-made billionaire, is vying for a role as economic visionary in Asia, if not the entire developing world.

Terror war 'holding back Arab societies' Financial Times Subscription Required
FT Oct 21, 2003
A group of leading Arab intellectuals warned that the US-led "war on terror" was "giving ruling regimes in some Arab countries spurious justification for curbing freedom".

The Internet Tax Grab Wall Street Journal Subscription Required
WSJ Oct 21, 2003
Politicians, keep your greedy hands off the Web.

A Snow Job Caused Bush's Currency Gaffes in Asia Wall Street Journal Subscription Required
George Melloan (WSJ) Oct 21, 2003
The president gets bad advice from the Treasury.

Argentina and Brazil unite to fight U.S. trade policy
IHT Oct 22, 2003
A statement of intent signed in Buenos Aires last week by the presidents of Argentina and Brazil might have been short on economic details, but it did send a clear message: The two countries will resist efforts by the United States to undermine their unity in regional and global trade talks.

A more positive Brazilian trade policy Financial Times Subscription Required
Peter Hakim (FT) Oct 22, 2003
The country must take steps to overcome its reputation as a spoiler, more likely to hamper than to ease negotiations.

Why We Should Fight Anti-Globalists Wall Street Journal Subscription Required
WSJE Oct 22, 2003
Complacency cedes the intellectual ground.

Finding Nemesis
Economist Oct 22, 2003
Of technology stocks and short-term memory loss.

Apec Summit: Safety First Far Eastern Economic Review Subscription Required
FEER Oct 23, 2003
America tells Asia it plans to link trade and security like never before. Many fear this new nexus will inflate the cost of trade, and may be used as a tool for U.S. protectionism.

WTO: Brief GC Meeting Approves 2005 Ministerial In Hong Kong
BRIDGES Weekly Trade News Digest - Vol. 7, Number 35 Oct 23, 2003
The WTO General Council (GC) met on 21 October for the first time following the collapse of trade talks at the fifth ministerial meeting in Cancun, Mexico, in September. The inconspicuous meeting lasted for only one hour, and did not provide any political signals of where the talks were going. Indeed, Members have indicated that despite a plan put forth by General Council Chair Perez del Castillo at a Heads of Delegation meeting on 14 October on how to proceed with informal talks, the WTO remains quiet and talks low-key in anticipation of necessary political signals from capitals and key Members. Some observers have said they expect discussions to pick up only at the beginning of 2004. Both the EC and the US have indicated that while they are not opposed to restarting the talks, they are not going to take the lead. A group of 20 developing countries including Brazil, India and China, has indicated it wants to get the talks back on track, but has not yet come forth with any concrete proposals or positions.

Development Committee Discuss TA, Commodities, and Sustainable Development
BRIDGES Weekly Trade News Digest - Vol. 7, Number 35 Oct 23, 2003
The forty-sixth session of the WTO Committee on Trade and Development (CTD) met on 16 October and 23 October to discuss, inter alia, the 2004 technical assistance (TA) plan, the proposal from a group of East African countries on the declining prices of primary commodities, and the mandate from paragraph 51 of the Doha Declaration (under which the CTD is to identify and debate the developmental aspects of the negotiations, so as to help have sustainable development appropriately reflected). As discussions on the first two items filled the allotted time for the scheduled 16 October meeting, Members reconvened on the morning of 23 October 2003 to complete the agenda.

Four developing countries 'talking on mutual trade'
FT Oct 24, 2003
Brazil, China, India and South Africa are in talks about trade agreements among themselves that underline their growing importance in international trade, Alec Erwin, South Africa's trade and industry minister, said.

The world needs a new body to monitor migration Recommended! Financial Times Subscription Required
Jagdish Bhagwati (FT) Oct 24, 2003
We have only a fragmented set of organisations to deal with flows of humanity.

WTO secretariat reports significant decline in new anti-dumping investigations
WTO Oct 24, 2003
The WTO Secretariat reported, on 23 October 2003, that in the period 1 January to 30 June 2003, 18 Members initiated 79 anti-dumping investigations against exports from a total of 30 different countries or customs territories. This represents a significant decline from the corresponding period of 2002.

Global: The Cyclical-Structural Tradeoff
Stephen Roach (MSDW) Oct 24, 2003
This summer’s reawakening in the global economy hasn’t exactly fit the script of those of us who have been growth skeptics for the past several years. Nor does the seven-month surge in world equity markets suggest that the economic uplift will be short-lived. Rarely do I give a presentation in these days of froth when I don’t get asked the obvious question: Where could you be wrong? My answer addresses what I have long believed is the toughest challenge we macro practitioners face -- the time-honored trade-off between cyclical and structural considerations. If I’m wrong, it will probably be because I have missed a shift in the balance between these two sets of forces.

Global: Asia at the Crossroads
Stephen Roach (MSDW) Oct 27, 2003
Asia’s wrenching financial crisis of 1997-98 marked a critical turning point for the region that we are only now beginning to understand. The ascendancy of China is the most obvious and important hallmark of the post-crisis era. But the awakening of India is not without potentially profound implications as well. The road has been considerably rougher for the so-called newly industrialized economies of Asia -- Korea, Singapore, Taiwan, and Hong Kong. Meanwhile, Japan has languished in its post-bubble malaise. The balance of economic power is in the process of shifting in Asia. Old Asia is floundering and a New Asia is emerging. That poses profound challenges for the region and for the broader global economy.

