Assigned News Items
Note: I will list here, for most of the term, the major news items that have appeared that are relevant for the course. I will usually discuss these, if only briefly, on Tuesdays (or the following Thursdays when Tuesdays are not available). You should be sure to be familiar with them from whatever news sources you are using. Where possible, I will provide links to the items online. I will include questions about some of them on exams.
- US trade complaints against Mexican sugar and steel fester
-- FT: 4/16
- Decisions are nearing on US anti-dumping cases against Mexican sugar and steel. These are increasing tensions between the US and Mexico, and they may complicate negotiations on TPP and TTIP.
- The US government has called the sugar case "ill-timed" because of these complications, but it has no power to prevent or influence it. That has not stopped the Mexico from lobbying to stop it.
- The cases will make it harder for Mexico to approve the TPP, if it is negotiated, but will make it easier for Obama, since they will show that he is "tough on trade enforcement."
- China's reserves reach $4 trillion; US objects, but declines to name China as currency manipulator
-- WSJ: 4/16
| ST&R: 4/16
| FT: 4/16
- Official data show that China's reserves have reached close to $4 trillion for the first time, indicating that China is continuing to buy foreign currency and thus depressing the price of its own. Reserves increased $129 billion in the first three months of 2014, reaching a new high of $3.95 trillion. At the same time, the Chinese currency has fallen 2.7% against the dollar since mid-February.
- The US Treasury issued its semi-annual currency report, which included strong criticism of this intervention by China, but it declined -- again -- to name China as a "currency manipulator."
- Most believe that China allowed the currency to fall in order to put pressure on speculators. But Chinese growth has slowed, and its government is also under pressure to cheapen its currency to promote exports and stimulate the economy.
- World's biggest cement companies, Swiss and French, to merge
-- WSJ: 4/7
| NYT: 4/7
| FT: 4/7
- The French firm Lafarge and the Swiss firm Holcim, construction-materials companies that are the two largest producers of cement, announced their agreement to merge. The combined firm, to be called LafargeHolcim, would be based in Switzerland with operating headquarters in both countries.
- Merger will need to be approved by as many as 15 different anti-trust regulators. To satisfy regulators, firms will sell assets especially in Europe, where without that their combined sales would exceed 40% of the market. They announced plans to sell assets that produce about $6.9 billion per year in revenue.
- The European Commission has been investigating these companies plus six more since 2010 for operating as a cartel.
- China's trade fell in March
-- WSJ: 4/10
| NYT: 4/10
| FT: 4/10
- China's exports fell 6.6% in March and its imports fell 11.3%, year-on-year. This was unexpected and has caused concerns about China's prospects for growth. But Premier Li Keqiang said that China will not resort of short-term stimulus measures.
- The export figure may be distorted, however, by over-invoicing of exports that occured in early 2013, in order to bypass capital controls. The Chinese government has cracked down on the practice since then, and has also let the currency fall, reducing the incentive for doing it. Since over-invoicing was most likely on exports to Hong Kong and Taiwan, and since exports to countries other than those rose 7%, over-invoicing does seem a likely cause of the new data.
- China's trade surplus was $7.7 billion in March, after an unusual deficit in February.
- US warns China about currency depreciation
-- WSJ: 4/7
| FT: 4/7
- An official of the US Treasury Department said the US is looking closely at China's actions in its currency market and that it would "raise serious concerns" if China moves away from allowing market forces to determine its exchange rate.
- This happens after China widened its band of exchange rate fluctuation and the currency then fell in value. In spite of the wider band, analysts see the depreciation as engineered by China's central bank, not so much to stimulate its economy but to punish exchange rate speculation.
- The announcement came just before last week's meeting of the IMF, World Bank, and G20 in Washington, perhaps to deflect attention from criticism of US monetary policy, which through quantitative easing had pushed capital toward emerging markets, and now through tapering of that policy is causing capital to flow back out.
Mar 31 - Apr 6
- World Bank to double lending to middle-income countries
-- NYT: 4/2
- The World Bank announced it would add about $100 billion to its lending capacity, intended for middle-income countries such as China, India and Brazil. This follows a pledge last year of an additional $52 billion to a fund for the world's poorest countries.
