2/28/00
- US rejects Europe's man for IMF
2/25/00
- WTO slams US trade subsidy
- Brazil admits Mercosur difficulties
2/20
- Poorest countries press trade action
at Bangkok meeting
- EU, Latin nations to open 3 days of political,
economic talks
EU finance ministers
have proposed
Germany's deputy
finance minister Caio
Koch-Weser to become
the next managing
director of the
International Monetary
Fund (IMF).
But his nomination was
immediately rejected
by the United States.
White House spokesman Joe Lockhart said the
US government believed Mr Koch-Weser would
not meet "the criteria for a strong candidate of
maximum stature who is able to command
broad support from around the world".
He said President Clinton had warned
Germany's Chancellor Gerhard Schroeder on
Saturday that the US would not support the
German candidate.
Washington's snub will increase tensions with
Berlin and may persuade EU countries to rally
around their little-loved candidate.
A German government spokesman said "We
know that the Americans still have some
reservations but after this impressive
encouragement by the European countries we
are confident."
Lacklustre EU support
Mr Koch-Weser's name was put forward after
weeks of wrangling among EU countries over
whether he would be the right man for the job.
Now that he has the "unanimous" backing of
EU ministers, he faces the challenge of Stanley
Fischer, a naturalised US citizen who is the
fund's acting boss and was proposed by a
number for African countries, and Eisuke
Sakakibara, a former Japanese vice-minister of
finance known as "Mr Yen".
UK Chancellor of the Exchequer Gordon Brown
said Mr Koch-Weser was "a strong candidate
for the role and we ... support him".
Tradition has it that
the IMF's top job goes
to a European, while
the deputy comes from
the US.
The IMF is currently
without a managing
director.
Michel Camdessus
stepped down from the
office on 14 February,
but a lack of
consensus among
European governments
delayed Mr Koch-Weser's nomination.
Both London and Paris are said to have been
reluctant to endorse him, while US government
officials have been accused of conducting a
"whispering campaign" against him.
There have been
suggestions that he
lacked the political
clout needed for the
job. He joined the
German government
less than a year ago,
after working as a
World Bank economist
for the previous 26
years.
Mr Koch-Weser, whose
parents fled Nazi
Germany in 1933, is a
specialist on aid for
developing countries and speaks four
languages fluently.
Complex voting procedures
If elected, Mr Koch-Weser would be the first
German in the job.
The IMF, established after World War II, has
had seven managing directors, three from
France.
Mr Camdessus held the post for 13 years, with
the non-French bosses coming from Sweden,
twice, and one each from Belgium and the
Netherlands.
The new managing director will be elected by
the IMF's Executive Board, where 24 directors
represent either individual countries or blocs of
countries. Their votes are weighted.
Germany, for example, holds 6.08% of voting
rights, France and Britain 5.02%, and the
United States 17.35%.
A number of European governments cast a bloc
vote for other countries and are expected to
add to Mr Koch-Weser's tally, among them
Belgium (5.21%), the Netherlands (4.92%),
Italy (4.23%), Denmark (3.56%) and
Switzerland (2.66%).
-top-
The Brazilian foreign minister, Luiz
Felipe Lampreia, has acknowledged
that the South American common
market, Mercosur, does have internal
problems.
Speaking to the BBC from Lisbon, Mr
Lampreia said he was sure that
Mercosur's members would take the
necessary decisions in the coming
months to overcome their differences.
His comments came after Brazil on
Thursday officially asked the World
Trade Organisation to intervene in a
dispute with Argentina over quotas
on Brazilian cotton exports.
Mr Lampreia also spoke about the
importance of trade with the
European Union. During meetings in
Portugal this week, the EU agreed to
begin free trade talks in April with
Mercosur and its associate member,
Chile.
From the newsroom of the BBC World
Service
Boeing may lose export orders
The European Union has won a major
trade case against the United States
in the World Trade Organisation.
The WTO has ruled that the US is
unfairly subsidising the exports of its
multinational companies by giving
them a special tax break - the
so-called foreign sales corporation
tax exemption (FSC).
US officials have
reacted angrily to the
ruling, but promised not
to ignore the findings.
A spokesman for the European Union
said Brussels was open for talks with
the US administration to find a
solution acceptable to both sides.
$3bn tax break
The FSC tax break is worth about
$3bn a year to US companies.
It allows big exporters like Microsoft
and Boeing to shield some of their
export income from US taxes by
setting up a foreign subsidiary.
The programme was established in
1984 to offset the tax breaks
European companies get when they
sell outside the EU.
EU Trade
Commissioner
Pascal Lamy
welcomed the
decision.
"The FSC (Foreign
Sales Corporation)
system, and its
predecessor, have
had a major
negative effect on
international trade
to the detriment of
European companies," he said.
US attacks ruling
The ruling was immediately attacked
by the US trade representative,
Charlene Barshefsky.
"We strongly
disagree with the
appellate body's
ruling," Ms.
Barshefsky said.
"Our view remains
that the FSC is
completely
consistent with US
WTO obligations.
We respect our
WTO obligations,
and will seek a
solution that
ensures that US firms and workers
are not at a competitive
disadvantage with their European
counterparts."
The US Treasury Secretary, Larry
Summers said that the United States
would not back down.
US industry representatives
expressed concern that the ruling
could lead to a further escalation of
the trade war with Europe.
"We stand to lose tax parity with our
trading partners," said Steve Elkins of
the Chemical Manufacturers
Association. "And we stand to be
retaliated against through tariffs
against US exports."
