Trade News: BRIC Countries Still Experiencing Growing Pains

CHINA: From European Trade Commission: EU welcomes WTO report on China’s export restrictions on raw materials.  The WTO ruled against China’s export restrictions of certain raw materials backing a case jointly brought by EU, US and Mexico. The WTO Panel has found that China’s export restrictions were not justified on environmental grounds and should be removed.  China applies export restrictions on key raw materials such as bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorous and zinc. Some of these resources cannot be found outside China.

Export restrictions can create serious disadvantages for foreign producers by artificially increasing China’s export prices and driving up world prices. At the same time, such restrictions artificially lower China’s domestic prices for the raw materials due to significant increases in domestic supply. This gives China’s domestic downstream industry significant competitive advantages and puts pressure on foreign producers to move their operations and technologies to China.

Follow-up Article: WTO Panel Rules against China’s Export Restrictions on Raw Materials

RUSSIA: From ICTSD (International Centre for Trade and Sustainable Development): Russia Finds US Support in WTO Accession Efforts, Though Obstacles Remain: The push is on for finalizing negotiations for Russia’s accession to the World Trade Organization by the end of this year. As an integral part of its reset strategy for relations with Russia, US President Barack Obama’s administration is making a concerted diplomatic effort to help Russia finalize its 17-year track to the WTO. The EU, along with Russia’s BRIC partners (Brazil, China, India) and South Africa, is also strongly pushing for the move.  As Russia’s largest trade partner, the EU also supports Russian accession, despite their recent trade dispute over fresh vegetables. Georgia is one of the remaining obstacles to Russian membership at the WTO.

INDIA: The US-India Economic Partnership – a 21st Century Partnership Built on Innovation and Collaboration. President  Obama has observed that “The relationship between the United States and India– bound by our shared interests and values — will be one of the defining partnerships of the 21st century.”  The United States is the largest source of foreign investment in India. In 2009, total U.S. FDI in India was $18.6 billion, up 12 percent from 2008.

The stunning growth of the Indian economy is well known.  India has embraced global trade and competition, cutting its top applied tariff rates on industrial goods from more than 100% before liberalization to about 10-12% currently. Today, annual growth rates in excess of eight percent have become commonplace.

Notwithstanding, the article below presents a less than sanguine outlook.  

From MSU Global Edge Blog: India’s Growth Flounders as Corruption Concerns Increase. India, the world’s tenth largest economy according to the International Monetary Fund, is seeing troubling signs in the short-term outlook. Recently, India has seen a slowing growth rate in GDP, increase in inflation to 9.1%, and a decrease in local investment. Many economists attribute these worrisome signs to the corruption and scandals plaguing the growing nation.  This corruption problem coupled with the fact that outside nations have reduced investment in India in recent months has put the economy on a downward sloping path.

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