Tag Archives: india
IEA Task40: Biomass Provides 10 percent Of Global Energy Use
Taylor Scott International News Taylor Scott International Taylor Scott International, Taylor Scott Continue reading
Are Global Agricultural Trade Policies Only Protecting The Developed World?
By: East Asia Forum Date: 20 September 2013 The agriculture sector is a large part of the developing world and supports the livelihoods of a significant portion of its population. But since the last WTO Doha Round, the developing world have been concerned that ambitious tariff reduction proposals will leave their domestic agriculture sector, and by extension their economies more generally, vulnerable. The Agreement on Agriculture negotiated in the Uruguay Round was expected to bring about a structural change in the global agricultural trade and lead to efficient agricultural producers. Yet despite several further rounds of negotiations there has been minimal progress on all issues related to the Agreement and agricultural trade continues to be distorted. Given the prevalence of these distortions and the importance of agriculture to developing countries, the need to create a framework to tackle agricultural trade issues is stronger than ever. Both developed and emerging economies have been accused of protectionism. Developed countries often heavily subsidise their farmers, while developing countries often impose high import restrictions that inhibit free trade. Developing countries are advocating two instruments to defend their concerns of food security, farmers’ livelihood and rural development. The first is the Special Safeguard Mechanism (SSM), allowing for the temporary raising of tariffs. The other is the concept of Special Products (SP), which proposes to create a list of products that directly impact the developmental concerns of developing countries and should not be subject to tariff reductions under the Doha talks. Paragraph 7 of the Hong Kong Ministerial Declaration states: Developing country members will also have the right to have recourse to a Special Safeguard Mechanism based on import quantity and price triggers, with precise arrangements to be further defined. Special Products and the Special Safeguard Mechanism shall be an integral part of the modalities and the outcome of negotiations in agriculture. What this means is that a WTO member country will have the right to impose SSMs if it finds that imports are increasing to the extent that local markets are being disrupted (a ‘volume’ trigger) or if there is a collapse of the international price of that commodity which undermines or threatens to undermine the otherwise viable domestic production (a ‘price’ trigger). The leading bloc arguing for SP and SSM is the G33, which comprises more than 40 developing countries, including India and China. Although all WTO members have acquiesced in principle to establishing a SSM, some developed countries, particularly the United States, and some developing countries with an export interest in agriculture (such as Thailand, Paraguay, Argentina, Uruguay) have sought to restrict the use of SSMs. They seek, in particular, to limit the number of times it can be used and the extent to which it can be used to raise tariffs. The main justification for SSM and SP is that international commodity prices remain extremely volatile. Studies show that there has been no systemic decline of volatility in the post-WTO period, and that import surges have been common in developing economies. A Food and Agriculture Organization report states that: ‘Indeed, import surges seem to be more common in product groups that are subject to high levels of subsidies in exporting countries, notably diary/livestock products (milk products, poultry parts), certain fruits and vegetable preparations and sugar’. Against this backdrop, developing countries are worried that the ambitious tariff reduction proposals being negotiated at the Doha Round will leave their domestic agriculture sector, and by extension their economies more generally, vulnerable. A SSM would provide a measure of insurance. Unlike in industrial production, the production cycle of agriculture does not allow for sudden halts and rapid restarts in production. If cheaper imports lead to a fall in domestic production and the decreased demand persists for more than a few weeks, farmers may be forced to switch to other crops. It could be difficult for them to return to the original crop even when the price of that crop becomes favourable again in the medium term. Price volatility thus makes farmers disinclined to implement long-term plans to build capacity in particular crops, which would lead to economies of scale, and exposes farmers and the nation to damaging fluctuations in income. Normal safeguards are insufficient to address this problem. When the price of industrial products declines factories can increase their inventory and save for when prices rise again. But when demand for domestic agricultural products is reduced, small farmers in developing countries find it difficult to store their product in the hope of a return to higher prices because of the lack of storage facilities and the perishability of agricultural products. What is needed is a mechanism to reduce the severity of fluctuations in prices. A SSM can do this. The agriculture sector is a large part of the developing world and thus supports the livelihoods of a significant portion of its population. The viability and dynamism of the developing world’s agriculture sector thus remains essential to secure success in the developing world’s poverty alleviation strategies. The next ministerial at Bali in December must ensure pressure remains on developed nations to meet the aspirations of developing countries with regards to the global agriculture trade. By Rohit Sinha & Geethanjali Nataraj, ORF Rohit Sinha is a research intern and Geethanjali Nataraj is Senior Fellow at the Observer Research Foundation, New Delhi. Continue reading