EU strategy undecided
Under international trade rules, the
United States has until 1 October to
repeal the tax law.
If it does not, the
EU would be
allowed to
introduce penalty
tariff rates on a
range of US
products to
compensate for
any losses caused
by the illegal US
tax subsidy.
The United States
imposed similar
penalties on EU products last year in
disputes over the import of bananas
and beef.
It was at that time that the EU
decided to take the US to the World
Trade Organisation over the
subsidies.
It also objected to another provision
of US trade law, called "Super 301",
which allows the US to unilaterally
introduce trade sanctions against
other countries.
That dispute was settled peacefully,
with the US more or less conceding
that it would not be able to
implement the discretionary
provisions.
Sensitive timing
The current dispute is likely to prove
politically explosive, especially during
a US election year.
US Congressional leaders urged the
government to reach a negotiated
settlement with the EU, warning that
there were not enough votes to
change the law.
"This is likely to lead to a highly
charged tax and trade environment
that we are sure all parties would like
to avoid," warned Senator William
Roth and Representative Bill Archer in
a joint letter.
With the failure of attempts to launch
a new round of world trade talks in
Seattle in December, trade disputes
are threatening to escalate,
undermining support for the system
of free trade that was established
after World War II.
Copyright © 2000 Nando Media
Copyright © 2000 Associated Press
VILAMOURA, Portugal (February 20, 2000 9:57 p.m.
EST http://www.nandotimes.com) - Latin American and
European nations will hold three days of meetings
this week, sessions that are expected to bring the
two regions closer to a free trade agreement.
Officials said that the European Union foreign
ministers will push their Latin counterparts to
increase regional economic ties, a key element to
an eventual free trade pact.
The talks begin Tuesday with the EU meeting with
half a dozen Central American nations. During a
meeting with Mexican officials Wednesday, the EU
is expected to urge Mexico to take on a greater
political leadership role in Central America.
The EU on Wednesday will discuss trade prospects
with Brazil, Argentina, Paraguay, Uruguay and Chile
- South America's best economic performers.
The free trade talks face no formal deadline since
their fate depends on the evolution of global trade
talks through the World Trade Organization, now at
an impasse.
EU efforts to forge a new ties with Latin America
coincide with a U.S. bid to craft a pan-American
free trade area by 2005.
Copyright © 2000 Nando Media
Copyright © 2000 Associated Press
For more about Africa, visit Africa News Online.
World trade conference ends in smiles, but what next?
BANGKOK, Thailand (February 19, 2000 1:23 p.m.
EST http://www.nandotimes.com) - The world's poorest
nations must be allowed to improve their economies
through increasing global trade, negotiators to a
U.N. conference on Third World development
agreed Saturday.
But the message of the U.N. Conference on Trade
and Development was watered down more than
many participants would have liked, with the
world's two biggest economies, the United States
and the European Union, balking at key proposals.
As UNCTAD ended its 8-day conference Saturday,
UNCTAD Secretary-General Rubens Ricupero said
ministers had been "instrumental in creating an
atmosphere of greater mutual understanding on the
complexities of the globalization process."
The "Bangkok Declaration" agreed on Saturday sets
the agenda for the 190-nation forum for the next
four years, urging rich and poor countries to work
to create a "prosperous, peaceful and secure world
based on true partnership."
But the declaration gave few specific directions for
resolving the disputes that have derailed
negotiations for a binding trade deal in the World
Trade Organization.
U.S. and E.U. officials made it clear from the outset
they don't want UNCTAD - which is supposed to be
a forum for helping developing nations - moving
onto the WTO's turf. Washington sent only a
low-level delegation to Bangkok, saying trade
disputes should be resolved by the WTO, which has
the power to enforce treaties.
Many developing nations, and their allies in the
developed world, want rich economies to open their
markets fully to all products from the world's 48
poorest countries - with no tariffs or quotas
imposed.
Some members of the 15-nation European Union
have agreed to open their markets to most, but not
all Third World goods. The United States has also
expressed reluctance to dropping all quotas.
The final declaration only urged UNCTAD to "build
consensus" on the issue.
It also made only passing reference to the issue of
subsidies - a large dispute in the WTO, where the
European Union has defended its heavy agricultural
subsidies against critics who want them removed.
UNCTAD delegates focused on the rapid
globalization of the world economy, which critics
say has enabled the rich to get richer, while leaving
poor countries lagging far behind.
"For the international community, just as for each
and every national society, the ultimate test lies in
the way it treats the weaker members of the
community," UNCTAD said.
The UNCTAD delegates gathered a little more than
two months after the embarrassing collapse of
WTO talks in Seattle, where the 135 WTO members
were unable to agree on launching a new round of
commerce talks.
The Geneva-based WTO sets rules for world trade,
while UNCTAD plays more of an advisory role,
issuing non-binding declarations about how to help
the poor do better.
In Washington on Friday, U.S. Trade
Representative Charlene Barshefsky held separate
discussions with Japanese Foreign Minister Yehei
Kono and Pascal Lamy, the top EU trade
negotiator, to seek ways on restarting the WTO
talks.
Barshefsky said afterward she believed the world's
largest economies are ready to try to resolve the
sticking points that wrecked the Seattle summit.
Poor nations have clamored for relief from foreign
debts they say hinders their ability to grow, and
Algeria's president, Abdelaziz Bouteflika, said
Saturday at UNCTAD that some loan write-offs
have been too little, too late.
"This is the macabre specter of someone visiting a
dying man and saying, 'Well, die happy. You won't
have any debts to pay'," Bouteflika said.