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December 2003 Archives


Brazil renews "unnecessary" IMF agreement despite opposition
Bretton Woods Update Nov/Dec 2003
Plus: IFC doubts labour fears in Haiti, approves loan; Indigenous Peoples Policy delayed; World Bank trade capacity building; and BWI reform discussed at UN dialogues.

The Privatization of Foreign Aid: Reassessing National Largesse
Carole C. Adelman (Foreign Affairs) Nov/Dec 2003
Critics have long derided the U.S. government for stinginess in international giving. But such charges miss the point. Today, it is private funds that make the difference in poor countries, and here the United States leads the pack.

The Bubble of American Supremacy
George Soros (Atlantic Monthly) Dec 2003
A prominent financier argues that the heedless assertion of American power in the world resembles a financial bubble--and the moment of truth may be here.

Global: Growth at What Cost?
Stephen Roach (MSDW) Dec 1, 2003
With its China-like performance in the third quarter, a booming US economy is once again the envy of the world. In a classic pre-election gambit, Washington has pulled out all the stops in order to resuscitate what had been an unusually sluggish economy. On the surface, the returns appear most encouraging -- 8.2% GDP growth in 3Q03 and vigorous follow-through in the monthly data that points to spillover into the 4-5% range in 4Q03. While it’s tempting to extrapolate into the future on the basis of this seemingly spectacular upturn, there’s still good reason to be cautious, in my view. Two related issues keep me awake at night -- the quality and sustainability of this rebound. On both counts, I worry that the US will ultimately pay a steep price for squeezing too much out of an unbalanced economy.

Geithner on IMF Adobe Acrobat Required
IMF Survey Dec 1, 2003
Plus: India: 1980s paved way for 1990s growth; New IMF department heads named; IMF, World Bank trade appeal; China: high and sustained output growth; IMF and World Council of Churches; IMF's civil society guide; Phnom Penh PRSP conference.

U.S. steel producers want word with Bush
IHT Dec 2, 2003
American steel producers said on Monday that they have not given up their fight to maintain tariffs imposed against foreign steel.

World Bank Again Giving Large Loans to Indonesia
Jane PErlez (NYT) Dec 2, 2003
The World Bank has decided to increase its loans to Indonesia, even though the bank says corruption is still rampant.

Trading Favors
NYT Dec 2, 2003
President Bush should stop trying to fine-tune trade policy to enhance his electoral vote count and focus on the overall national interest.

Lessons of Steel Wall Street Journal Subscription Required
WSJ Dec 2, 2003
Protectionism always backfires.

Political Steel
WP Dec 2, 2003
President Bush plans to attend a fundraiser in Pittsburgh today. He also plans this week to repeal the tariffs he applied to imported steel nearly two years ago. In theory, these two events should have nothing to do with one another: A fundraiser is a fundraiser, and a trade decision is a trade decision. But in practice, the steel tariffs had everything to do with fundraising and everything to do with winning votes in Pennsylvania. And that goes to the heart of what was wrong with them.

The Dangers of Sinophobia
Jude Blanchette (Mises Daily) Dec 2, 2003
On the surface there was a triumph of trade two weeks ago for U.S. corporations and the Chinese people. Almost simultaneously, the Big Three in Detroit, followed closely by GE and Boeing, announced massive trade deals with the Chinese government valued at over three billions dollars.

Consequences of a Dollar Standard
Christopher Mayer (Mises Daily) Dec 3, 2003
Since the end of the Bretton Woods agreement in 1971, the dollar has been an irredeemable currency, no longer defined or measured in terms of gold. Nonetheless, in an ironic twist, it has become the world’s dominant currency and the core reserve asset of central banks all over the world. It has replaced gold as an international currency.

Currencies: I’d buy that for a dollar (and two dimes)
Economist Dec 3, 2003
The euro is worth $1.20 for the first time in its history. That may hurt Europe. Will it help America?

