GLOBAL TRADE BLOG: 2011

Oct 15, 2011

G20 Paris Meeting Ends October 15 as Prelude to November's G20 Cannes Summit

Photo: FreeDigitalPhotos.com

As people converge in public squares on October 15, 2011 across the globe -- New York to Los Angeles, Tokyo to Hong Kong, Sydney to London -- the finance ministers and central bankers from the Group of 20 leading economies wrap up a October 14 and 15 meeting in Paris, France.

Suffice it to say, there is significant amount of pressure on national economies as the issue of income inequalities and unemployment across global markets have gained voice in Occupy Wall Street and 99 Percent slogans. In reviewing public G20 statements after the Paris meeting, the main agenda among the G20 attendees related to euro zone worries.

What follows are some of the statements issued by the G20 from the Paris meeting:

"We, the G20 Finance Ministers and Central Bank Governors, met at a time of heightened tensions and significant downside risks for the global economy that need to be addressed decisively to restore confidence, financial stability and growth," according to a statement reported by The Wall Street Journal.

"We have progressed in delivering the commitments we made three weeks ago in Washington DC. In particular, we welcome the adoption of the ambitious reform of the European economic governance. We also welcome the completion by Euro area countries of the actions necessary to implement the decisions taken by Euro area leaders on 21 July 2011 to increase the capacity and the flexibility of the EFSF (European Financial Stability Facility). We look forward to further work to maximize the impact of the EFSF in order to avoid contagion, and to the outcome of the European Council on October 23 to decisively address the current challenges through a comprehensive plan."

According to Francois Baroin, France's Finance Minister, the G20 discussed elements of the E.U.'s final decisions related to the Greek financial crisis, which will be addressed by heads of state and government at the G20 summit in Cannes in November. "I have to tell you in truth that the results of the European Council on October 23 will be decisive," said Baroin.

U.S. Treasury Secretary Timothy Geithner expressly supported increasing IMF financial support to Europe. "The IMF has a substantial arsenal of financial resources," said Geithner, "and we would support further use of those existing resources to supplement a comprehensive, well-designed European strategy alongside a more substantial commitment of European resources."

"Not only Saudi Arabia, but members of the G20, are convinced that the challenge facing the global economy is the European challenge in the short term," states Saudi Central Bank Governor Muhammad Al-Jasser from Paris.

Bank of Japan Governor Masaaki Shirakawa stated that "Japan's economy is picking up but we're focusing on downside risks given heightening global economic uncertainty and the effect of yen rises." Juan Azumi, Japan's Finance Minister, stated that "Europe needs to get its act together because unless the crisis is put to an end, it will start to affect emerging economies which have enjoyed strong growth."

Emerging market economies were encouraged by the G20, in part, to adjust macroeconomic policies and contain inflationary pressures as needed. "Surplus emerging market economies will accelerate the implementation of structural reforms to rebalance demand toward more domestic consumption, supported by continued efforts to move toward more market‐determined exchange rate systems and achieve greater exchange rate flexibility to reflect economic fundamentals," according to the G20 Paris statements.

From November 3-4, 2011, the 2011 G20 Cannes Summit will serve as the sixth meeting of the heads of government from the richest 20 global economies. The meeting will be held at the Palais des Festivals in Cannes, France. Mexico will chair the G20 Summit at Los Cabos in June 2012.

DISCLAIMER: Because of the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. This profile may constitute attorney advertising. Prior results do not guarantee a similar outcome. Any correspondence with this blog does not constitute a client/attorney relationship. Neither the content on this blog nor transmissions between you and the blogger through this blog are intended to provide legal or other advice or to create an attorney-client relationship.

Sep 21, 2011

U.S. Requests WTO Consultation Against China's Duties on its Chicken Exports

Image: U.S. Trade Representative Ron Kirk

On September 20, 2011, United States Trade Representative Ron Kirk announced that the Obama Administration has taken the first step to formally challenge China's imposition of import duties on U.S. chicken broiler products before the WTO -- namely, submitting a consultation request letter.

On September 17, 2009, China's Ministry of Commerce (MOFCOM) began investigating imports of U.S. chicken broiler products. Based on MOFCOM's findings that the U.S. chicken broilers were being sold in China at less than fair market value, anti-dumping and countervailing duties measures were respectively imposed on September 26, 2010 and August 30, 2010.