Emerging Markets’ Crisis Could Derail Global Economic Recovery
http://www.gulf-times.com/Default.aspx 7 September 2013 The current emerging market (EM) crisis in Asia and Latin America may derail the incipient global economic recovery, QNB has said in a report. The financial turmoil unleashed by the Federal Reserve (Fed) announcement that it will start tapering its asset-purchasing programme soon—the so-called Quantitative Easing (QE) — has led to large capital flight from most emerging markets, a large weakening of their currencies, and higher long-term interest rates globally. If the Fed starts QE tapering in its forthcoming meeting on September 17 and 18 as announced, this is likely to unleash further EM capital flight, thus undermining their economic growth and reducing global export demand. This, QNB said, will inevitably have a knock-on effect on the relatively weak growth in the US and the incipient recovery in Europe. Ultimately, QE tapering may well be self-defeating as it could in fact lead to lower growth both in the US and the rest of the world, thus derailing the global economic recovery. In June Fed Chairman Ben Bernanke had announced a tapering of its QE policies contingent upon continued positive US economic data. This announcement marked an end to three waves of QE that have flooded US financial markets since 2009 with an estimated $2.9tn (19.3% of US GDP), according to the economic research of the Federal Reserve Bank of St. Louis. The opportunities, however, to invest these resources have been limited in advanced economies given near-zero interest rates in Europe, Japan, and the US. Global financial institutions therefore used a significant portion of this liquidity to invest in EM, which offered higher returns. This led to higher EM exchange rates, lower interest rates, and to some extent higher growth momentum. Unfortunately, the QE party for emerging markets came to an end on June 19, the day Bernanke made the announcement. As has been the case in previous EM crises, it pays to be the first one out of the door, because exchange rates are still high and it is easier to liquidate large financial investments when foreign exchange liquidity is still plentiful. Accordingly, global financial institutions have rushed to liquidate their EM investments since the Fed announcement in order to cash in their capital gains and avoid being faced with policy measures that could restrict their capital movement. The result has been a panic selling of EM exchange rates. The Fed announcement has also lowered demand for government bonds globally, thus leading to higher long-term interest rates in EM and, to a lesser extent, in advanced economies. This has shaken EM consumer and investor confidence, which will inevitably lead to lower economic growth going forward. Emerging markets central banks have added to the capital flight by trying to lean against the wind. They have used their international reserves and raised policy rates to defend their currencies. Most prominent in this defence has been the Reserve Bank of India (RBI), which has witnessed a decline in the rupee of 14% since June 19. In response, the RBI has used its international reserves to defend the rupee and tightened liquidity. Restrictions on gold imports and capital account outflows have also been tightened in order to stem the outflow without success. At the same time, there are early signs that the Indian economy is slowing down rapidly, with the HSBC Purchasing Managers’ Index indicating the manufacturing sector contracted in August for the first time since the global economic crisis of 2009. There is even talk of a possible IMF credit line to help India weather the storm. Similar narratives are occurring in other emerging markets, like Brazil, Indonesia and, to a lesser extent, Malaysia and Thailand. Overall, the emerging markets crisis resembles in many aspects the Asia crisis of the late 1990s. Today’s emerging markets crisis has serious implications also for advanced economies. Unlike in the 1990s, advanced economies are today more than ever dependent on emerging markets for their own growth. China, the US, Germany and Japan were the world’s largest exporters in 2012 and an increasing share of their exports have flown to emerging markets in recent years. A significant decline in emerging market growth would inevitably have a knock-on effect on their own exports and therefore on their growth momentum. Continue reading