- It will lend more without asking for new contributions from members. How it will fund this is unclear, but it mentions stretching its existing funds "by increasing borrowing limits for individual countries, changing certain internal lending rules, increasing fees and offering loans with longer maturities."
- The Bank is also creating new "practice groups" of experts to help developing countries on topics including energy, agriculture, and finance.
- US trade deficit increases
-- WSJ: 4/4
- Report on US trade for February shows exports down 1.1% and imports up by 0.4%, increasing the trade deficit by 7.7%, compared to January.
- The fall in exports is attributed to slowing growth in China and continuing fragility of European economies.
- Report caused downward revisions of estimates of US GDP growth for the first quarter, which may even turn out negative.
- China restricts imports of pigs from US
-- WSJ: 4/5
- China tightened its restrictions on imports of live pigs from the US, due to concerns about a fatal swine virus, porcine epidemic diarrhea virus, which has spread to nearly 30 US states and killed millions of young pigs.
- China is asking the USDA to conduct more testing and to certify that exports are free of the virus. The virus is fatal only to young pigs and "poses no threat to human health or food safety."
- China is the world's largest consumer of pork. US exports of live pigs, valued at $20 million in 2013, were only a small part of US pork-related exports to China -- US exported $703.5 million of fresh pork to China.
- WTO decides against China on rare earth exports
-- WSJ: 3/27
| NYT: 3/27
| FT: 3/27
- The US, EU, and Japan had filed complaints against China in the WTO in 2012, arguing that China was restricting exports of rare earths -- minerals that are crucial for the manufacture of many high-tech products, including smartphones, cameras, and hybrid cars. Last week the WTO panel decided against China. China may appeal the ruling, but it complied with a previous ruling against it on exports of some more common commodities, such as bauxite and zinc.
- China produces 90% of the world's rare earths, such as lanthanum, tungsten, neodymium, and molybdenum. By limiting their availability to other countries, China gave an advantage to Chinese companies that use these materials and a disadvantage to their foreign competitors. China argued that the restrictions were justified to protect the environment.
- China had introduced export restrictions in 2009, causing world prices of rare earths to rise as much as 500%. This prompted investors to create new mines in other countries, which will eventually reduce China's dominance of this market. Indeed, prices have already dropped, so that this WTO ruling will probably not cause much change in the market.
- China and EU dispute Chinese subsidies in telecoms sector
-- WSJ: 3/27
| FT: 3/27
- The EU has complained for some time that China subsidizes its telecoms equipment manufacturers, to the detriment of companies in Europe. The largest of the Chinese companies, Huawei and ZTE, have insisted that they do not get subsidies.
- Karel De Gucht, the EU's Trade Commissioner, spoke again against these subsidies, but also said that Brussels would not pursue an investigation. This was a result, in part, of agreement reached with China not to place tariffs on other EU products, including polysilicon and wine. It also anticipates the visit next week of Chinese president Xi Jinping to Brussels.
- The claim by both the EU and the US is not that these companies get direct payments from government, but rather that they benefit from cheap financing provided by Chinese state-owned banks, from cheap electricity, tax credits, and other benefits.
- Venezuela relaxes currency regulations
-- WSJ: 3/24
| NYT: 3/25
| FT: 3/25
- After strict regulations and limited access to foreign exchange since 2010, Venezuela announced that it will allow a market-determined flexible exchange rate starting Monday. It is not simply moving to an overall flexible exchange rate, however, but adding a 4th exchange rate to the three that it already has, this one to be legal and market-determined.
- This will likely lead to a large depreciation of the Venezuelan currency, the bolivar, and this could increase inflation. But it could help the government to balance its budget, as its income from oil exports, priced in dollars, will be worth more in local currency.
- The change should also ease the many shortages that have plagued the country, as it will be easier (though more costly) to import. Shortages had prompted street demonstrations in which more than 30 people have been killed.