“To be clear, the United States does not arbitrarily seek disagreements with China,” said Ambassador Kirk in a news conference on September 20, 2011. “However, we will not stand still if we believe that China has violated its commitments as a WTO member and is therefore threatening American jobs – in this case hundreds of thousands of American poultry industry jobs."

According to the USTR press release announcing the WTO consultation, China's imposition of duties did not comport with WTO rules and threatens the U.S. poultry processing industry, which directly employees 300,000 workers. Before the duties were imposed, the U.S. was China's largest supplier of chicken broiler products. In 2009, more than 600,000 metric tons of U.S. broiler products were exported to China. Since the duties, these exports numbers are down 90 percent, according to the release.

If the two parties do not resolve the matter within 60 days through the WTO consultation process, a dispute settlement panel may be requested.

DISCLAIMER: Because of the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. This profile may constitute attorney advertising. Prior results do not guarantee a similar outcome. Any correspondence with this blog does not constitute a client/attorney relationship. Neither the content on this blog nor transmissions between you and the blogger through this blog are intended to provide legal or other advice or to create an attorney-client relationship.

Jul 26, 2011

EU Files WTO Complaint Against China on X-Ray Security Scanner Import Duties

Image: FreeDigitalPhotos.net

The European Union filed a complaint with the World Trade Organization against China regarding Beijing's imposition of dumping duties against imports of X-ray security scanners from EU member states.

"On 25 July 2011, the European Union requested consultations with China under the dispute settlement system concerning the latters definitive anti-dumping duties on x-ray security inspection equipment from the EU," said the WTO in a statement on its website.

If the two parties do not resolve the matter within 60 days under consultation, the EU can request the WTO to form a panel to adjudicate the matter.

Jun 21, 2011

Greek Debt Woes Continues: U.S. Financial Support of Greece's Sovereign Debt Bailout Through IMF

Image: FreeDigitalPhotos.net

While hosting German Chancellor Angela Merkel in June, U.S. President Barack Obama reaffirmed his support of a financial bailout of Greece whose sovereign debt tallies US$484 billion (€340 billion). The International Monetary Fund's (IMF) loan approval earlier in the year totaled U.S.$55 billion and included, in part, U.S. financial support. Though currently at a stand-still, the proposed joint IMF and European Union (EU) bailout package for Greece totals US$145 billion.

Some eurozone nations are hesitant to commit to what has been coined "Greece Bailout II", responding to the vocal concerns of its more (or less) fiscally sound national citizens. John Lipsky, the IMF's acting managing director, seems to be fighting for E.U. bailout support like his political-life depends on it. The U.K.'s Guardian newspaper reports that Lipsky threatened to trigger sovereign default if Germany failed to support the second-round of Greece's bailout financing. Lipsky's recent remarks in Luxembourg urged the Europeans “to bring the debate about debt restructuring and the set-up of the ESM (European Stability Mechanism) quickly to a close.”

In its customary reserved posture towards the E.U.'s financial interdependence, U.K.'s Prime minister David Cameron has assured U.K. taxpayers that participation in Greece's bailout will be limited to its IMF pledge. No ESM for the U.K., please.

The debate about financing Greece's bailout makes sense among the European nations. The union is an economic one. For the U.S., however, support of a bailout of Greece's sovereign debt, even through the IMF, makes less sense.

The U.S. federal government has reached its national debt ceiling. Many U.S. states struggle with budget shortfalls. U.S. national unemployment sits conservatively at 9.1 percent and the likelihood of a government-sponsored jobs and workforce development program seems unlikely. Instead, the debate among U.S. federal and state government officials surrounds a series of drastic cuts to core national public services, the so-called "entitlements".

U.S. financial support of Greece's bailout sounds eerily like a global version of the "too big to fail" economic argument heard in an all-too-recent national scenario. While sympathetic to the Greek's financial misery -- there is certainly more than enough of this type of misery going around these days -- U.S. financial support of a bailout of Greece's sovereign debt amounts to globalization at its most absurd.

