Major News Items

Nov 19 - Dec 2

1. USITC Rules Against Countervailing Duties on Paper Imports from China WSJ: 11/21 | Proquest | NYT: 11/21 | NewsBank
   • Import duties, authorized earlier this year on grounds that Chinese glossy paper exports were subsidized, were removed by USITC on grounds that the US industry was not "materially injured" or threatened with such injury.
   • Case had been filed by NewPage Corp., of Dayton Ohio, also against exports from South Korea and Indonesia, who are also covered by this ruling.
   • The earlier levying of tariffs reversed previous US policy that subsidies could not be illegal in a country that does not have a market economy, thus signalling acceptance of China as a market economy.
2. China Agrees to End Subsidies to Manufactures WSJ: 11/30 | Proquest | NYT: 11/30 | NewsBank | FT: 11/30 | Proquest
   • Accord is result of talks with US to resolve a US complaint to the WTO. This puts the WTO case on hold. Three other complaints are still pending.
   • US claimed that these subsidies cover 60% of China's manufacturing exports to US. Most go to firms that are partly foreign owned, including by US. Critics say China would have reduced these subsidies anyway.
   • Agreement comes ahead of top-level meetings in China next month, to be led by US Treasury Secretary Henry Paulson, focusing on greater access to China for American-made goods.
3. Pfizer May Double Its Outsourcing to Asia WSJ: 12/1 | Proquest
   • Pfizer, which currently outsources 15% of manufacturing, is considering doubling that to 30%.
   • Company has already shut down several factories, as part of a plan to cut its world-wide workforce by 10% in response to declining sales especially of its cholesterol drug, Lipitor.
   • Similar moves to Asia are being made by other pharmaceutical companies.

Nov 6-18

1. World Bank Report Shows More Rapid Growth in Sub-Saharan Africa NYT: 11/15 | NewsBank
   • The region's economy grew at 5.4% in 2005 and 2006, comparable to other developing countries except China and India. This is a big improvement for the world's poorest region.
   • Improvement is said to be due to: better policies, better government, fewer armed conflicts, and expansion of trade and investment. Fastest growth was by exporters of oil and minerals, but many others also did well.
   • World Bank attributes improvement in part of Bank policies, including fiscal discipline. But some African leaders condemn the Bank for making them reduce numbers of teachers, nurses, and other needed trained workers.
2. SEC Drops Accounting Requirement for Non-US Companies WSJ: 11/16 | Proquest | NYT: 11/16 | NewsBank | FT: 11/15
   • US Securities and Exchange Commission dropped the requirement that non-US companies listed on US stock exchanges must conform to US accounting rules. It also will listen to public opinions on letting US companies use international standards.
   • US uses "Generally Accepted Accounting Principles" promulgated by the Financial Accounting Standards Board (FASB). These differ from the "International Financial Reporting Standards" of the International Accounting Standards Board (IASB) used by Europe and many other countries.
   • This change by SEC is said to be a step in the direction of a single set of accounting standards for the world, presumably those of the IASB.
3. Michigan Democrats Propose to Punish Employers of Illegal Immigrants NYT: 11/18 | NewsBank
   • Law would make it a felony to hire an illegal immigrant knowingly, with penalty of up to $250,000 fine and 5 years in prison for repeat offenders.
   • Since the failure of the immigration bill in Congress, several states have tried their own laws, some favoring immigrants and others opposed. Both are said by some to pre-empt federal law and thus be unconstitutional.

