News & Commentary:

November 2003 Archives


Moving beyond the Washington Consensus and redrafting the reform agenda Recommended!
Finance and Development Sep/Nov 2003
Articles on moving beyond the Washington Consensus and redrafting the reform agenda by John Williamson, Guillermo Ortiz, and Trevor A. Manuel. One article from the World Bank based on the -World Development Report 2003/2004- on improving service delivery to the poor, and a joint IMF-World Bank article on what needs to be done to accelerate progress toward the Millennium Development Goals. Two articles on what developing countries can do to protect themselves against natural disasters. Other articles on monetary regime options for Latin America, central bank intervention in volatile foreign exchange markets, assessment of offshore financial centers, long-term fiscal challenges confronting countries, and income inequality. Profile of development economist Esther Duflo. Kenneth Rogoff's column on why the IMF needs to do more whistle-blowing and less cheerleading when countries seem to be headed for trouble. Statistics on the Middle East and North Africa.

Sovereign Bonds, Public Debt Management, and International Trade Adobe Acrobat Required
IMF Research Bulletin Sep/Nov 2003
Research summaries on sovereign bonds and public debt management and on international trade; country study: Sweden; summaries of new study on deflation and recent book: Sweden's Welfare State; contents of latest issue of IMF Staff Papers; visiting scholars at the IMF; titles of recent IMF working papers; list of external publications by IMF staff.

Next Move in Steel: Revocation or Retaliation? Recommended! Adobe Acrobat Required
Gary Clyde Hufbauer & Ben Goodrich (IIE) Nov 2003
In May 2003, the WTO dispute panel ruled that US steel safeguards imposed in March 2002 are illegal, and the WTO Appellate Body confirmed that judgment this week. The Bush administration now faces a choice. It can keep the safeguards in place, pleasing steel producers and important constituencies. But doing so would further anger steel users, who have lost more business and jobs as a consequence of the safeguards than producers have gained. Alternatively, the Bush administration can revoke the safeguards. This choice would eliminate an unfair tax on steel users and send a powerful and positive signal to the world trading community.

Unlocking the Benefits of World Trade Recommended!
Jeffrey J. Schott (Economist) Nov 2003
The collapse of the ministerial meeting of the World Trade Organisation (WTO) in September has impeded global trade talks and made their conclusion increasingly difficult and uncertain. Even without the breakdown in Cancún, Mexico, the complexity of the agenda and American and European calendars for rewriting their farm policies led many analysts to expect protracted negotiations. Some ministers left Cancún hoping that the delay was not significant, and that talks would pick up within a year or two.

Global trade: The key to a new agreement
Donald Johnston (IHT) Nov 3, 2003
The strengthening of global trade rules and further steps to liberalize markets are too vital for world prosperity to let talks languish. When trade representatives deadlocked in Cancún in September, they spawned ill will, mistrust and divisiveness. National capitals must now move decisively to repair the damage and get negotiations moving again. The alternative is unacceptable: a growing hodgepodge of regional free trade deals and a likely surge in disputes over disruptive agriculture subsidies.

Time For Change in Chinese Agriculture Wall Street Journal Subscription Required
Michael Goettl (AWSJ) Nov 3, 2003
Policies that are designed to boost the income of many Chinese farmers are having adverse economic effects.

Globalization: Challenges Arising from the Sources of Global Economic Growth
Anne O. Krueger (IMF) Nov 3, 2003
The prospects look brighter than they have for some time. As you know, the World Economic Outlook that we published last month was distinctly more optimistic in tone than our assessment earlier in the year. Many of the uncertainties that had been hampering growth prospects back in the spring have diminished. And in the last few weeks, most developments have tended to confirm our view that a pick-up in the world economy is under way. We now expect global growth to average around 3¼% this year, rising to around 4% in 2004.

U.S. and China Can Avoid Collision on Trade
Gene Sperling (Bloomberg) Nov 3, 2003
Observing current U.S.-China economic relations has the feel of watching a car wreck in slow motion.