- Eurozone leaders agree on system to handle failing banks
-- NYT: 3/20
- Political leaders from the European Parliament, from member states, and from the European Commission agreed on a system for sharing funds to be used for shutting down failing banks in a crisis. This is a step toward a "banking union" that has been a goal of many since the financial crisis.
- The problem has been that, because banks have been regulated only within the nations of the eurozone, yet the banks themselves often operate throughout Europe, a bank failure both overwhelms the resources of its national government and creates strains on other banks that might then also fail.
- The new system, which will require banks to contribute to a central fund run by a Resolution Board and overseen by the European Central Bank, should be able to fully manage the failure of a bank within a weekend.
- Zambia drops two regulations on foreign currency exchange
-- FT: 3/21
- One regulation, now dropped, stopped businesses from paying for goods and services in dollars. The second, also dropped, forced exporting companies to repatriate any foreign currency that they earned.
- Dropping these regulations is a response to the 13% fall this year in the value of Zambia's currency, the kwacha, relative to the US dollar. The fall was due mainly to a fall in the world price of copper, which accounts for 70% of its export earnings.
- The hope is that dropping these regulations, which had discouraged foreign investors, will stop the decline of the currency. Of course the regulations themselves had been a misguided attempt to support the currency.
- Students and others in Taiwan protest trade agreement with China
-- NYT: 3/19
- The agreement would reduce barriers to trade in services, as a follow-up to a 2010 Economic Cooperation Agreement. The ruling party in Taiwan, which negotiated the deal, has the votes to approve it, but the agreement is not popular with the public.
- Hundreds of people -- students and others -- occupied the Taiwan's legislature and demonstrated outside to protest the trade agreement, objecting that it will reduce Taiwan's independence from China.
- China officially views Taiwan as still a part of China and insists that eventually the two parts of China must be reunified.
- Some press to drop Investor-State Dispute Settlement from TTIP
-- FT: 3/10
- TTIP, the Trans-Atlantic Trade and Investment Partnership between the US and EU, has been intended to include ISDS, Investor-State Dispute Settlement, similar to the contentious Chapter 11 in NAFTA.
- ISDS would allow multinational companies that believe their rights have been abridged or their investments devalued by governments to complain directly to a dispute settlement mechanism of the trade agreement. This contrasts with other disputes under trade agreements that can only be brought between governments. ISDS has been part of international trade and investment agreements for decades, with the main purpose of preventing governments from expropriating investments.
- ISDS is opposed by both NGOs (non-governmental organizations) and some countries, on the grounds that it limits the abilities of governments at all levels (including local) to use policies for environmental and other purposes. Even some groups that favor ISDS in principle are now questioning whether it is worth keeping if it might derail agreement on the TTIP.
- Scandal involving price fixing in foreign exchange (Forex) rates
-- WSJ: 3/12
| FT: 3/10
- Government authorities across the US, Europe, and Asia are investigating price fixing in the international foreign exchange (forex) market, the world's largest financial market at over $5.3 trillion per day. Some two dozen bank traders have been fired or suspended so far, and banks are expecting both civil and criminal penalties.
- The concern is that traders have shared information about orders from clients and agreed to manipulate, for their own benefit, certain benchmark rates that provide the basis for many transactions. One such benchmark is published at 4:00 PM each day and computed from transactions over a 60-second window, then used by large asset managers as the basis for further transactions.
- The probe is likely to exceed in size and scope the Libor scandal of recent years which involved manipulation of that international interest rate. It appears that the US Fed, in response to the Libor scandal, looked into forex manipulation but took no further action.
- China loosens its currency peg
-- NYT: 3/16
- China's central bank announced Saturday that it will allow its currency to fluctuate 2% either way from its government-set parity rate. This is twice the size of the 1% band that was being permitted previously.
- The result is expected to be greater fluctuations in the dollar/renminbi exchange rate, as well as reduced intervention in the exchange market by the Chinese central bank.
- This, together with relaxing some of its controls on international capital movements, is intended to help move the Chinese currency toward becoming accepted as an international currency.
