Summary of World Trade News
Once again, it’s that time of the week to catch up on the latest happenings in the world of international trade. To start off this week’s world trade news round up, Proctor and Gamble recently announced that they will cut down jobs that cover technical posts.
About 300 scientists and researchers are expected to be let go from the multimillion pharmaceutical company’s payroll. The research center located in Ohio will be the most affected by Proctor and Gamble’s decision. The downsizing will also affect employees in London, Toronto and New York.
According to Tom Milkin, the spokesperson for Proctor and Gamble, the decision was not influenced by the desire to cut back on company cost. He said that the company’s move to let their employees go is a business strategy. Milkin added that despite the numerous job losses, this decision will benefit domestic research companies.
Job cuts aren’t the only decisions that the company has made this month. Proctor and Gamble recently signed a contract with Nastech to sell Nastach’s nasal spray that promises to cure osteoporosis. Aside from the expansion of Nastach’s nasal spray, Proctor and Gamble is said to give more focus in developing pharmaceutical products for women, muscular-skeletal problems and gastro-intestinal medicine.
While Tom Milkin denied that the Proctor and Gamble is not having any financial trouble, the head of the Palestinian Authority Mahmoud Abbas, admitted that his government is currently facing financial difficulties.
Earlier this month, the World Bank has given the Palestinian Authority a warning about the country’s financial problem. Palestine’s budget deficit is continuously expanding and if the necessary procedures aren’t taken to ease the crisis, this could possibly be the downfall of the Palestinian Government.
The origin of Palestine’s financial crisis is traced to the violent events in the West Bank against Israel. Israel has taken measures to slowly cripple the Palestinian Government. Security checks between the boarders of Israel and the Gaza Strip. Israel went as far as banning the passage of equipments for the Palestinian security forces and even asking all foreign donors to stop sending payments to the Palestinian Authority. Israel is adamant in letting the Palestine Government suffer; calling on international powers to boycott the Palestinian Government and ignoring calls from the United States to release funds.
Another factor that has influenced financial crisis Palestine is experiencing right now is the election victory of the radical Islamist group Hamas. This group is considered as terrorist by the United States and the Palestinian Authority’s biggest donor, the European Union. In fear of their donations reaching Hamas, the United States asked Palestine to return its $50 million donation and the European Union has warned to stop sending funds.
To make up for the loss, Ismail Haniyeh, the Palestinian Prime Minister, said that they will seek aid to Arab nations instead.
As answer to the criticism he received from the United States, Hugo Chavez warned that to halt the supply of oil to the US if Condoleeza Rice continues to undermind his administration. Rice previously released statements that the relationship of Venezuela and Cuba endangers the democratic system of other Latin countries. Chavez also faced accusations of using Venezuelan oil to interfere with trades of nearby nations. Chavez said that the Americans’ attempt to turn other nations against Venezuela would be a failure. Chavez doesn’t consider stopping the supply of oil to the US as a loss; in fact it is the US that will face a loss because they are dependent on Venezuela’s oil supply. He is confident that other oil consuming countries will continue to acquire oil from Venezuela.
On other oil related events, nine foreign oil workers have been held hostage by the Movement for the Emancipation of the Niger Delta. The hostages consisted of three Americans, two Thais, two Egyptians, one Filipino, and one Briton all working under a Shell subcontractor, Willbros. The rebels claim that they have staged the hostage situation in order to keep foreigners from getting their oil and to reclaim the Nigeria’s rightful share of the country’s oil assets. Though Nigeria is the biggest oil producer in Africa, the country is still experiencing severe poverty.
This situation caused dramatic oil hikes in different countries such as Japan because the export of crude oil from Nigeria has been cut back by twenty percent. Some operations have also been suspended because of this.
Still on the talk of oil, Petroecuador, Ecuador’s national oil company, has decided to suspend their exportation of petroleum products because of the sabotage that the Trans-Ecuadorian pipeline has experienced. The numerous violent demonstrations are held responsible for the sabotage of Petroecuadors major pipeline.
Eduardo Naranjo, the company’s top executive, said that the pipeline was completely paralyzed and oil stations have been severely damaged because of the demonstrations. These violent protests, including putting up roadblocks, were participated by Napo (a poverty-stricken province in Ecuador) residents and other Amazon Indians. This caused the production of 144,000 barrels of oil per day to be discontinued. The suspension of oil export will cause Ecuador an estimated $ 30 million worth of revenue daily. The demonstrators demanded that the Ecuadorian government should give poor areas like Napo their fair share of the National budget.
Speaking of giving its fair share, the United State criticized China for not giving theirs. According US Deputy Trade Representative Karan Bhatia, China has been gaining profits from their access in the US market while the US has yet to benefit from their trading relationship.
Rob Portman, US Deputy Trade Representative, stated that a task force will be assigned by the US to monitor China’s observance to global trade policies. There have been proposals made by legislators to lower US trade relations with China. Tariffs will also be imposed on low-priced products from China that is flooding the US market.
Chinese Foreign Ministry Spokesman Qin Gang said that if such policies are implemented, these could prove to be unfavorable for American business interest. Analysts agree, saying that these actions could backfire at the United State government.