Global: China Pull
Stephen Roach (MSDW) Nov 3, 2003
Overheating is the buzz in Beijing. It was all anyone wanted to talk about on my visit to China last week. Excesses in selected coastal property markets, together with spillover effects on the pricing of steel, cement, and other construction materials, are on the radar screen of Chinese policy makers. The authorities have already moved to arrest the excesses. This points to a likely slowing in the Chinese economy in early 2004, with concomitant ripple effects showing up elsewhere in an increasingly Chinese-dependent Asian economy.

Opportunity or threat? Recommended! Financial Times Subscription Required
FT Nov 4, 2003
Politicians express exasperation with a flood of imports and Beijing's refusal to revalue its currency. But Washington has little real interest in protectionism.

Trashy Trade Talk Heralds Election Season Wall Street Journal Subscription Required
Gerald P. O'Driscoll Jr. (AWSJ) Nov 4, 2003
Bush needs to dispel the dark forces of protectionism within his administration.

Moving on from Cancun: Agricultural Trade and the Poor
Anne O. Krueger (IMF) Nov 4, 2003
The multilateral trade framework established after the Second World War is facing one of its greatest challenges. Failure to resolve the problems left in the wake of the Cancun meeting would have serious repercussions for the world economy. And I think we can all agree that progress on agricultural trade issues is central to progress in the Doha round as a whole.

Market Discipline and Public Policy: The Role of the IMF
Anne O. Krueger (IMF) Nov 4, 2003
The past couple of decades have witnessed a major shift in the attitude of many policymakers around the world. They have become increasingly aware of the importance of markets, and market-friendly policies. They have also come to realize—many of them for the first time—the benefits that the discipline of the markets can bring—provided, of course, that they seek to use the markets for public policy purposes instead of trying to fight them.

Pennies on a volcano
Economist Nov 4, 2003
A corporate-bond primer, for investors big and small.

EU talks tough in U.S. trade spat
IHT Nov 5, 2003
The European Union's trade commissioner, Pascal Lamy, warned Tuesday that an EU retaliation on billions of dollars worth of American exports would be "a racing certainty in mid-December" if the United States failed to quickly end illegal export subsidies and lift steel tariffs.

The U.S. debt just can't keep growing
Paul Krugman (IHT) Nov 5, 2003
Academic economists often cite Stein's Law, a principle enunciated by the late Herbert Stein, chairman of the Council of Economic Advisers during the Nixon administration. The law comes with various wordings; my favorite is: "Things that can't go on forever, don't." Believe it or not, that's a useful reminder.

Asia's Fear: China's Undercooking Its Books
William Pesek Jr. (Bloomberg) Nov 5, 2003
For years now, the suspicion has been that China was cooking the books, overstating gross domestic product. Now it seems the only thing cooking is growth, and increasingly observers wonder if Beijing is understating it.

DSB: India Wins Landmark EU-GSP Case
BRIDGES Weekly Trade News Digest - Vol. 7, Number 37 Nov 5, 2003
In a landmark ruling on 28 October, a WTO panel upheld an Indian complaint against provisions under the EU's Generalised System of Preferences (GSP) scheme that grant developing countries combating illicit drug production additional trade preferences. In a ruling that was issued on a confidential basis to India and the EC, the panel stood by India's primary claim that the special tariff preferences were inconsistent with the Most-Favoured Nation (MFN) obligation of the General Agreement on Tariffs and Trade (GATT Article 1.1). The MFN obligation requires every WTO Member to extend any advantage, favour, privilege or immunity granted to imports from any single Member to be automatically extended to all other Members.

We Want Trade, Not Aid Wall Street Journal Subscription Required
Yoweri K. Museveni (WSJ) Nov 6, 2003
The WTO can help unlock Africa's economic potential.

time for China to Revalue the Yuan Wall Street Journal Subscription Required
Hong Liang (AWSJ) Nov 6, 2003
The yuan peg will not only cost China politically in the international arena, but also economically by building up dangerous internal imbalances.