Feb 24 - Mar 9
- US & EU contemplate sanctions against Russia due to Ukraine/Crimea
-- WSJ: 3/4
| NYT: 3/4
| FT: 3/7
- In response to Russian-uniformed soldiers taking over the Crimean peninsula, part of Ukraine, the US and EU warned of sanctions. The US immediately suspended military cooperation and talks with Russia about increasing trade and investment. The EU took no action immediately, but warned of action within days.
- Later in the week, the US issued visa bans for Russian officials. The EU suspended talks on trade and visa liberalization, and it agreed to parts of the integration agreement with Ukraine, the rejection of which by then-president Yanukovish had originally prompted confrontation.
- Other steps might include sanctions on Russian banks and freezing assets of Russian officials and companies. More serious would be to cut off trade, but that could hurt the EU as much as it hurts Russia. US trade sanctions alone would have little effect, as the US is not a major trading partner of Russia.
- China's currency drops in value
-- WSJ: 2/25
| Economist: 3/1
| FT: 2/24
- China's currency -- the renminbi, or yuan -- fell in value against the US dollar by an unprecedented amount. This is a currency that has been carefully managed by the Chinese central bank and has changed very little, except to rise slowly, over the last decade and more. So this drop, which was understood to be deliberate by the central bank, was a huge surprise.
- The movement was very small compared to recent changes in other currencies. But it was significant because international investors had believed that they could not lose holding reminbi. It was viewed as a "one-way bet." One motivation for the change was to undermine this expectation, and thus discourage capital inflows. Another was that, while the renminbi had risen slowly relative to the US dollar, it had risen much more relative to China's exporting rivals, thus reducing its competitiveness.
- There are two dollar-renminbi exchange rates, "onshore" and "offshore," made possible by China's strict controls on capital movements. It was the offshore rate that fell the most, reducing its premium above the onshore rate.
- Bitcoin exchange, Mt Gox, suffers more than $400 million theft
-- WSJ: 3/1
| NYT: 2/25
| FT: 2/26
- Owners of the "cryptocurrency" or "virtual currency" Bitcoin, much of which had been traded through and held at a Tokyo based exchange, Mt. Gox, found their holdings unavailable after Mt. Gox suffered a more than $400 million theft and went bankrupt. As the exchange was unregulated, those who lost are not protected.
- The theft was apparently made possible by a flaw in the software. "There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble," said Mt. Gox CEO Mark Karpeles.
- Bitcoin was created about 5 years ago, by an "anonymous" person or group named Satoshi Nakamoto (recently claimed to have been found by Newsweek), and is not backed by any real commodity nor by any central bank.
- Leaders of US, Canada, and Mexico met in Mexico, marking the 20th anniversary of NAFTA
-- WSJ: 2/20
| NYT: 2/19
| FT: 2/19
- Barak Obama, Stephen Harper, and Enrique Peña Nieto, the met in Toluca, Mexico, for their "Tres Amigos Summit" marking the 20th anniversary of the North American Free Trade Agreement, NAFTA. They announced several agreements, to ease travel among the countries for people and for goods. But the meeting was a disappointment, in that Obama faces opposition at home on both trade and immigration.
- In the 20 years of NAFTA, jobs have not moved from the US and Canada to Mexico, as some feared, but neither has Mexico's income risen relative to the others, as many hoped. Intra-regional trade has grown, but not faster than trade with the rest of the world.
- Obama's trade representative, Michael Froman, argues that the negotiation of the Trans-Pacific Partnership, TPP, which includes Canada and Mexico, represents Obama delivering on his campaign promise to "renegotiate NAFTA." Critics scoff.
- France making changes to attract FDI
-- NYT: 2/17
| FT: 2/17
- President François Hollande met with foreign investors and promised to limit taxes and simplify regulations, in order to make France more friendly for inflows of foreign direct investment. He also promised grants for foreign startups.
- As a socialist president, not previously very friendly to business, his time in office has been marked by a slump of inward FDI. He responded recently to rising unemployment with a "responsibility pact" that would cut labor costs and simplify labor regulations.
