Taxiing on the apron

Chilean president visits region to talk trade

At home in Chile, Michelle Bachelet – that nation’s president, elected to her second term in a landslide vote in 2013 – works a tough balancing act.

Her Pacific nation is home to robust capitalists – mine owners, winemakers, fruit growers whose Southern Hemisphere seasons enable them to supply Americans in winter – and militant communist and anarchist groups, which press hard, and often successfully, for taxing the rich to pay for college tuition, retirement plans, health insurance. A socialist and a single mother, Bachelet governs in coalition with the Christian Democrats. On Monday in New York, she presided over a special meeting of the U.N. Security Council to help prevent wars.

But in Wilmington and Philadelphia this week, Bachelet is all business. At a warehouse at the Delaware port on Tuesday, she drew a crowd of U.S. and Chilean businesspeople and workers, and a collection of pro-free-trade Democrats – led by U.S. Sen. Tom Carper (D., Del.), U.S. Rep. John Carney (D., Del.), and Delaware Gov. Jack Markell, also a Democrat, who worked as a young banker in Chile in the 1980s before becoming a Comcast executive. Read more:

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Canada-South Korea free-trade deal shows small gains for both sides

Canada’s free-trade deal with South Korea will hurt the domestic auto sector, but the pain will be softened by the fact that Canadians will have a bit more money to buy new cars, according to the first detailed analysis of the trade pact.

 The Canada-Korea Free Trade Agreement took effect on Jan. 1, and the C.D. Howe Institute is releasing a report on Thursday that estimates the expected impact of the deal over the next 20 years.

Overall, the research concludes the deal will show small and comparable gains for both sides. Canada will get an additional $3.1-billion in gross domestic product in contrast to $2.3-billion for South Korea. However, South Korea will do slightly better than Canada when the effect is measured as a percentage of GDP, according to the institute.

The report projects production will decline by $114-million for auto makers in Canada because cheaper imports will be available from South Korea, which will increase its exports to this country by $1.2-billion. Read more:

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Chile, Japan to scrap tariffs for expansion of economic partnership

Chile and Japan are looking to expand their economic partnership by eliminating tariffs, Chile’s Ministry of Foreign Affairs said Monday.

A bilateral commission of the Chile-Japan Strategic Economic Partnership Accord met last week to discuss extending import tariff exemptions to more goods, the ministry said in a statement.

Chile and Japan, along with 10 other nations, are also interested parties to the Trans-Pacific Partnership, a wide-ranging regional trade and investment treaty that has been under negotiation since it was initially proposed in 2005.

The bilateral commission concluded two days of negotiations Friday in Chile’s capital, concretizing commitments made in September 2014 to expand tariff exemptions between the two countries. Read more: 

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Non-tariff barriers dog EAC

DAR ES SALAAM, Tanzania – The East African Community (EAC) has been advised to set a target for intra-EAC trade growth for this year of 15% by promptly eliminating Non-Tariff Barriers (NTBs).

Peter Kiguta,  the Director General Customs and Trade at the EAC Secretariat was speaking at the 16th EAC Regional Forum on NTBs held recently.

He suggested the Chairpersons and Co-Chairpersons of National Monitoring Committees (NMCs) to exchange their contacts in order to redress NTBs when reported instead of waiting for the Regional Meetings. Read more: 

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Blog Share: A Study on Liberalizing Liquor Trade in India|By D. Dhanuraj and Rahul V Kumar

India is one of the world’s most restrictive places for trade and doing business. In 2014, it is ranked 110 out of 152 countries, in terms of economic freedom, by the Economic Freedom of the World Report. Its Freedom to Trade Index was 6.2 (highest score 10.0), 124 out of 152.[i]Doing business in India remains difficult for both foreign and domestic companies. The country was ranked 133 out of 152 countries by the World Bank this year in its Doing Business Score.[ii] Many studies have indicated trade barriers continue to be a major hindrance to India’s development and prosperity, making trade liberalization and further deregulation critical to its economy. Read more: 

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Public Procurement in FTAs: The Challenges for Malaysia

Malaysia’s GDP was ranked by the IMF at 35th globally in 2013. The country has a major commodity sector and wide-ranging export-base manufacturing and service industries. Malaysia has great potential to grow through further trade liberalization. However, many of the goods and services produced now are typically supplied to government agencies under decades-long government procurement contracts. A Recent Study by Malaysia-based Institute for Democracy and Economic Affairs (IDEAS) points out that public spending on procurement currently stands at around 25 percent of the annual GDP in 2014. The study also shows that long-term government procurement policies have limited the competitiveness of domestic businesses, and have prevented the country from enjoying the full benefits of global trade. Read more:

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Blog Share: More free trade should be pursued|By Sri Murniati

Among arguments used by those opposing free trade agreements, especially the Trans-Pacific Partnership Agreement (TPPA) negotiations, is the potential decline of Malaysia’s trade surpluses if we join a big trade group with dominant players such as the United States. Sri Murniati, Manager of Political Economy and Governance Unit at the Institute for Democracy and Economic Affairs argues in a recent article that current debate over whether Malaysia should further opening up trade through TPP has missed its point. She said, ” They argue that Malaysia’s exports to countries in the trade group such as the TPP may probably increase but our imports from those countries may increase even more. This will result in a net reduction in our Balance of Trade (BOT), creating a trade deficit. They argue that this is a bad thing for our country.Using trade surplus to measure the impact of free trade is not necessarily appropriate, and could be misleading.” The two agreements initiated by the United States since last year are still experiencing challenges and resistance from local groups. It is a time to realize the importance educating public about benefits of trade not only to the government, but more importantly to the general public who are becoming increasingly active in shaping public policies thanks to the world wide web. In her article, she also stressed a key to today’s trade integration, “If we want to further integrate our economy into the global economy, we should not be obsessed with increasing export volume so as to ensure it is above import volume. Rather we should think about how to increase Domestic Value Added (DVA) that can be retained from increased trade. The higher the DVA retained within a country, the higher the benefit the country will gain from global trade.” Read more: 

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Nexus Between Trade, Rising Poverty

The relationship between trade and poverty is inverted. Countries with higher proportions of global trade tend to have less of poverty. Conversely, countries, which contribute the least to global trade have higher poverty rates. This shows the importance of good trade policies in reducing poverty rates and increasing prosperity. Also, this shows why there is intense competition for export markets even by countries that already control significant share of global trade. Trade facilitation is becoming critically important to the economy of poverty-stricken areas. Read more: 

Blog Share: Progress on TPP Deal With U.S. But a Gap Remains: Japan Official | By Lucian Cernat

Whether the 12-nation Trans Pacific Deal will conclude in the near future largely depends on the degree to which U.S. and Japan are willing to compromise on agriculture issues. Reuters reported last week that progress in U.S. talks with Japan towards a Trans-Pacific Partnership trade pact is encouraging, but difficult issues remain, the acting deputy U.S. trade representative said on Wednesday. Hopes of sealing the deal this year took a blow last month, when talks between the two nations seen as key to concluding the ambitious 12-nation trade pact hit a snag, with each side blaming the other for a stalemate over farm exports.The United States insists that Japan lower barriers to agricultural imports, but Japan wants to protect sensitive products, including pork, beef, dairy and sugar. “We were encouraged by the progress we made this week during our negotiations, but we need to underscore that the issues before us are tough,” Wendy Cutler told reporters at Japan’s foreign ministry, following four days of talks with Japan’s deputy chief negotiator, Hiroshi Oe. Read more: 

Blog Share: How Can Europe’s Trade Policy Better Benefit Small Exporters? | By Lucian Cernat

According a recent blog at World Economic Forum, Out of the total number of exporting firms, more than 80% are SMEs (over 600,000 exporters). With over €500 billion of merchandised exports, SMEs account for over a third of EU exports. These exporting SMEs employ more than 6 million people throughout Europe. Therefore, while the happy few are still accounting for a dominant share of total EU exports, SME exports are too large to be ignored. And so are those firm-level characteristics that lead SMEs to become successful exporters, which bring us to the third conclusion: Export performance of EU SMEs by member states is quite diverse.When benchmarking SMEs export performance by member states against the EU average, they can be clustered in two dimensions: The proportionate number of exporting SMEs and the value of their exports. Some countries excel in both dimensions, whereas others fall behind in one or in both aspects. Understanding the different SME export performance across countries is important in establishing trade-related domestic policy priorities in various EU countries. Benefits of export to SMEs is inevitable. Nevertheless, one should not underestimate the importance of import to a large economy as European Union. Business and people in large economies would only truly benefit from trade if governments are willing to open up its market and welcome foreign businesses. Read more…