Further references:

"Greece Program, IMF Approves 30 Bln Loan for Greece on Fast Track"; International Monetary Fund Survey Magazine; May 9, 2010
"Obama Encourages Europe, Pledge U.S. Aid for Greece Crisis"; HuffPost Business; June 8, 2011
"Hardline IMF Forced Germany to Guarantee Greek Bailout"; Ian Traynor; Guardian; June 17, 2011

May 11, 2011

Russia WTO Bid: Last Obstacle, Georgia

Russia and the WTO. Image: FreeDigitalPhotos.net

Russia has sought membership with the World Trade Organization (WTO) since 1993. After 18 years, the WTO continues to be a goal of Russia under the leadership of Russian Prime Minister Vladimir Putin. The challenge Russia has faced in past efforts to join the organization, which now counts 153 member-nations, is its significant body of regulatory trade barriers and tariffs.

Former WTO Judge James Bacchus, now a member of Greenberg Traurig's global law practice, recently wrote an article in the International Business Times that describes Russia's barriers to trade as about the most restrictive of any industrialized nation in the world. To put it conservatively, Bacchus is a bit skeptical of whether Russia would abide by WTO's rules even if admitted.

Georgian Deputy Foreign Minister Sergi Kapanadze is an active part of the ongoing WTO talks with Russia. As a WTO-member, Georgia has made border crossing points in Abkhazia and South Ossentia one of the conditional issues for its vote for Russia's accession to the WTO.

"We still insist on the legalization of (Georgian) customs posts at the Abkhazian and South Ossetian border," says Niko Mchedlishvili, press secretary of the Georgian prime minister, to the Kommersant daily paper on 05/04/11. "However, the Russian side is so far refusing to agree to our demands. The only thing we have agreed is to hold a third round in late May."

While a third round of Swiss-mediated talks on Moscow's WTO entry terms is set to continue in Bern in late May, the Peterson Institute released a report in April that estimates that U.S. exports to Russia could double to $19B if Russia joins the WTO. Not surprisingly, the Obama-administration wants Russia to join the WTO, as indicated by the White House's joint statement with Russia on the commitment to its WTO accession.

May 9, 2011

Google Antitrust Lawyer Search Launch in Wake of Growing Global Competition Scrutiny

Image: Wikimedia Commons

Commentators note that Google Inc. (GOOG) has launched an active ad campaign for an antitrust lawyer. The rapid growth of the Mountain View, California-based firm has made it the world's largest search engine company, controlling approximately 83 percent of the global search traffic, according to a NetMarketShare report. It has also resulted in a recent flurry of global competitors lodging complaints of anti-competitive behavior against Google in the last six months, petitioning domestic competition regulators to institute investigative probes.

FTC Probes Google's Dominance in Search Engine Market

This month, the Federal Trade Commission (FTC) has started looking into Google's search engine market influence under U.S. antitrust laws, according to a Bloomberg report. The FTC has inquired with search engine competitors, including Yahoo! and Bing, as it allegedly prepares to issue civil investigative demands, the equivalent of subpoenas, for relevant market information.

In February 2011, the FTC hired Timothy Wu, Columbia Law professor and IT scholar, who stated in a recent interview that dominant Internet companies should be barred from monopolizing more than one market. The Sherman Antitrust Act of 1890, the U.S.'s main federal antitrust statute, forbids use of a legal monopoly in one market to gain undue influence in other markets. Even under a fact intensive inquiry, results have frequently turned on the regulatory agency's interest in a laissez faire or aggressive enforcement approach.

Antitrust Complaint Against Google by South Korean Internet Providers

On April 15, 2011, Naver and Daum Communications Corp., South Korea’s numbers 1 and 2 top search portals, have launched antitrust complaints against Google with the nation's Fair Trade Commission. The firms claim that Google is unfairly limiting their market access to smartphones that run on the Google Android operating system.

NHN Corp., owner of Naver, has issued an official statement that Google Android smartphones “have Google’s search engine installed as a default navigation tool, while they are systematically designed to make it virtually impossible to switch to another option.”