- Corporate taxes in France are currently higher than in Germany, and he promises to "harmonize" with Germany by 2020.
- The US Fed issued its final rules on US operations of foreign banks
-- NYT: 2/19
| FT: 2/19
- In the works for several years, these rules have now been weakened somewhat for foreign banks, but they are still viewed as harsh. Mainly, the Fed pushed back by one year the deadline for compliance.
- The aim is to lessen the likelihood that the US government will be asked to bail out banks when they get in trouble, including the US operations of foreign banks. To accomplish this, the Fed is requiring larger foreign banks to hold greater "capital" in their US operations, not just have access to capital held abroad.
- Though the rules on foreign banks are the same as have applied for some time to US banks, the foreign banks still complain that the rules create an "uneven playing field." Officials in Europe have said they might retaliate against US banks in Europe.
- Data on China's trade are questioned
-- WSJ: 2/13
| FT: 2/13
- China reported exports up in January by 10.6% and imports up by 10%. This was unexpected, leading analysts to question the data.
- This is not unusual, as China's reports of data in February are often strange and hard to interpret. The reason is the week-long holiday of the lunar calendar, which moves around from year to year. Economic activity responds to this holiday, but in unpredictable ways. This is partly because of a mass migration of workers to their homes for the holiday.
- Another explanation, however, is that exporting firms were "over-invoicing" export shipments in order to circumvent capital controls (thus disguising capital inflows as receipts for exports).
- Switzerland votes to restrict immigration
-- WSJ: 2/10
| NYT: 2/10
| FT: 2/10
- 50.3% of voters voted to extend a quota system on non-EU immigrants to cover EU immigrants as well. The Swiss government had opposed this initiative, but it was pushed by the ultraconservative Swiss People’s Party. The referendum does not specify the size of quotas, which might perhaps be set high enough not to bind.
- Swiss net immigration has been about 1% of population for the last seven years. This has caused concern about competition for jobs and has been said to push up property prices and rents and to congest the local transport system.
- This is contrary to a 1999 agreement that Switzerland signed to allow Swiss and EU nationals to move freely. That agreement also included access to other important markets, which this will invalidate, and may make it harder for Swiss businesses to operate in the EU.
- Kazakhstan devalues currency by close to 20%
-- WSJ: 2/12
| NYT: 2/12
| FT: 2/12
- The Kazakh central bank, the National Bank of Kazakhstan, devalued its currency, the tenge, by almost 20% on Tuesday.
- This came as a surprise, as the economy was doing well and its international reserves were not declining.
- The move is an effort to remain competitive with currencies in nearby countries, including Russia, Ukraine, and Turkey. But these and other changes are widely attributed to the US "tapering" of monetary expansion.
- US gray-market car exports to China
-- NYT: 2/12
- US is trying to crack down on "gray market" exports: Goods bought at retail in the US and sold abroad at higher prices, contrary to the wishes of their producers. A spokesman for BMW says: "Illegal exports deny legitimate customers here in the U.S. the popular vehicles, which are in high demand."
- A stark example is a Florida businessman who buys luxury cars in the US for $55,000-$75,000 and sells them in China for three times those prices. "We’re taking advantage of a legitimate arbitrage situation," he said. This trade amounts to an estimated 35,000 cars per year.
- These exports violate the policies of the car manufacturers, and the US government, through the Secret Service and federal prosecutors, attempts to enforce those policies, especially when the traders make false claims in order to purchase and ship the cars. The Florida man claims there is no law against this, however, and is fighting it.
- US trade deficit increases in December
-- WSJ: 2/7
| NYT: 2/7
- The US trade deficit rose from $34.56 billion in November to $38.70 billion in December, as exports fell 1.8% and imports rose 0.3%. Increase was expected, but not this large.
- Decline in exports is attributed to slowing growth abroad. Exports to Europe fell 8.9%. But exports fell also to Canada, Mexico, China and Japan.
- Over the whole year, however, exports were up and imports down -- especially of energy. The trade deficit for the full year was the smallest since 2009.