In Monetary Affairs, Crisis Follows Crisis
Christopher Mayer (Mises Daily) Nov 6, 2003
"The world is in permanent monetary crisis," Murray Rothbard once observed (in Making Economic Sense), "but once in a while, the crisis flares up acutely, and we noisily shift gears from one flawed monetary system to another." Monetary systems built on floating fiat currencies are fragile things. Most of the world currently operates under this arrangement.

More signs of a global rebound
IHT Nov 7, 2003
In the clearest sign yet that the global recovery is picking up speed, the Bank of England raised interest rates Thursday, the first of the world's major central banks to tighten credit after a stifling three-year economic slump pushed borrowing costs to historic lows.

A duet to mend markets and heal rifts
Robert Pozen (FT) Nov 7, 2003
To help reconcile regulatory differences between capital markets, US and EU officials should operate a steering committee to manage critical issues.

Unappetizing Dinar Wall Street Journal Subscription Required
Steven H. Hanke (WSJ) Nov 7, 2003
Postwar Iraq is ill-equipped to manage its own currency.

Recapturing Corporate Asia's Dynamism Wall Street Journal Subscription Required
W. Chan Kim (AWSJ) Nov 7, 2003
If Asian companies are to come back strong, they should not forget what a historical analysis of their success reveals.

EU enlargement Economist Subscription Required
Economist Nov 7, 2003
Six months before they are due to join the European Union, prospective members get their knuckles rapped.

Commission to impose countermeasures on US products
EU DGT Nov 7, 2003
The European Commission has adopted on Wednesday a proposal to impose countermeasures on selected US products in connection with the long-standing WTO dispute on the US Foreign Sales Corporations.

WTO rules U.S. tariffs on steel are illegal
IHT Nov 11, 2003
A WTO appeals panel ruling cleared the way for the EU to impose more than $2 billion of sanctions on U.S. imports unless the administration drops the duties quickly.

The White House Steel Trap
NYT Nov 11, 2003
The president should cut his losses, abide by the World Trade Organization decision, and lift the tariffs the White House placed on steel imports.

Bush's Steel Opening
WSJ Nov 11, 2003
President Bush should gracefully abandon a disastrous policy.

Bush at a trade crossroads
IHT Nov 12, 2003
In the next few weeks, George W. Bush will have to decide what kind of a trade president he wants to be.

Wide-awake China Financial Times Subscription Required
Martin Wolf (FT) Nov 12, 2003
The US was the first continental, capitalist, economy. The European Union is trying to become a second. Potentially, China dwarfs them both. 20:21 | Read

Global: Missing Pieces
Stephen Roach (MSDW) Nov 12, 2003
The missing pieces of economic recovery finally appear to have fallen into place. At long last, America has started hiring again, setting in motion a dynamic that lies at the heart of any cyclical upturn in economic activity. For those of us who have been stressing downside risks to the macro climate, this is the time to take some chips off the table. After the weakest start to an economic recovery on record, over the past seven months the US economy has certainly been stronger than I had thought. The obvious and important tactical question is whether this newfound vigor is sustainable. But the deeper strategic question is whether cyclical recovery refutes the macro of structural imbalances that has long been central to my relatively gloomy view of the world.

Currencies: Currency Implications of a Slowing China
Stephen L Jen and Karin Kimbrough (MSDW) Nov 12, 2003
Demand from both the US and China has underpinned the incipient recovery in Asia. A continuation of the US recovery and robust demand from China are two necessary conditions for the rest of Asia to recover, and important conditions for USD/Asia to trade lower. If we instead assume a policy-induced slowdown in China in 2004, we expect negative implications for the Asian currencies. While the AXJ currencies may not weaken against the USD, the structural correction in USD/AXJ could stall out. Also, since demand from China has been one of the propellants of commodity prices, a slowing China could also be negative for commodity currencies, in our view, and would be a modest negative for the USD too.