Nov 5-11

1. Bush Proposes Enhanced Regulation of Imported Products WSJ: 11/6 | Proquest | NYT: 11/6 | NewsBank | Proquest
   • Proposal would increase regulatory powers of FDA, CPSC, including increased monitoring of imports before they are exported.
   • FDA could require manufacturers and imports of "high risk" products to prevent contamination, require certificaiton of compliance with FDA standards, gain access to production records, and mandate recalls. CPSC could require tests of products and increase penalties for violators.
   • Some Democrats welcome the proposal; others say it is inadequate, not likely to be adequately funded.
2. US FTA with Peru Approved in House WSJ: 11/9 | Proquest | NYT: 11/9 | NewsBank | FT: 11/8 | Proquest
   • House of Representative approved the US-Peru FTA by a vote of 285-132, in spite of Democrat concerns that it would cost jobs and worsen the trade balance. Nearly half of Democrats voted in favor. Defenders say this FTA will improve US standing in Latin America and counter the growing political influence of Venezuela's Hugo Chavez.
   • Approval was facilitated by agreement, in May, to include labor rights and environment in future trade agreements. It was also facilitated by campaign contributions for Democrats from export-oriented firms, including financial services, high tech firms, entertainment, and farmers.
   • The Peru agreement is regarded as easier to be approved than others that are pending with Panama, Colombia, and S. Korea.
3. US Trade Deficit Falls to Lowest in Two Years WSJ: 11/10 | Proquest | NYT: 11/10 | NewsBank | FT: 11/10 | Proquest
   • Exports rose a lot in September, while imports rose only a little, producing the lowest US trade deficit in two years.
   • Fall in deficit due to falling value of dollar, benefits US producers but hurts consumers.
   • Ben Bernanke, Fed Chairman, warned that falling dollar could curb economic growth in coming months. (Not clear why, unless he's worried about it causing a slowdown abroad.)

Oct 29 - Nov 4

1. EU Steel Producers File Anti-Dumping Complaint againts China WSJ: 10/29 | Proquest | NYT: 10/30 | NewsBank
   • Claim is that China is selling steel below cost. Chinese steel production had increased for Olympics, and now is excessive.
   • EU is unhappy due to rising trade deficit with China, which is on track to surpass the US deficit this year. European steel, like other goods, is less competitive due to the high euro.
   • Meanwhile, anti-dumping claims by US steel industry have declined, as falling dollar has shifted others' exports from US to EU.
2. Grassley Proposes Increase in Visa Tax WSJ: 11/2 | Proquest
   • Senator Chuck Grassley (Republican, Iowa) added an amendment to a spending bill that would raise tax on businesses that hire workers with H-1B (skilled worker) visas from $1500 to $5000.
   • Number of H-1B visas is capped at 65,000 per year, well below demand, and number is not being increased.
   • H-1B visas also require that these professionals be paid more than comparable Americans.
3. US Sanctions on Iran Are Interfering with World Bank Aid | NYT: 11/4 | NewsBank
   • World Bank has suspended payments of $5.4 million to Iran for four projects, involving earthquake relief, water and sanitation, environment management and urban housing.
   • This in response to US sanctions listing four major Iranian banks as being involved in nuclear proliferation and terrorism. As a result, no US bank is allowed to facilitate any dollar-based transaction between them and any other bank in the world.
   • Result is that World Bank is having difficulty finding banks in Iran to handle its transactions.

Oct 15-28

1. Oil Price Rises above $90 WSJ: 10/26 | Proquest | NYT: 10/26 | FT: 10/27 | Proquest
   • Price is record high in nominal terms, but still below record in real terms, which in April 1980 was $101.70 in todays prices.
   • OPEC expressed lack of concern as long as global economic conditions are good.
   • High price is due to worries about supply, including US economic sanctions on Iran, declining supplies in US, and Turkey's threat to invade Iraq. Also mentioned in the falling US dollar.
2. Report to Show that Fewer Illegal Migrants Are Trying to Cross Border WSJ: 10/25 | Proquest
   • Apprehensions are down 20%, suggesting fewer are trying to cross into US from Mexico. Change is attributed to heavier law enforcement -- more Border Patrol agents, plus National Guard -- but also to slowing US economy.
   • Fee for people smuggling has risen from near zero to $6000 per head.
   • Traditional mom-and-pop people smugglers are being replaced by more professional criminal gangs, often with ties to illegal drug trade. Violence has increased, including gun fights, hijackings, and rape and assault on migrants.
3. Cost of Bulk Shipping Is Rising WSJ: 10/22 | Proquest
   • Cost of ocean shipping for raw materials is at an all time high due to shortage of ships, raising prices of grain, iron ore, coal, etc. Other types of ship, including oil tankers and container ships, are not in short supply.
   • Shortage of ships has nearly tripled the cost of renting one. Shortage results from increased demand to supply raw materials to China's growing market. Inadequate port facilities also hurt, as ships are kept waiting as long as two weeks to unload.
   • New bulk freighters are being built, but won't come on line until 2010. There is typically a 36-month lag between orders and delivery.