- Investigators probe foreign exchange (Forex) manipulation
-- NYT: 2/4
| FT: 2/4
- Allegations that traders have colluded to rig exchange rates have prompted a global investigation, said to be as bad as the previous investigation of manipulation of the Libor (London Inter-bank Offer Rate) interest rate that began three years ago.
- Regulators in London, Europe, and the US are investigating, with cooperation from at least 15 large banks, some of which have fired some of their traders. The result, as with the Libor scandal, may be banks having to pay another billions of dollars in fines.
- The claim is that firms and individuals were using chat rooms and phones to rig prices that were then used as benchmarks for other trades.
- Dutch far-right politician calls for the Netherlands to exit from EU
-- WSJ: 2/6
| FT: 2/6
- Dutch politician, Geert Wilders, of the far-right Freedom Party, presented a study that said the Netherlands would be better off if it left the European Union. He points to Norway and Switzerland, both outside the EU and doing well, as examples of what the Netherlands could achieve if it left the EU.
- Such an exit -- dubbed "NExit" -- would according to the study restore Dutch sovereignty, create jobs, boost income, and allow its companies to grow. Concerns include the money that the Netherlands pays for the EU to transfer to poorer countries, plus the opening of migration from some of those countries. Economists argue that NExit would be disorderly and harmful for both the Netherlands and the rest of the EU.
- Wilders's party is leading in the polls for the election to the European Parliament, due in May. Wilders is one of several populist leaders in EU countries who are doing well in the polls arguing against the EU. Wilders first achieved prominence, but not popularity, with anti-Muslin rhetoric. His shift to being anti-EU has made him more popular.
Jan 27 - Feb 2
- Reid opposes Fast Track
-- WSJ: 1/30
| NYT: 1/31
| FT: 1/30
- Senator Harry Reid, Majority Leader, said that he would oppose passing Trade Promotion Authority (TPA), also known as Fast Track. This is a blow to President Obama's agenda for negotiating trade agreements with Asia and Europe, which are supported by many Republicans.
- Fast Track sets a time table for considering international trade agreements, and requires they be voted up or down without amendment. The latter is considered crucial for getting other countries to sign on to agreements, since without it any agreement is subject to change by the US Congress. Obama had called for Fast Track in his State of the Union message the day before.
- Reid, like many other Democrats, has long worried that trade agreements will hurt US labor, as well as human rights and the environment. He worries now that it will hurt the Democrats' chances of keeping its majority in the Senate in the 2014 elections. However, until now he has avoided publicly disagreeing with Obama on this.
- Google sells Motorola to China's Lenovo
-- WSJ: 1/30
| NYT: 1/30
| FT: 1/30
- Google, having bought the mobile phone business of Motorola two years ago for $12.5 billion, has agreed to sell it to China's Lenovo for $2.91 billion. Lenovo is the computer company that earlier bought IBM's PC business and, last week, bought IBM's server business.
- Google's main motivation in buying Motorola was to obtain its patents, and doing so risked antagonizing other hardware makers that use Google's Android software. In the sale to Lenovo, Google will keep the majority of the patents.
- Lenovo is attracted by getting improved access to the US market, but the deal will still have to be approved by CFIUS, the Committee on Foreign Investment in the U.S., which watches for national-security concerns and has blocked other international investments.
- Republicans re-open consideration of US immigration reform
-- WSJ: 1/31
| NYT: 1/28
| FT: 2/1
- Seven months after the Senate passed an immigration bill, Republican leaders of the House of Representatives went public with a set of principles for immigration reform. It includes a path to legal status for many adult illegal immigrants and a path to citizenship for those brought to the US illegally as children.
- Many other Republicans oppose this, wanting either to abandon it or postpone it until after the next elections. The latter fear that this issue will divide Republicans at a time when they might otherwise by unified in opposition to Obama.
- A major motivation for the pro-reform contingent is to attract Latino and other immigrant voters to the Republican Party. Another is to slow the outflow of high-skilled workers who train in the US but then are not allowed to stay and contribute to the US economy.