Trade politics
Economist Nov 12, 2003
After a World Trade Organisation ruling in its favour, the European Union is set to retaliate against America’s illegal steel tariffs. The transatlantic dispute over export subsidies is also coming to a head.

Criticizing the U.S. empire is not enough Recommended!
Amitai Etzioni (IHT) Nov 13, 2003
Now that the American empire is collapsing around our ears, it is the turn of those who favored a multipolar world - and one in which the United Nations plays a key role - to show that they can do better.

Security: How China Is Building An Empire Far Eastern Economic Review Subscription Required
FEER Nov 13, 2003
With its booming economic power as its overseas spearhead, China is now moving stealthily toward establishing a common Southeast Asian security community, possibly at the expense of U.S. power and influence in the region.

WTO: Informal Consultations On Singapore Issues Ongoing
BRIDGES Weekly Trade News Digest - Vol. 7, Number 38 Nov 13, 2003
Informal consultations on the Singapore issues -- investment, competition, transparency in government procurement and trade facilitation -- continue to play out at the Heads of Delegation (HOD) level at the WTO. According to delegates, General Council (GC) Chair Carlos Perez del Castillo has been meeting with delegations in smaller groups, holding a 'Green Room'-style meeting on 12 November with 36 delegations. Little substance has yet emerged from these consultations, though Chair Perez del Castillo has proposed new formulas for progressing the talks. Sources indicate that Members are waiting for the EC to spell out its position on the Singapore issues, and that in the end, the fate of these issues will correlate with what can be achieved on agriculture, the real sticking point of the negotiations.

EU Position On Singapore Issues Expected In December; NGOs Target EC Decision-Making
BRIDGES Weekly Trade News Digest - Vol. 7, Number 38 Nov 13, 2003
The EU 133 Committee (an EU decision-making body for trade, in which members states are represented) met on 7 November to consider an EC report on negotiating strategies for the so-called Singapore issues of investment, competition, transparency in government procurement and trade facilitation. According to trade sources, the meeting was "inconclusive," and a final decision on the Singapore issues would revert to EU trade ministers, due to meet informally on 2 December.

Sparks fly over steel
Economist Nov 13, 2003
The looming trade war over America's steel tariffs may yet be averted thanks largely to an expected surge in global steel prices.

Democracy’s steady advance
Economist Nov 13, 2003
The “third wave of democratisation”, which has been sweeping the world since the 1970s, has yet to reach swathes of East and Central Asia, North Africa and the Middle East, where billions still suffer under repressive regimes. Is this about to change?

Trade politics: Cold Steel
Economist Nov 13, 2003
After a World Trade Organisation ruling in its favour, the European Union is set to retaliate against America’s illegal steel tariffs. The transatlantic dispute over export subsidies is also coming to a head.

Global: Asia Musings Recommended!
Stephen Roach (MSDW) Nov 14, 2003
Of all my treks to Asia over the years, my latest one made the deepest impression. And I’m not just referring to a bad case of jet lag. In one sense, two weeks in the Far East barely scratches the surface of this diverse and complex region — a region that accounts for fully one-third of global output (as measured by the IMF’s purchasing-power-parity metrics of world GDP). But in our world of mad dashes, I’ll take what I can get. This was a great time to take a deeper look at Asia. In my view, the region is at a critical turning point. It is only now getting over the shock of the devastating financial crisis of 1997–98. Always in search of the ultimate model for development and prosperity, Asia has found yet another new way. But it’s a recipe that raises as many questions as answers.