DOJ Conditions Google's Acquisition of ITA

On April 9, 2011, Google signed a consent decree with the U.S. Department of Justice (DOJ) after the DOJ's close antitrust review -- but ultimate approval -- of its $700M acquisition of ITA. ITA is a travel software that provides data for online travel websites such as Bing Travel, CheapTickets, Expedia, Kayak.com, Orbitz, as well as an assortment of major airlines' websites.

Microsoft and other Google competitors that rely on the ITA travel software banded together as FairSearch.org to oppose the ITA acquisition. While they were unsuccessful in blocking the acquisition, they were successful in getting the DOJ to condition the acquisition under U.S. antitrust law considerations. Google's conditional acquisition of ITA requires that complaints be made available for review to search-engine rivals and federal regulators.

Closing the Google Book on Digitization Plan

On March 22, 2011, U.S. Circuit Judge Denny Chin refused to approve a settlement agreement Google proposed with authors and publishers in its efforts to digitize scores of books. Under the proposed plan, Google would have become the largest digital book publisher on the planet. The federal judge dealt a blow to one of Google's major projects for monopoly concerns.

E.U.'s European Commission Probe Search Engine Complaints

In November 2010, the E.U.'s European Commission (EC) competition authorities began a probe into Google's legendary PageRank algorithm that ranks the quality of paid and unpaid website content. The probe occurred after complaints were filed by two U.K. and one French firms, price comparison websites. Among the allegations, the firms assert that Google abuses its dominant market position by demoting competitor's search result placement through its coding.

"The (European) Commission will investigate whether Google has abused a dominant market position in online search by allegedly lowering the ranking of unpaid search results of competing services," states an EU executive, as reported by Reuters on 11/30/10.

EC decisions have tended to take a harder line on monopoly abuses than those of U.S. antitrust authorities. Both Microsoft and Intel were fined €1B each for business activities held in violation of EC competition laws. For Google, the EC probe was the first major challenge to its search engine dominance. The EC notified the DOJ of its investigation.

What does all this mean for any new antitrust lawyer for Google? Well, a lot of work.

DISCLAIMER: Because of the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. This profile may constitute attorney advertising. Prior results do not guarantee a similar outcome. Any correspondence with this blog does not constitute a client/attorney relationship. Neither the content on this blog nor transmissions between you and the blogger through this blog are intended to provide legal or other advice or to create an attorney-client relationship.

Apr 4, 2011

China's Minmetal Hostile Takeover Bid for Canada's Equinox: Global Players Eye Zambian Copper Interests

Toronto-based Equinox Minerals Ltd. made a hostile bid for Lundin Mining Corporation in February 2011. Now Canada's Zambia-focused copper miner is the target of a hostile takeover bid by Chinese-owned Minmetals Corp. Minmetals C$7 per share offer (US$6.5b) for Equinox marks the first time a Chinese company has made a bid for a Canadian mining interest.

Global mining reports notes the strategic shift by Beijing government officials in allowing this unsolicited bid. It is, however, quite consistent with China's desire to increase its global mining assets. It also highlights the growing international focus on Africa's mining resources, as seen by the major mining interests of Anvil Mining and Tiger Resources. The development of this potential deal should be an exciting one to watch.

"The significance of the bid highlights not only China’s appetite for copper, but its growing presence in Africa," confirms Foster Stockbroking analysts, reporting to WSJ.

Dealbook players: Minmetals' legal counsel in the hostile takeover bid are Davies Ward Phillips & Vineberg LLP (Canada), Freehills (Australia) and Linklaters (Hong Kong).

DISCLAIMER: Because of the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. This profile may constitute attorney advertising. Prior results do not guarantee a similar outcome. Any correspondence with this blog does not constitute a client/attorney relationship. Neither the content on this blog nor transmissions between you and the blogger through this blog are intended to provide legal or other advice or to create an attorney-client relationship.

Mar 13, 2011

China-U.S. Trade Dispute Reversed by WTO Appellate Body in Favor of China

Photo: Beijing, China Skyline by Peter Morgan (Creative Commons)

The World Trade Organization (WTO) Appellate Body issued trade report on March 11, 2011 on China's appeal regarding anti-dumping and countervailing duty measures instituted on a number of imports that include laminated woven sacks, steel and tires by the United States Department of Commerce.