Currencies: Inflation Expectations Drive Yen Asset Prices
Stephen L Jen (MSDW) Oct , 2003
I believe the rally in the Nikkei, the sell-off in JGBs, and the appreciation in the JPY that we have witnessed in the past months are trends that are consistent with drastically changing inflation expectations in Japan. If one expects that the worst of deflation may be behind us, then improving inflation expectations may imply that these trends will continue in the quarters ahead. In my view there are three factors behind the sell-off in USD/JPY: (1) this was a part of the USD correction; (2) there has been a convergence in the spectrum of inflation expectations in the market; and (3) structural reforms have enhanced the valuation of Japanese equities. Factors (1) and (3) likely have more to run.

Unhappy families
Economist Oct 28, 2003
Time for some soul-searching by emerging-market investors, again. Thank you Russia, again

Forecasting will never be an exact science Financial Times Subscription Required
John Kay (FT) Oct 29, 2003
It is not that economists are insufficiently clever. Predicting the level of the dollar in the second quarter of next year or the S&P index at the end of 2004 is in principle impossible.

Treasury may name currency manipulators
FT Oct 30, 2003
John Snow, US Treasury secretary, appears on Thursay in front of a congressional committee to present the Treasury's annual currency report, facing pressure to step up its campaign against Asian countries manipulating their exchange rates.

A vision of stability within the Basel accord Financial Times Subscription Required
Jaime Caruana (FT) Oct 30, 2003
Basel II is an evolutionary process and we remain committed to reforming it in order to incorporate best practices in risk management.

WTO: Members Meet Informally To Consider Ag
BRIDGES Weekly Trade News Digest - Vol. 7, Number 36 Oct 30, 2003
On 24 October, Chair Perez del Castillo and Director-General Supachai Panitchpakdi held an informal "Ambassador plus one" 'green-room' consultation with a smaller group of key Members to discuss how to revive the multilateral farm trade negotiations. Talks have been stalled since the Cancun Ministerial ended abruptly before trade ministers had the chance to address agriculture in greater detail. According to Chair Perez del Castillo, it was a positive first step and a good meeting. "Everyone said they were willing to engage, without exception," the Uruguayan Ambassador said.

WTO 'Green Room' Meets On Non-Ag Market Access; Singapore Issues Forthcoming
BRIDGES Weekly Trade News Digest - Vol. 7, Number 36 Oct 30, 2003
On 28 October, approximately 30 WTO Members gathered for the first 'green room'-style informal meeting since Cancun on non- agricultural market access (NAMA). Country delegates focused on how to move forward with the NAMA text that was included as an annex in the 13 September Draft Ministerial Text, tabled by Cancun Ministerial Chair Luis Ernesto Derbez. The meeting was preceded by several smaller informal consultations among groups of countries. Comments on the text for the most part reflected concerns voiced prior to and at Cancun on the annex, which sets out a framework for modalities for non-agricultural tariff and non-tariff liberalisation.

Snow makes strong defense of U.S. dollar
IHT Oct 31, 2003
Seeking to avoid the onset of what could turn into a trade war with China, Treasury Secretary John Snow told U.S. senators Thursday that Beijing was not manipulating its currency exchange rate to gain an unfair advantage over American manufacturers.

US holds back on China's exchange rate peg
FT Oct 31, 2003
The US Treasury held back from officially naming Asian countries as manipulators of their currencies for unfair advantage, saying that a more diplomatic approach was paying dividends.

To Avoid Costly Devaluations, Dollarize Wall Street Journal Subscription Required
Mary Anastasia O'Grady (WSJ) Oct 31, 2003
The Dominican Republic doesn't have to suffer such devastating inflation.

Decision Time Approaches on the Yuan Wall Street Journal Subscription Required
Huge Restall (WSJE) Oct 31, 2003
The costs of maintaining the fixed exchange rate are getting too high.

Constant Purpose, Changing World: The IMF in the Twenty-First Century
Anne O. Krueger (IMF) Oct 31, 2003
The process of globalization long predates the IMF. But the integration of the world economy has accelerated rapidly in the postwar era. This brings its own challenges. The potential benefits are enormous. But many countries, especially those that are poor or most vulnerable to economic shocks, need help to exploit those benefits. They often look to the IMF to provide that help. We cannot‚ and we do not‚ underestimate the scale of the task we face. But I believe that in many ways the IMF is better prepared today than ever before, and today I want to show how and why.

Global: The Pitfalls of Rhetorical Currency Policies Recommended!
Stephen Roach (MSDW) Oct 31, 2003
I was eagerly awaiting a return visit to Japan’s Ministry of Finance. It was a timely opportunity to peer inside the power structure of Japanese foreign exchange policy. Quickly it became apparent to me that these plans were in disarray. It was October 29 and the yen had just strengthened through the ¥108 threshold versus the dollar. You would have though the sky had fallen. The MOF’s brain trust had scrambled into full-scale FX alert. It gave me considerable pause as I returned to a full schedule of meetings in Tokyo on this two-week tour in Asia.

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