The dogs bark
Economist Dec 3, 2003
And the caravan moves on. Financial markets are in a forgiving mood

WTO: Informal Talks Keep Geneva-Based Delegates Busy
BRIDGES Weekly Trade News Digest - Vol. 7, Number 41 Dec 4, 2003
During the past week, WTO General Council (GC) Chair Carlos Perez del Castillo kept negotiators busy with a tight schedule of meetings in various small group formats, focussing mainly on industrial market access, the Singapore issues (investment, competition, transparency in government procurement and trade facilitation) and cotton. Reportedly, the talks led to scant progress at a substantive level. Chair Perez del Castillo is expected to hold talks with key Members on the way forward in the near future.

Singapore Issues: Convergence Emerging On Trade Facilitation
BRIDGES Weekly Trade News Digest - Vol. 7, Number 41 Dec 4, 2003
At an informal consultation on the so called Singapore issues (investment, competition, government procurement and trade facilitation) on Wednesday 3 December, most developing countries reportedly indicated a willingness to discuss trade facilitation. However, they still differed on whether the clarification of modalities should continue in a working group, or whether negotiations could go ahead directly. Most Members expressed 'wariness' regarding the idea to negotiate plurilateral agreements on the Singapore issues -- something one trade expert attributed to reduced possibilities for countries to negotiate trade-offs across issues.

Backing Down on Steel Tariffs, U.S. Strengthens Trade Group
David E. Sanger (NYT) Dec 5, 2003
The W.T.O. forced the Bush White House into a 180-degree turn over steel tariffs, a rare feat for an international organization during this presidency.

EU welcomes termination of US steel safeguard measures
EU DGT Dec 5, 2003
The US announced today the full and immediate termination of its steel safeguards. EU Trade Commissioner Pascal Lamy said: “I am pleased to see that after nearly two years of litigation, the US has decided to abide by their international obligations by lifting the illegal safeguards. EU steel producers and workers will be relieved, as will those in the seven other countries which stood together with the EU in contesting these measures. But more importantly, this is a test case of how important is a rules-based international trading system for all of us”. He also added : “We should now concentrate our efforts in the OECD steel talks to cut down trade distorting subsidies and global excess steel capacity, which is at the root of the problems by the US steel industry”.

Victory Wall Street Journal Subscription Required
Don Evans (WSJ) Dec 5, 2003
Repealing steel tariffs is a sound decision for the U.S. economy.

Brazil's Currency Lesson for the U.S. Wall Street Journal Subscription Required
David Malpass (WSJ) Dec 5, 2003
Avoiding a currency crisis will help Congress clear it's spending hurdles.

America’s steel tariffs
Economist Dec 5, 2003
George Bush has announced the dismantling of America’s tariffs on imported steel, while promising to shield domestic companies from dumping. The tariffs have done their job, he says. Have they?

Global: Global Rebalancing and Dollar Risk
Stephen Roach (MSDW) Dec 5, 2003
For the past three years, I have expressed deepening concerns about the mounting imbalances of a US-centric global economy. A rebalancing of this lopsided state of affairs is the only means by which the world can finally start to function again as an organic global economy. And I have a tough time envisioning how such a realignment would occur without a significant further correction in the dollar. The biggest unknown, in my view, is the ultimate pace of dollar depreciation -- the speed of which could well have critical impacts on world financial markets and the global economy.

UN takeover of Internet? Some are 'not amused'
IHT Dec 8, 2003
Should the Internet come under control of the United Nations? That will be one of the most contentious issues at the World Summit on the Information Society in Geneva this week.

Global: A Bet Coming Due?
Stephen Roach (MSDW) Dec 8, 2003
This is the time of the year when we push our scratched and cracked crystal balls to the limit as we extend our forecast horizon out a year. It’s an exercise we always conduct with great trepidation, but this time it feels more uncertain than ever. While the recent momentum in the global economy is encouraging on the surface, the fundamental tensions of an unbalanced world are deepening. That may imply more momentum over the short term, but it raises serious questions about what lurks over the horizon.

