Wednesday, 7 March 2012
Unit 4: House Passes Bill to Address China Subsidy
WASHINGTON — The House voted on Tuesday to ensure that the United States could impose duties on subsidized goods from China and Vietnam, overwhelmingly rejecting a conservative group’s attempt to portray it as a tax increase.
The bill, which was passed 370 to 39 and addresses a court ruling, now goes to President Obama, who is expected to sign it into law. The Senate passed the bill on Monday.
“China distorts the free market by giving enormous subsidies to its producers and exporters, and our companies and workers should not be expected to compete against the deep pockets of the Chinese government,” Dave Camp, a Michigan Republican who is chairman of the House Ways and Means Committee, said during debate.
The Obama administration helped draw up the bipartisan bill after an appeals court ruled in December that the Commerce Department did not have authority to impose countervailing — or antisubsidy — duties on goods from “nonmarket economies.”
The decision endangered countervailing duties on about two dozen goods from China and Vietnam worth more than $4 billion in trade, and potential new duties in cases involving solar panels and turbine towers from China.
Supporters say current duties protect 80,000 American jobs. They cover steel, aluminum, paper, chemicals, other products from China and plastic shopping bags from Vietnam.
The vote gave both Republicans and Democrats a chance to show they are being tough on China, which many Americans see as an unfair trader. Last year, United States imports from China totaled a record $399.3 billion.
Unit 4: US and India at the WTO
US challenges India poultry import ban at trade body
The US authorities have accused India to trying to protect its domestic poultry industry
The US has dragged India to the World Trade Organization challenging its ban on imports of American poultry.
India has banned shipments of US farm products, including poultry meat and chicken eggs, since 2007 to prevent the spread of avian flu.
US authorities said India had imposed the ban to protect local industry and that it violates global trade rules.
The move comes just days after the US created a new panel to crack down on unfair trade practices by its partners.
Ron Kirk, US Trade Representative, said that India's ban was "clearly a case of disguising trade restrictions by invoking unjustified animal health concerns".
"The United States is the world's leader in agricultural safety and we are confident that the World Trade Organization will confirm that India's ban is unjustified."
Key market
India is the world's second most populous country and the demand for poultry products has been growing in the Asian nation.
According to some estimates, the Indian poultry market is expanding at an annual rate of between 8% to 10%.
The US, which is the world's largest producer of poultry meat, is keen to tap into this fast-growing market.
Industry experts said US exports to India could touch $300m (£190m) annually, if India lifted the ban on US poultry goods.
"As the middle class in India continues to expand, and the market moves more toward commercial poultry, the United States should be afforded the opportunity to compete fairly with our products in this growing market," said Mike Brown, president of the US National Chicken Council.
The US has dragged India to the World Trade Organization challenging its ban on imports of American poultry.
India has banned shipments of US farm products, including poultry meat and chicken eggs, since 2007 to prevent the spread of avian flu.
US authorities said India had imposed the ban to protect local industry and that it violates global trade rules.
The move comes just days after the US created a new panel to crack down on unfair trade practices by its partners.
Ron Kirk, US Trade Representative, said that India's ban was "clearly a case of disguising trade restrictions by invoking unjustified animal health concerns".
"The United States is the world's leader in agricultural safety and we are confident that the World Trade Organization will confirm that India's ban is unjustified."
Key market
India is the world's second most populous country and the demand for poultry products has been growing in the Asian nation.
According to some estimates, the Indian poultry market is expanding at an annual rate of between 8% to 10%.
The US, which is the world's largest producer of poultry meat, is keen to tap into this fast-growing market.
Industry experts said US exports to India could touch $300m (£190m) annually, if India lifted the ban on US poultry goods.
"As the middle class in India continues to expand, and the market moves more toward commercial poultry, the United States should be afforded the opportunity to compete fairly with our products in this growing market," said Mike Brown, president of the US National Chicken Council.
Tuesday, 6 March 2012
Unit 3: Mergers in action
A fabulous example of some of the challenges and potential problems that arise when a merger of two substantial, similar businesses is finally completed…
This short news clip highlights the nature of the change facing management and employees working to merge United Airlines and Continental Airlines as the final stage of the merger - a transfer of booking systems - took place.
This short news clip highlights the nature of the change facing management and employees working to merge United Airlines and Continental Airlines as the final stage of the merger - a transfer of booking systems - took place.
Power in the media...please watch!
Thanks to Mr Cave for this exceptional Guardian advert which highlkights the power of the media. Not Economics as such, but thought provoking none the less.....
Monday, 5 March 2012
Y13 students should become familiar with the term 'Sovereign Wealth Funds'. Essential knowledge in the study of global economics, trade, investment and currency developments. As you will see, we are famous here in the UAE as we have the oldest & biggest SWF in the world!
A sovereign wealth fund is a government or state run investment fund usually created by supernormal profits from natural resources such as oil, gas or minerals.
Here is some brief background on them:
The oldest SWF is the UAE-Abu Dhabi Fund established in 1976, one of the most recent is the one created by Russia in 2008.
The largest sovereign wealth fund (measured by the US $ value of assets under management) is the Abu Dhabi Investment Authority with $627bn. The Chinese Investment Corporation (CIC) has $410bn and the Kuwait Investment Authority had $296 under management at the end of 2011.