Bush's Steel Tariffs Not the First Instance of Hypocrisy on Free Trade Recommended!
Ariel Dillon (Independent Institute) Nov 14, 2003
Steel tariffs endorsed early in the Bush administration -- and declared illegal recently by the World Trade Organization -- illustrate a horrible hypocrisy long popular in Washington, DC. If the U.S. government is to implement a Free Trade Area of the Americas in 2005, as it had claimed was feasible, Washington therefore must deal with the fact that its own protectionist policies are one of the greatest obstacles to free trade in the Western Hemisphere. It is precisely Washington's hypocrisy on free trade which gives South American protectionists a plausible case for stalling trade negotiations.

The Difference is in the Debt: Crisis Resolution in Latin America
Anne O. Krueger (IMF) Nov 14, 2003
I want to share with you today some thoughts about the outlook for Latin America but, more specifically, to raise some questions about the best way of resolving financial crises when they occur. I want to argue that there is a fundamental difference between crises where a country's underlying debt position appears sustainable over the longer-term; and those where a debt restructuring is inevitable. In the latter case, deciding on the right course of action for the Fund to take in providing help is particularly difficult.

Currencies: USD — Assessing the Risk of a Repeat of 1995
Stephen L. Jen & Melanie Baker (MSDW) Nov 14, 2003
With global financial markets possibly moving into a phase reminiscent of late-1994/95, where a period of prolonged yield curve steepness was followed by a sharp curve flattening and collapse in USD/JPY, many are wondering if a repeat of that experience is likely ahead. A steepening in the US yield curve in 2004 now looks like a distinct scenario. However, we believe a crash in the USD (especially USD/JPY) similar to that witnessed in 1994/95 is unlikely.

Currencies: USD & AUD — Looking Beyond Current Account Deficits
Stephen L. Jen & Melanie Baker (MSDW) Nov 14, 2003
There has been much discussion of the need for the USD to crash/weaken significantly because of the large C/A deficit of the US, which was 4.9% in Q2 and could reach as high as 6.2% of GDP by 2004 according to our US economists —remaining at around record highs. This factor has helped the Australian dollar (AUD) appreciate 38.5% against the USD since January 2002. But Australia itself has a C/A deficit of 6.6% of GDP (Q2) — even larger than that of the US. The aim of this short note is not to argue that the AUD should also fall, but to make a point we’ve tried to make repeatedly, that exchange rates are driven by many factors, and a view on a currency built exclusively on the C/A deficit is not correct.

A Free Trade Boost for Our Hemisphere Wall Street Journal Subscription Required
Robert B. Zoellick (WSJ) Nov 17, 2003
The negotiations in Miami are nothing to protest.

German economic reforms Adobe Acrobat Required
IMF Survey Nov 17, 2003
Plus: Bio-Tchane on Africa's future; Research workshop on low-income countries; conference on real estate data; privatization in Macedonia; Brazil loan extension.

How Banks Do Well While Doing Good
NYT Nov 18, 2003
The International Finance Corporation must press on in its fight to stem abuses tied to loans for mining operations in developing countries.

It's Your Money Wall Street Journal Subscription Required
WSJ Nov 18, 2003
Someone finally puts a price tag on the IMF.

Tilting the Rules of Fair Trade Wall Street Journal Subscription Required
Greg Rushford (AWSJ) Nov 18, 2003
The hypocrisy of American politicians who claim they want a "level playing field" in trade with China.

Global: Macro Passion
Stephen Roach (MSDW) Nov 18, 2003
Our annual global investment conference in Lyford Cay has become an important milestone in my own macro journey. Client sentiment at this gathering provides those of us at Morgan Stanley with invaluable insights into the markets and offers a unique sounding board for our own views. But this isn’t just any conference. After 19 years, it has taken on a special character. Most of the attendees are repeat participants. And with that repetition comes familiarity -- almost like family. The feedback is fair and direct -- and often intense. Over the years, the dialog at Lyford Cay has become the marker by which I have learned to set my personal macro compass for the year ahead.