Recovery Isn't So Jobless After All Wall Street Journal Subscription Required
George Melloan (WSJ) Dec 9, 2003
We don't need protectionist policies to have a rising employment rate.

Some Subtler Arguments for Tariffs
Robert P. Murphy (Mises Daily) Dec 9, 2003
The Bush Administration recently announced that it would repeal its controversial steel tariffs, proving that even Republicans will occasionally let market prices do their job. The move of course had nothing to do with a newfound appreciation of David Ricardo: Even the official press releases make it clear that the repeal was in response to a possible trade war, and that all the talk of the "modernized" domestic industry is just cover to make a political move appear economically consistent.

Chairman reports progress in relaunching trade negotiations
WTO Dec 9, 2003
Chairman Amb. Carlos Pérez del Castillo, at an informal Heads of Delegations meeting on 9 December 2003, reported progress in consultations with members for relaunching negotiations but gaps remain wide among positions. Director-General Supachai Panitchpakdi urged members to keep working with a sense of urgency and engagement.

The Dollar Crisis
Robert Blumen (Mises Daily) Dec 10, 2003
The current international monetary system, based on floating fiat currencies, brings about tremendous distortions which inevitably must be corrected. This much has been known to Austrians for some time. Awareness is now starting to spread to mainstream economists. To understand how we got here requires some historical background.

Attack of the killer bras
Nicholas D. Kristof (NYT) Dec , 2003
The most important thing happening in the world today is the rise of China, and that's the reality hovering in the background of the delicate U.S.-China talks under way in Washington this week. So I decided to "cover" the talks not in Washington, where it's easy to be overwhelmed by details of Chinese bra imports and U.S. policy toward Taiwan, but here in southern China's Taishan area, which accounted for a majority of Chinese emigrants to the United States until a few decades ago.

U.S. considers new protection for steel makers
IHT Dec 10, 2003
A week after dropping one set of tariffs on steel, the Bush administration is considering giving new protection to U.S. steel makers by changing how other duties are calculated.

We can trade up to a better world
Horst Köhler (IMF) and James Wolfensohn (WB) Dec 10, 2003
We have reached a critical juncture in efforts to create a more open and equitable global trading system. After the breakdown at the September World Trade Organization meeting, negotiators set themselves the challenge of restarting talks by December 15. But, on the eve of that deadline, the coalitions seem as far apart as ever on the main issues. The risk of the Doha development agenda being put off indefinitely looms larger with each month of inaction.

Doha Round: Talks Stall, Negotiating Groups To Resume In 2004
BRIDGES Weekly Trade News Digest - Vol. 7, Number 42 Dec 11, 2003
On 9 December, General Council (GC) Chair Carlos Perez del Castillo (Uruguay) wrapped up a second set of informal talks he has been conducting since the failure of the fifth Ministerial Conference in Cancun in September, concluding that Members would not be able to relaunch talks at a 15 December GC meeting. Instead he told Members attending a Heads of Delegation (HODs) meeting that he would present a Chair's report on 15 December, outlining progress thus far, identifying key issues and setting out a process for advancing the Doha round.

Singapore Issues: Talks Marked By Confusion, Disagreement On Way Forward
BRIDGES Weekly Trade News Digest - Vol. 7, Number 42 Dec 11, 2003
WTO Members have not reached any agreement on how to deal with the controversial Singapore issues -- investment, competition policy, transparency in government procurement and trade facilitation -- despite a series of informal consultations last week. The negotiating environment was, according to one trade delegate, "shrouded in confusion and lack of clarity". Two informal consultations on 4-5 December, focusing on trade facilitation and government procurement, were part of a second round of informal talks on the Singapore issues initiated since the breakdown of Doha round negotiations in September.