Although the United States is unhappy with their trade relation with China, the same cannot be said for Anglo American. The company’s profits reach a new high when China’s demand for metal increased. Their earning last year ($ 3.7 million) increased by 39% compared to their 2004 total earning. The company is plans on expanding its production of coals and iron ore because the price of metal products is expected to increase this year. The company’s chief executive officer, Tony Trabar, sees indications for the stronger demand for metals.
Anglo American isn’t the only company currently expanding its products. IBM has released multifunction printers to the market recently. IBM’s new brainchild is capable of faxing, copying, and printing documents. The design for the multifunction printer was influenced by a study which shows that a significant amount of time is exhausted by companies on printing, copying and faxing documents.
Currently, there are four models out in the market, each designed to different capacities of workload. The Infoprint 1540 and Infoprint 1570 can be used by small companies. These printers cost $11,542 and $3,259, respectively. Medium sized companies can use the Infoprint 1560 which costs $12,858 and for large companies, the Infoprint 1580 is designed to handle rough office environment. The Infroprint 1580 costs around $14,462.
Product expansion isn’t the only growth the world market is seeing these days. The growth of European Union members is set to accelerate by 2006. According to the forecast made by the European Commission, 25 members of the union are expected to have a 2.2% economic growth, while 12 others are expected to grow by 1.9%.
Among European countries, Spain saw the largest growth projecting a 3.1% boost in their economy. A far second is the United Kingdom with a 2.4% economic growth. Joaquin Almunia, European Union’s Economic and Monetary Affairs Commissioner, warned that the biggest set back in the economic growth of European nations are the inevitable increase of the price of oil.
In other European news, an announcement was made by Germany’s E.ON regarding its 27.50 euros per share or 29.1 billion euros offer to Spain’s Endesa. The deal is expected to be completed this year if Endesa will accept E.ON’s offer. The biggest European power firm E.ON’s business offer to Endesa is said to be 29% higher the Gas Natural’s previous bid.
If the merge of these two power companies take place, 50 million clients in 30 nations will be served by a potentially top power company in the world. The merge will also put E.ON on the lead over its competitors and provide the company a stronger position in the Latin American markets.
Another business deal is in the works. It is between Dubai Ports World and the United States. Dubai Ports World wants to run six major seaports in the United States. Although the US Congress is in opposition of such a deal, President George W. Bush threatened to veto any law that would hinder the deal.
Bush defended the sale of the ports by saying that his administration has carefully examined the matter. He also added that if the deal is successful, it will serve as a sign that the United States treats other countries fairly. Of course, the issue is scored major heat from critics. According to them, the takeover will only make the country more vulnerable from terrorist attacks. Al Queda, the group responsible for the September 11 tragedy is has members based in the UAE, which is where Dubai Ports World’s origin.
Speaking of President Bush, it has been announced that he will be visiting Asian countries in November. Bush will be the second president of the United States to ever visit Vietnam, the first being former president Clinton back in 2000. It should be remembered that Clinton made the decision to stop the embargo against Vietnam. Incidentally, Vietnam missed a place in the World Trade Organization last year when the spot was given to Tonga. Although it should be noted that being a member of the WTO could boost Vietnam’s economy, it doesn’t necessarily mean that not being able to join is a bad thing. There are a lot of things Vietnam needs to organize before become a WTO member.
For the 14th consecutive time, the interest rate of the United States Federal Reserve increased once again. The meeting held last month saw Alan Greenspan as the head of United States Federal Reserve for the last time after heading the Federal Reserve for 18 years. During Greenspan’s tenure in the Federal Reserve, he encountered numerous low points in the US market history. His administration faced the market crash of 1987, the market crisis of the 90’s and the September 11 attacks.
Greenspan was replaced by Ben Bernanke which was nominated by the president of the United States last year. The new chairman will discuss the interest rate issue in his first meeting which will be held on March 27. Bernanke’s biggest challenge is ending the increase of interest rates which economists think will continue to rise because of the current inflation.
In more recent turn of events, a bank robbery saw The Securitas Cash Management Ltd. lose at least $ 43.5 million. Officials are still unsure just how much cash is still unaccounted for. It should be noted that this is one of the biggest back heists in the history of Britain.
In a detailed statement, it was revealed that the robbers dressed as policemen blocked the bank managers on his way home and was told to do what he was ordered. Another group of men in cahoots with the bank robbers were successful making the manager’s family believe he met and accident and agreed to go with the group of robbers.
The manager was cuffed by the posing policemen and threatened to hurt his family if he did not cooperate. They proceeded to a Tonbridge cash center and tied up 15 bank employees before taking all the cash in the depot. The incident took over and hour, fortunately no one was hurt.
On a more positive note, it seems that an alliance has been formed by international banks, which includes the World Bank and the International Monetary Fund, to employ carefully though out strategies to combat corruption. These organizations have reached an understanding for the need to support each other and to reach a common ground if the corruption is to be stopped. They have decided to form a team that will be responsible for reporting a standardized framework the financial firms should employ to fight fraud. The group has conducted numerous surveys pin-pointing countries and sectors that is plagued with widespread corruption.
The group is also willing to extend to other organizations, civil sectors of different nations, and the media as reinforcements in their quest to put a stop to bank fraud and rampant corruption. To track down plundered wealth and preserve global laws, the United Nations Convention against Corruption was created in 2005.