Oct 8-14

1. US Trade Deficit Decreases in August WSJ: 10/12 | Proquest | NYT: 10/12 | NewsBank | FT: 10/11 | Proquest
   • Exports rose and imports fell, due in part to falling dollar.
   • This strengthens US aggregate demand, thus may help prevent recession.
   • Trade deficit was $57.6 billion, down $10 billion from August 2006.
2. News on Immigration, in US and Abroad WSJ: 10/11 | Proquest | NYT: 10/8 | NewsBank | NYT: 10/11 | NewsBank
   • The most powerful political party in Switzerland distributes anti-immigration poster: three white sheep on Swiss flag, one kicking black sheep away.
   • French are uneasy with government's plan to use DNA testing to test would-be immigrants who want to join family members. Controversy coincides with opening of new pro-immigration museum.
   • US Judge uses injunction to stop new program that would penalize employers whose workers' Social Security numbers don't match their names. Concern is that 70% of such workers are US citizens.
3. China Will Help Track Textile Exports to EU WSJ: 10/10 | Proquest
   • China will require exporters of textiles to get license, which will state the product type, quantity, and cost of the export. This information will be passed on to the EU, allowing it to monitor the volume of this trade earlier than would be possible from customs data.
   • Purpose is to spot an import surge earlier than before, so that action to limit the damage from imports can be taken.
   • Import quotas on textiles were dropped in 2005, then restored against China after import surge. Extended quotas expire in EU in 2008 and in US in 2009.

Oct 1-7

1. Costa Rica Voting on CAFTA WSJ: 10/1 | Proquest | NYT: 10/1 | NewsBank
   • Costa Rica, the only country that has not yet ratified the Central American Free Trade Agreement with the US, is voting on it Sunday Oct 7. (No other country has held a referendum on CAFTA.) The vote is regarded as too close to call.
   • Country is divided, with many demonstrating against it on Sep 30. Opponents say it will flood country with cheap farm goods and destroy jobs. Proponents say it will bring investment and create jobs.
   • Some US Democrats are encouraging Costa Rica to reject CAFTA. Economists and Republicans tend to predict that rejection will divert investment to other Central American countries and push Costa Rica toward the influence of Venzuela's Huga Chavez.
2. Appreciation of Euro Hurting Europe WSJ: 10/6 | Proquest
   • Euro rose to $1.40, hurting European exports and triggering criticism of European Central Bank, US trade deficit, and China's currency policy.
   • The "Eurogroup" -- finance ministers of the 13 countries that use the euro -- will meet Monday with ECB President Trichet, and will undoubtedly demand cuts in euro interest rates.
   • "'We are in-de-pen-dent,' Mr. Trichet said, stressing each syllable, when asked last month whether the central bank would bend to political pressure." (WSJ)
3. US Congressional Investigators Report on Safety of Food from China WSJ: 10/5 | Proquest
   • After two-week inspection trip, investigators say US needs stronger inspection system to keep out tainted products.
   • They found that food production in China is done by "hundreds of millions" of private farms" and intermediaries, with regulatory power split among central and local governments. Chinese government is determined to ensure food safety, but it is ineffective.
   • John Dingell (D. Mich), chair of House Energy and Commerce Committee which issued report: "These findings are first-hand confirmation that food from China presents a clear and present danger to Americans under the current conditions of import." He is advocating "user fees" for food imports, with funds used for inspectors and lab testing.