Dollar falls to new low in trading with euro
IHT Nov 19, 2003
A report of a sharp drop in foreigners' appetite for U.S. investments has raised alarms about possible fragility in the U.S. economic recovery.

U.S. Moves to Limit Textile Imports From China
Edmund L. Andrews (NYT) Nov 19, 2003
The Bush administration finds itself caught between cries from the industry for protectionism and anxiety among investors who fear it.

Banking for the World's Poor
NYT Nov 19, 2003
Extending basic financial services to the world's poor is a viable business and a good long-term strategy for global economic development.

Trans-American Trade
WP Nov 19, 2003
Although unwilling to stand by his free-trade principles where, say, steel tariffs are concerned, President Bush's free-trade rhetoric has always flowed freely when the subject is Latin America. The North American Free Trade Agreement, he once said, "has created good jobs in all three nations" that signed it: "Now we must extend those opportunities to all with a free-trade agreement for the entire Western hemisphere." It sounds good; indeed, it has sounded good for many years. Ever since President Ronald Reagan introduced the idea, presidents have waxed eloquent on the subject of a Free Trade Area of the Americas, encompassing 800 million people and a territory from the southern tip of Chile to the northern border of Alaska. The potential political and economic benefits are enormous. Such an agreement would facilitate trade both between the United States and the rest of the hemisphere and among other countries of the region, where high barriers to trade have long hampered regional growth.

WTO: Green Room Highlights Limited Progress In Trade Talks
BRIDGES Weekly Trade News Digest - Vol. 7, Number 39 Nov 19, 2003
Carlos Perez del Castillo, Chair of the WTO General Council (GC), held a 'green room' meeting among heads of delegation on 18 December to take stock of talks seeking to revive the current round of trade negotiations. According to Chair Perez del Castillo, Members had been showing their commitment to the process, and he said that he was "convinced we have been able to put the shock of Cancun behind us, and... pleased that our recovery from this seems to be taking place rapidly". However, he also warned that sticking points remained, in particular in the area of the Singapore issues of investment, competition, transparency in government procurement and trade facilitation, where countries had not moved from their pre-Cancun positions. The meeting, which lasted for less than two hours, was held primarily for reasons of transparency, and only a small number of countries took the floor.

Ag Talks: GC Chair Reports Progress, Key Members Sceptical
BRIDGES Weekly Trade News Digest - Vol. 7, Number 39 Nov 19, 2003
Carlos Perez del Castillo, Chair of the WTO General Council, reported to Members at an informal 'green room' meeting at the heads of delegation level on 18 November on progress made in the first round of post-Cancun consultations on agriculture (also see related story, this issue). A week earlier, on 13 November, a group of ten key Members had met to exchange views on what some saw as a largely "Chair-driven process" in agriculture, which they felt was putting more pressure on Members to move than they were prepared to do at the current stage of talks.

Euro's rise over dollar is greeted nervously
IHT Nov 20, 2003
The euro's rise to a record high this week, driven by a skidding dollar, comes at a sensitive time for a European economic recovery that finally seems to be gaining a bit of traction.

Maintaining the Momentum: Emerging Market Policy Reform in 2004
Anne O. Krueger (IMF) Nov 20, 2003
I want today to say something about the global outlook over the next year or so, and how we at the Fund think this will affect emerging market economies. I would then like to share with you some thoughts about why we think it is so important that governments do not lose the chance to press on with economic reform.

A Few Cadillacs to China Won't Resolve Trade Fight
Doron Levin (Bloomberg) Nov 20, 2003
Exporting 15,250 Detroit-made cars to China will add little to the bottom lines of General Motors Corp., Ford Motor Co. or DaimlerChrysler AG.

The Nation That Lost Its Jobs, But Got Them Back
Gene Callahan (Mises Daily) Nov 20, 2003
Once upon a time, there were two hippies, Jerry and Sarah. Tired of the rat race of modern life, they found a deserted valley in a remote region of the world. They moved there, with their four children. They declared that the area was now the independent kingdom of Lost Valley and seceded from the surrounding nation. Amazingly, it let them go.