Capitalism and The Role of Globalization Recommended!
Alan Greenspan (World Affairs Council of Greater Dallas) Dec 11, 2003
Interest in issues of trade, tariffs, and protectionism has ebbed and flowed in this country since our founding. The widened trade deficit of recent years, in the context of a prolonged bout of job loss, has again elevated cries of distress to special prominence.

The Fundamentals of a Falling Dollar
Richard C. B. Johnsson (Mises Daily) Dec 15, 2003
One of the more confused propositions in the realm of currencies and exchange rates is the belief that the value of a currency is measured or determined by the exchange rate. For example, the dollar has fallen about 13 percent against the euro in this year and has lost about a third of its value against the euro since mid-2001. This makes some people believe that the value of the dollar has fallen and the value of the euro has risen. From observing the exchange rate, people do make inferences about the value of each currency[i].

Rajan on role of IMF research Adobe Acrobat Required
IMF Survey Dec 15, 2003
Plus: China-India conference; IMF annual research conference; Economic forum on capital flows; Krueger on Kenyan reforms; Environmental accounting; Military expenditure.

Puff the magic dragon
Economist Dec 16, 2003
Beward the China Play.

WTO: Members Decide On Way Forward In Doha Round
BRIDGES Weekly Trade News Digest - Vol. 7, Number 43 Dec 17, 2003
WTO Members met from 15-16 December in the last General Council (GC) session of the year. WTO ambassadors devoted most of the session to follow-up to September's Cancun Ministerial, ultimately agreeing to reactivate the Trade Negotiations Committee (TNC) and the negotiating bodies under it. The mood of the meeting was reportedly positive. While the outcome of the meeting was limited and focused on procedure rather than substance, no one had expected more.

Chair wraps up: groups can restart, but still no deal on tough issues
WTO Dec 16, 2003
Members are willing to restart work in the negotiating groups, but there is still no major breakthrough, General Council Chairperson Carlos Pérez del Castillo said on 16 December 2003. He was wrapping up the council’s discussion on the follow up from the Cancún Ministerial Conference.

Mexico Is Frittering Away Its Nafta Gains Wall Street Journal Subscription Required
William C. Gruben (WSJ) Dec 19, 2003
Mexico can no longer dominate the low-wage producer niche, yet it has been slow to take the next step.

A New Trade Deal
NYT Dec 22, 2003
The free trade agreement between four Central American nations and the United States deserves Congressional support.

Asia's Own Basel Accord Agenda Wall Street Journal Subscription Required
Philip D. Sherman & Corinne Neale (AWSJ) Dec 22, 2003
Asia should ignore attempts to water down the Basel accord.

A Basel Primer Wall Street Journal Subscription Required
AWSJ Dec 22, 2003
The ABCs of the New Basel Capital Accord.

Exchange Rates Must be More Flexible
Raghuram Rajan (IMF) Dec 23, 2003
Raghuram Rajan is just two months into the job as Chief Economist, IMF. It's a big change from his days in academia but no, he doesn't feel it cramps his style. But some of his answers may be a bit bland, he confesses with a disarming smile.

Free Trade Accord at 10: Growing Pains Are Clear
Tim Weiner (NYT) Dec 27, 2003
The North American Free Trade Agreement is more than ever a politically charged symbol of the promises and perils of free trade.

Japan may act on debt
IHT Dec 30, 2003
Japan is prepared to forgive "the vast majority" of its billions of dollars in Iraqi debt, if other leading creditors do the same.

The Unkept Promise
NYT Dec 30, 2003
Until we start chiseling away at our farm subsidies, the promise of trade will remain a promise unkept for many of the world's poor.

Don’t believe the hype
The Economist Dec 30, 2003
From overly cautious to overly trusting: the tale of 2003.

A bet comes due Economist Subscription Required
The Economist Dec 30, 2003
The dollar's recent slide should have been easy to predict.

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