- Argentina currency falls sharply, causing fears for other emerging markets
-- WSJ: 1/25
| NYT: 1/25
| FT: 1/25
- The Argentine peso fell 10% on Thursday and continued to fall on Friday, prompting concerns about other emerging market currencies, which then also fell. Some were reminded of the "financial contagion" that afflicted Asian currencies and others in 1997, though others insist this is not the same.
- The fall is caused in part by expectation of US monetary tapering and by slowing growth in China, but more directly it is caused by (and is also a cause of) high inflation in Argentina.
- Argentina responded Friday by loosening limits on purchases of dollars. Meanwhile, the Argentine central bank has spent heavily out of his dollar reserves to stem the fall in the peso. Reserves have fallen from $52.6 billion three years ago to $29 billion. On Friday alone they spent $160 million.
- World elite gather at Davos
-- WSJ: 1/24
| NYT: 1/21
| FT: 1/22
- The annual World Economic Forum at Davos, Switzerland, convened last week, with such notables Shinzo Abe, Bill Gates, and Matt Damon joining the CEOs of many of the world's largest businesses. Not attending, however, were Warren Buffett, nor the CEOs of Apple, General Electric, Google, and Facebook.
- The atmosphere at Davos always mirrors the world economy, and this year it is optimistic. This year, unlike the last several, it is growth of the US economy that is feeding this optimism, as emerging markets are showing cause for concern, especially slower growth in China. One theme was that technology is now leading the world economy, instead of banking and finance.
- Also present were heads of state and diplomats, seeking to solve the problems of the Middle East: US Secretary of State John Kerry, Iranian President Hasan Rouhani, Syrian Foreign Minister Walid al-Moallem, and Israeli Prime Minister Benjamin Netanyahu.
- New restrictions on electronic trade
-- FT: 1/22
| FT: 1/25
- Argentina, in an effort to curb capital flight, on Wednesday imposed restrictions on online shopping. Buyers on Amazon.com and similar sites must now sign a declaration and submit it when they collect their packages at the customs office. And they are limited to two purchases per year, up to a value of $25, beyond which they pay a 50% tax. The policies are explicitly protectionist, as a cabinet official said "We must ask ourselves if we want Argentine industry, Argentine workers."
- Russia is requiring extra paperwork on all parcels for personal use, with the result that DHL and FedEx have suspended deliveries to individuals in Russia. The motive is said to be to prevent consumers from evading import taxes by underreporting value of goods they purchase.
- US Congress fails to approve increased funds for IMF
-- FT: 1/14
- In 2010, led by the US, G20 had agreed that advanced economies would increase the role of emerging economies in IMF and also increase its funding.
- The US budget package agreed Jan 13 did not include increased funds for IMF, in spite of intense lobbying by US Treasury and the White House.
- This breaks the "contract" that the US had with other countries and will prevent reform that would have made IMF governance fairer for emerging economies.
- Indonesia bans mineral exports
-- NYT: 1/12
| FT: 1/12
- Indonesia announced a ban on unprocessed mineral exports, effective Jan 12 2014, but not actually binding for major exporters until 2017. Indonesia is a major producer of the world's gold, nickel, copper, tin and thermal coal. It produces more than 15% of global nickel supply.
- Purpose is to push mineral companies to process minerals inside Indonesia, increasing the "value added" there. Companies are required to build smelters to convert ore into pure minerals by 2017.
- Government claims this will promote industrial development. Mining companies and economists say it will cause mass lay-offs and reduce export revenues.
- US Democrats are critical of Trans-Pacific Partnership (TPP)
-- WSJ: 1/15
| NYT: 1/15
- White House wants "fast track" rules for passing trade agreements, but Democrats fear that TPP will reward countries with poor records on human rights and environment.
- Documents leaked by WikiLeaks show that the environmental chapter of what is being negotiated looks like US is giving in to the other 11 TPP countries, allowing environmental protections to be not legally binding.
- USTR Froman says "We have worked closely with the environmental community from the start and have made our commitment clear." But the other 11 countries argue that strong enforceable environmental rules would hurt their growing economies.