President Bush's New 'Fair Trade' Clothes Wall Street Journal Subscription Required
Huge Restall (WSJE) Nov 21, 2003
Bush sheds his free trade mantle for quotas on Chinese garments.

Global: Torn Fabric
Stephen Roach (MSDW) Nov 21, 2003
In the end, it’s the only solution that macro can really offer: An unbalanced world needs a realignment in relative prices. As the most important relative price in a US-centric global economy, the dollar had to fall. And that’s exactly what has been happening over the past 21 months -- an 11% decline in the “broad” trade-weighted dollar index (in real terms) since February 2002. The risk, in my view, is that there’s a good deal more to come on the downside. It’s not just economics that drives me to that conclusion. It’s also the world’s faith or, in this case, lack of faith in its reserve currency. I fear there is a tear in the fabric of confidence that underpins the special role of the dollar -- a tear that is now getting larger under the stresses and strains of an unbalanced world.

Free Trade, à la Carte
NYT Nov 22, 2003
Both at home and abroad, the Bush administration's approach to global trade is a recipe for disaster.

Global: Derailing the Global Trade Engine
Stephen Roach (MSDW) Nov 24, 2003
Cross-border trade flows are the glue of globalization. They are the means by which the world creates ever-virtuous circles of prosperity. The theory is simple: As poor countries enter the global supply chain, their increasingly prosperous workers eventually become consumers. Supply creates new demand, and the world is a net winner. While it’s hard to argue with this theory, today’s world is having an increasingly difficult time in putting this theory into practice. The global trade engine is at risk of being derailed.

Global: False Dawn
Rebecca McCaughrin (MSDW) Nov 24, 2003
Monthly US portfolio flow data rarely attract more than a cursory glance from financial markets, but the latest batch of surprisingly weak data sent ripples through markets this week. The US Treasury release indicated that net aggregate portfolio inflows plunged to just $4.2bn in September, an even sharper slide than that in the aftermath of the terrorist attack in September 2001 and the lowest level since the LTCM crisis in late 1998. In our view, September will likely prove an outlier, mostly reflecting a knee-jerk reaction by private investors to the G-7 communiqué. The massive inflows seen during May-June were also outliers we believe, and as we argue below, the current pace reflects a rebalancing, not an inflection point.

A recipe for trade disaster
IHT Nov 25, 2003
Last week was a good week for protectionists in Brazil and for subsidized American farmers. The outcome of the hemispheric trade gathering in Miami suggests that both will continue to be shielded from full competition in a global market. It also means the ambitious effort to create a mammoth free trade area throughout North and South America by 2005, begun with such fanfare nine years ago, runs the risk of being downsized to a point of near irrelevance.

Assessing Threats to the Global Recovery Wall Street Journal Subscription Required
George Melloan (WSJ) Nov 25, 2003
Alan Greenspan issues a timely warning on trade.

Globalization: Preserving the benefits
Anne O. Krueger (IMF) Nov 25, 2003
In some circles, these days, it is fashionable to blame globalization for all manner of ills. Critics hold it responsible for everything from poverty and inequality to environmental pollution. It is important, of course, to listen to what the critics say. Many of them have genuine misgivings about the spillover effects of rapid economic progress. Policymakers should make every effort to ensure that these costs—usually short-term—are kept to a minimum.

News Analysis: A triumph for politics, a crisis for EU
IHT Nov 26, 2003
In its quest for coherence and credibility, the European Union has long suffered from the notion that it is a place where politics trumps all.

The WTO's Mercantilist Flaw
Grant M. Nülle (Mises Daily) Nov 26, 2003
Just as Bush's open-ended war on terror provides ample illustrations of a politician paying off electoral debts, his administration's aggressive trade policies smack of blatant favoritism. Indeed, steel, lumber, textile, and agricultural lobbies all rejoice at Mr. Bush's penchant for protectionism and subsidies as much as the military-industrial complex savors America's assertive, post 9-11, forays abroad.