In October 2010 the Geneva-based WTO dispute settlement panel upheld five issues raised in the trade dispute, but two key issues denied before the original panel was reversed by the WTO appellate body who found that the U.S. Department of Commerce's imposition of anti-dumping and countervailing duty measures on certain Chinese exports in 2007 were illegal under the WTO rules.

After an independent probe by any of the 153 WTO member states that finds that an export is excessively cheap and constitutes international trade dumping, the member state can independently levy an extra duty on the challenged good. The member state whose exports are challenged has a right to bring the matter before a WTO dispute settlement body. This is what China did in September 2008, formally lodging a complaint arguing that the U.S. Department of Commerce's levies imposed on Chinese goods in 2007 constituted "unfair practices".

“I am deeply troubled by this report,” said United States Trade Representative Ron Kirk. “It appears to be a clear case of overreaching by the Appellate Body. We are reviewing the findings closely in order to understand fully their implications.”

China's commerce ministry issued a statement calling the ruling "a major victory" and illustrates that the U.S. "flouted world trade rules," according to an Industry Week report.

China has increasingly relied on the WTO to resolve international trade disputes since it became a member in December 2001. One of its most recent request for WTO consultation is dated February 28, 2011 and challenges another anti-dumping measure by the U.S. on certain frozen warm water shrimp from China.

DISCLAIMER: Because of the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. This profile may constitute attorney advertising. Prior results do not guarantee a similar outcome. Any correspondence with this blog does not constitute a client/attorney relationship. Neither the content on this blog nor transmissions between you and the blogger through this blog are intended to provide legal or other advice or to create an attorney-client relationship.

Mar 10, 2011

Air Canada Suspends U.S. Cargo Shipments Amid TSA's Security Amendments

Photo: Air Canada airplane Everystockphoto.com.

U.S. Transport Security Administration (TSA) announcement of new security directives and emergency amendments that take effect today resulted in Air Canada Cargo issuing a bulletin on Wednesday, March 9, that it will not ship air cargo to the U.S. until TSA compliance can be ensured.

An Air Cargo official statement through its spokesperson Peter Fitzpatrick provides that “[g]iven the short notice, it will not be possible for us to implement the necessary measures to ensure compliance and as a result, we are required to embargo all cargo flown to the US effective March 10, 2011 until further notice. Shipments already accepted prior to this date will be carried to destination."

“In spite of everything, it’s business as usual,” said FedEx senior communications specialist James Anderson, commenting on the new TSA screening rules and regulations.

The TSA would not go into the specifics of its new air cargo security directives, however, most industry reports provide that it has tightened existing air cargo security for flights to the US due to last year’s terrorist attempt to ship explosives aboard a cargo aircraft.

U.S.-based freight forwarders will likely see an immediate impact on existing international transactions involving air cargo operations from Canada to the U.S.

Mar 7, 2011

U.S. - South Korea Trade Pact Faces Partisan Wrangling

Image: South Korea, Wikimedia Commons

U.S. Trade Representative Ron Kirk, the Obama administration's top trade negotiator, has launched the administration's efforts to ratify a South Korea trade agreement. Trade agreements with Panama and Columbia have also been negotiated by the administration and Republican law-makers have stated that they will block the proposed South Korea deal unless all three international trade agreements are taken up by Congress together.

"Our No. 1 mission is to create jobs," Kirk said. "We firmly believe trade can be a valuable tool to help us get there."

"That timetable won't work for House Republicans," says Rep. Kevin Brady (R-TX), chairman of a key trade subcommittee. Brady and other House Republicans want the Colombian, Korean and Panamanian agreements all presented by July 1, 2011.

The proposed South Korea trade pact aims to lower tariff and trade barriers to boost export sales from the U.S. to South Korea by an annual $10 billion a year. This would support an additional 70,000 jobs in the U.S. Kirk has stated that he hopes that there will be "no delays," according to Associated Press reports.

DISCLAIMER: Because of the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. This profile may constitute attorney advertising. Prior results do not guarantee a similar outcome. Any correspondence with this blog does not constitute a client/attorney relationship. Neither the content on this blog nor transmissions between you and the blogger through this blog are intended to provide legal or other advice or to create an attorney-client relationship.