Sovereign wealth fund investment in the UK has grown rapidly over the years - it attracted $68 bn of total SWF investment in the six years to the end of 2011. Here are some high profile examples:
1/ Thames Water (9.9% stake bought by China Investment Authority)
2/ BAA Airports Group (17.7% owned by GIC of Singapore)
3/ Sainsbury’s (26% stake owned by Qatar Investment Authority)
4/ London 2012 Olympic Village (100% owned by Qatar Investment Authority)
From investment in corporate bonds and equities, real estate, infrastructure projects, government debt and hedge funds / private equity - the increasing financial muscle and influence of state investment funds is a key development to be aware of. There is rising pressure for these funds to be more transparent in their dealings - in the past they have been highly secretive.
Do you consider their impact to be positive for the UK economy at this crucial stage of the economic cycle? To what extent is the expansion of SWF power a reflection of the changing centre of gravity in the world economy?
Qatar looks to diversify away from gas
Q's for discussion: In light of the above information, assess the advantages & disadvantages of SWF for the UK.
A sovereign wealth fund is a government or state run investment fund usually created by supernormal profits from natural resources such as oil, gas or minerals.
Here is some brief background on them:
The oldest SWF is the UAE-Abu Dhabi Fund established in 1976, one of the most recent is the one created by Russia in 2008.
The largest sovereign wealth fund (measured by the US $ value of assets under management) is the Abu Dhabi Investment Authority with $627bn. The Chinese Investment Corporation (CIC) has $410bn and the Kuwait Investment Authority had $296 under management at the end of 2011.
Sovereign wealth fund investment in the UK has grown rapidly over the years - it attracted $68 bn of total SWF investment in the six years to the end of 2011. Here are some high profile examples:
1/ Thames Water (9.9% stake bought by China Investment Authority)
2/ BAA Airports Group (17.7% owned by GIC of Singapore)
3/ Sainsbury’s (26% stake owned by Qatar Investment Authority)
4/ London 2012 Olympic Village (100% owned by Qatar Investment Authority)
From investment in corporate bonds and equities, real estate, infrastructure projects, government debt and hedge funds / private equity - the increasing financial muscle and influence of state investment funds is a key development to be aware of. There is rising pressure for these funds to be more transparent in their dealings - in the past they have been highly secretive.
Do you consider their impact to be positive for the UK economy at this crucial stage of the economic cycle? To what extent is the expansion of SWF power a reflection of the changing centre of gravity in the world economy?
Qatar looks to diversify away from gas
Q's for discussion: In light of the above information, assess the advantages & disadvantages of SWF for the UK.
Friday, 2 March 2012
Unit 4: Deflation in the EU
A predictable, but nevertheless depressing, event is to see Europe slipping into deflation.
Monthly inflation in the EU area was -0.8% in January 2012. (EU Stat) The 12 month inflation figure was 2.6%, which includes some cost-push inflation. Inflation will continue to fall over the coming months However, there are few signs of economic recovery. Countries in the periphery of the EU are at greater risk of deflation because of the continued austerity, high exchange rate and fall in economic confidence. The ECB has been debating whether to pursue quantitative easing, but there is a deep-seated reluctance to pursue this unorthodox monetary policy.
The problem is that even quantitative easing can take a long time to have an effect on economic activity. The experience of the UK and US is hard to judge, but it has had an effect in preventing a deeper and longer lasting recession. Any fears of inflation resulting from quantitative easing seem hard to justify as the economies struggle along.
A short reminder of the timeline of the current economic crisis
How Will Deflation Affect the Eurozone?
Monthly inflation in the EU area was -0.8% in January 2012. (EU Stat) The 12 month inflation figure was 2.6%, which includes some cost-push inflation. Inflation will continue to fall over the coming months However, there are few signs of economic recovery. Countries in the periphery of the EU are at greater risk of deflation because of the continued austerity, high exchange rate and fall in economic confidence. The ECB has been debating whether to pursue quantitative easing, but there is a deep-seated reluctance to pursue this unorthodox monetary policy.
The problem is that even quantitative easing can take a long time to have an effect on economic activity. The experience of the UK and US is hard to judge, but it has had an effect in preventing a deeper and longer lasting recession. Any fears of inflation resulting from quantitative easing seem hard to justify as the economies struggle along.
A short reminder of the timeline of the current economic crisis
How Will Deflation Affect the Eurozone?
- Increase Debt to GDP ratios. Falling nominal GDP will increase the debt to GDP ratio. Even if countries like Greece and Portugal manage a primary budget surplus (which is very hard to imagine), they would still see rising debt to GDP ratios, and probably a continuation of higher bond yields
- Decline in consumer Spending. Deflation plays a key role in delaying spending decisions. Faced with falling prices, people tend to delay spending, waiting for goods to become cheaper.
- Higher real Interest Rates. With deflation, real interest rates are effectively higher.
- Higher unemployment. With continued deflation and lower growth, EU unemployment will remain high.
- More on economic costs of deflation.
Thursday, 1 March 2012
Unit 4: The Euro
A useful presentation on the single European currency....
Question for Homework: Evaluate the possible effects of the introduction of a single currency by a trading bloc. (30 Marks)
Question for Homework: Evaluate the possible effects of the introduction of a single currency by a trading bloc. (30 Marks)
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