Sep 24-30

1. US Imposes Financial Sanctions on Myanmar WSJ: 9/28 | Proquest | NYT: 9/29 | NewsBank | FT: 9/26 | Proquest
   • US aims to shut out Myanmar's rulers from the global financial system and choke off foreign investment there. This may force foreign companies to pull out. "What we are trying to do is speed their demise."
   • Clinton administration barred all new investments there in 1997, but investment by Unocal, now owned by Chevron, was exempted under a grandfather clause. Bush administration may reconsider that exemption. Also, US is trying to persuade China to participate in sanctions.
   • French company Total says, "a forced withdrawal would only lead to our replacement by other operators."
   • US officials refer to Myanmar by its old name, Burma, and to its capital city Yangon as Rangoon. The new names were adopted by the ruling junta, which is not recognized by the US.
2. Bush Does Not Attend UN Talks on Global Warming; Instead Holds Own Meeting Proposing Alternative to Kyoto Protocol WSJ: 9/30 | Proquest | NYT: 9/24 | NewsBank | FT: 9/29 | Proquest
   • World leaders met Monday at UN, without Bush but with Secretary of State Rice, to discuss replacing Kyoto Protocol, which expires in 2012.
   • Bush hosted his own meeting later in the week, including 15 major developed and developing economies -- the world's biggest CO2 emitters -- arguing for an approach to global climate change in which each country would set its own voluntary contribution.
   • The Kyoto Protocol sets mandatory CO2 reduction targets for most industrial nations (though the US and Australia are not members) and includes a mechanism for funding developing countries to do likewise.
3. Dominique Strauss-Kahn Named New Head of IMF WSJ: 9/30 | NYT: 9/28 | NewsBank | FT: 9/29 | Proquest
   • Strauss-Kahn, former Minister of Finance of France, was named the next managing director if the IMF.
   • Custom has been for Europe to name the head of the IMF, and the US to name the head of the World Bank. Some have argued that this should be changed, but it did not happen. Developing countries want more say in the institutions' policies, and Strauss-Kahn says he favors reform.
   • Strauss-Kahn: "What might be at stake today is the very existence of the I.M.F. as the major institution providing financial stability to the world, a global public good. In sum, the two main issues are relevance and legitimacy."

Sep 17-23

1. World Bank and UN to Help Poor Nations Recover Stolen Assets WSJ: 9/18 | Proquest | NYT: 9/18 | NewsBank | FT: 9/18 | Proquest
   • Bank and UN will set up system to recover assets stolen and sent abroad by corrupt leaders. Program is in partnership with UN Office on Drugs and Crime, and is made possible by 2005 UN Convention Against Corruption (which is not yet ratified by some important countries).
   • Amount stolen is estimated at $40 billion a year, much of it (up to 25% of GNP) from Africa.
   • Aim will be to assure that recovered money is used for proper development, and is not "stolen twice."
2. Canadian Dollar Reaches Parity WSJ: 9/22 | Proquest | NYT: 9/22 | NewsBank | FT: 9/22 | Proquest
   • After being worth much less than US$1 for many years (down almost to $.60 five years ago), the Canadian Dollar has reached "parity," a value of US$1.00, on Thursday, for the first time since 1976.
   • Workers in Detroit are crossing to Windsor to work (WSJ mentions strip club dancers); shoppers in Canada are crossing to the US to shop. Good news for Canadians wanted to buy US property; bad news for Canadian hotels.
   • Why the rise in the "loonie"? Reasons mentioned include high commodity prices (things Canada exports); overall weakness of the US dollar; strength of Canada's economy; Canada's fiscal surplus.
3. Mattel Apologized to China for Toy Recalls WSJ: 9/22 | Proquest | NYT: 9/22 | NewsBank | FT: 9/21 | Proquest
   • Largest recall was not due to lead paint, but due to design flaw by Mattel putting dangerous magnets into 18 million toys.
   • Apology could be costly, as it opens company up to lawsuits, but it is needed to keep China happy, as supplier of 65% of Mattel's products.
   • Mattel also said that some of the toys recalled due to excessive lead paint were not in fact excessive.

Sep 10-16

1. OPEC to Raise Oil Output WSJ: 9/12 | Proquest | NYT: 9/12 | NewsBank | FT: 9/12 | Proquest
   • OPEC will add 500,000 barrels a day to output starting Nov. 1, compared to current output of 26.6 billion barrels.
   • Increase is in response to record high price of oil, $78.23/barrel on Tuesday, up 28% so far this year. Intent seems to be to keep price below a ceiling of $80, and avoid being blamed for hurting the world economy.
   • Most of increase will come from Saudi Arabia, since other members are already producing all they can.
2. US Trade Deficit Shrank in July WSJ: 9/11 | Proquest | NYT: 9/12 | NewsBank
   • Exports grew more than imports, causing trade deficit to fall from $59.4 billion to %59.2 billion.
   • Both exports and imports set records.
   • Exports grew 2.7% in July, due to weak dollar and economic growth abroad.
3. Europe's Central Banks Move in Different Directions WSJ: 9/14 | Proquest
   • Swiss National Bank raised interest rates; Bank of England expanded reserves and lowered reserve requirements; European Central Bank said it would wait to move.
   • Confusion is result of market turmoil resulting from US sub-prime mortgage market combined with inflationary pressures.

Dates

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