Global: The Global Trade Boom — a Flash in the Pan?
Eric Chaney and Rebecca McCaughrin (MSDW) Nov 26, 2003
Over the last 20 years, the Baltic Freight Index, now renamed the Baltic Dry Index, has been tracking very successfully the gyrations of global trade. In the third quarter, the BDI index jumped 120% from one year ago. This growth rate climbed further to 205% in October and did not slowdown in the first three weeks of November. Based on past correlations, this implies that global trade flows in US dollar terms should be up by 40% compared with one year ago. Several special circumstances have probably distorted the link between freight indexes and actual trade. In particular, we believe that very strong demand for raw materials from China must have propelled the index much higher than trade of all goods and services. In addition, the depreciation of the US dollar may have increased dollar-denominated prices. Last, years of downsizing have left the shipping industry in short supply. However, we believe the boom in global trade is a reality that cannot be denied. The vital questions are: where does it come from, and can it last?

Agriculture Consultations: Chair Reports Lack Of Engagement
BRIDGES Weekly Trade News Digest - Vol. 7, Number 40 Nov 26, 2003
Carlos Perez del Castillo, Chair of the General Council (GC), held informal "green room" consultations on agriculture with a group of around 30 key WTO Members from 20-21 November. Chair Perez del Castillo -- who had hoped Members would negotiate on various elements contained in the most recent draft language on agriculture -- voiced his frustration after the meetings over what he termed "a persistence of differences on the big issues".

Developing Countries 'Taken By Surprise' At Talks On Singapore Issues
BRIDGES Weekly Trade News Digest - Vol. 7, Number 40 Nov 26, 2003
After a 24 November informal meeting on trade-facilitation -- one of the four so called Singapore issues, which also comprise investment, competition policy and transparency in government procurement -- many of the twenty invited countries expressed surprise at the strategy of the Chair.

FTAA Ministerial Leaves Future Wide Open; US Moves Toward New Bilaterals
BRIDGES Weekly Trade News Digest - Vol. 7, Number 40 Nov 26, 2003
The eighth Ministerial meeting of the Free Trade Agreement of the Americas (FTAA) wrapped up early on 20 November with the adoption of a Declaration that by all accounts avoided tough decisions and left many options on the table. The Ministerial followed lower-level talks between the 34 future FTAA parties, and saw particularly tough negotiations between FTAA co-chairs Brazil and the US. As delegates failed to broach their wide differences, they chose to adopt a broad and vague declaration in order to prevent a failure -- such as the breakdown of WTO negotiations in Cancun in September -- and keep the talks alive.

Calls mounting for new euro rules
IHT Nov 27, 2003
France, Italy and the European Commission all say that the rules that underpin the euro should be partially or totally rewritten.

Jobs Overseas? Another Attempt to Explain
Llewellyn H. Rockwell, Jr. (Mises Daily) Nov 27, 2003
The Bush administration has slapped high duties on Chinese TV sets for the alleged problem of "dumping"—which increasingly means selling at prices lower than sets sold by established firms.

Failing on trade Economist Subscription Required
Economist Nov 27, 2003
Trade relations between America and China worsened further after the Commerce Department imposed anti-dumping duties on televisions from four Chinese firms. A week earlier America restricted the import of Chinese bras and other textiles. Meanwhile, Japan threatened retaliation against American steel tariffs that the World Trade Organisation has ruled illegal.

The Good News
Paul Krugman (NYT) Nov 28, 2003
Over the past 25 years, we've seen an enormous, unexpected improvement in the standard of living for the world's poor.

Pork feast
FT Nov 29, 2003
For some time now the US Congress has been steadily abandoning its reputation as a serious legislative forum in the widely understood sense of the term. Instead, it has been been transforming itself into a vending machine.

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