India to Ease Customs Norms

By Dilasha Seth

The government has decided to set up a national committee on trade facilitation, which will suggest and implement measurers to ensure seamless movement of cargo by addressing constraints like high transaction costs and poor infrastructure.

“The national committee on trade facilitation will be put in place soon, which will have representation from 7-8 departments. It will look after all aspects of trade facilitation,” a senior commerce department official told ET on condition of anonymity. “India is not against trade facilitation. We are expeditiously working towards it.”

India had on July 31 vetoed the trade facilitation agreement at the World Trade Organisation (WTO), which sought to speed up global trade by reforming customs procedures, arguing that there should be a parallel deal on food security. Delhi, however, maintained that it was fully committed to trade facilitation.

The Politics of Free Trade Agreements

Seeking to address the liberalization concerns of WTO’s less-developed members, the Doha Development Round was supposed to culminate in 2005 with a new trade agreement.

Read also: WTO TRADE FACILITATION AGREEMENT GUIDE

The envisioned deal concerned the reduction of trade barriers in commodities and services, as well as a new international framework for intellectual property rights. But soon after negotiations began, governments from developing countries — India, Brazil, China, and South Africa — and NGOs (non-governmental organization) began to worry that international negotiations were an obstacle to the governmental protection of developing sectors and regulation of financial services. After the failure of the Cancún proceedings in 2004, trade scholars worried that Doha might not be completed by its original deadline, but kept the hope that negotiations would continue. However, trade talks came to a deadlock in 2006, 2009, and 2011, mainly due to differences in agricultural policies. The US and the EU even backed out of previous agreements to reduce export support and agricultural subsidies, arguing that they did not want to weaken their bargaining positions too early in the Round.

Read also: ITC publishes business guide on new WTO trade facilitation agreement by ITC Communications

Attempts to reconcile disagreements among countries since then have been largely in vain. But in December 2013, new tailwinds seemed to push the Doha Round to more favorable shores. The Bali Ministerial Conference, which concluded with the signing of a package deal on trade customs collection and a post-Bali development agenda, was touted to have “achieved what many believed was impossible”: bringing together the 160 WTO members for the first time in twelve years. But even though the Bali package does not have much to do with free trade — it facilitates the collection, but not the reduction, of custom duties — the agreement still wasn’t signed by all members in July 2014. This time, India vetoed the ratification to gain more bargaining power for Prime Minister Modi’s program of domestic food subsidies. Reuters reported that “trade diplomats in Geneva have said they are ‘flabbergasted,’ ‘astonished,’ and ‘dismayed,’ and described India’s position as ‘hostage-taking’ and ‘suicidal’.”

Perhaps commentators would have been less surprised if they had identified the negotiation deadlock as only the symptom of a more pervasive underlying cause: the national — read: political — interest of all countries at the negotiations table. The bread and butter of WTO member states is the extent to which they can encroach upon private enterprise, and control both product and financial markets. Under these circumstances, committing to open one’s borders to international trade is simply idle talk. Free exchange and competition would undermine the leverage of domestic interest groups, and cut through the structure of government intervention.

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UAE is central to HSBC’s global SME strategy

By Babu Das Augustine for Gulf News

Global banking giant HSBC sees the UAE as central to its small and medium enterprises (SME) strategy following a strategic review of its commercial banking and business banking, Stuart Nivison, Global Head of Business Banking told Gulf News in an interview.

HSBC’s commercial banking business is segmented into three areas based on customer needs such as large corporate, middle market and business banking. Business banking focuses on SMEs or companies that have annual turnover up to $50 million (Dh184 million).

In the UAE, HSBC is focused largely on internationally oriented SMEs. “We are closely involved with firms doing international trade. We help them with protection and finance. Another segment we are involved is overseas companies coming into the UAE and a third category is the UAE companies that are expanding overseas. We help them to take the banking relationship to new markets where they want to expand,” said Nivison.

The bank has identified a number of separate but linked indicators that are showing surging positive sentiment among its clients in the UAE. One of them is the overall optimism in the country indicated by the sharp increase in the purchasing manager’s index (PMI).

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Why allowing crude oil exports has impacted U.S. economic growth

By Khyathi Dalal

U.S. to allow oil export

The U.S. Department of Commerce has decided to allow the first exports of U.S. crude oil since Congress imposed a ban on such sales, except to Canada since the 1970s. Ultra-light oil, often referred to as “condensate” by the energy industry, will be cleared to be exported abroad, according to a private ruling by the federal government. This move would help the U.S. economy resume oil sales abroad. It would allow the economy to reap the full benefits of the shale revolution that has propelled the U.S. back into the top ranks of global oil and gas production.

U.S. oil exports

The Department of Energy total U.S. crude oil exports data reflected that for the third week ending June 20, exports touched its 52 week high of 273—1,000 barrels per day—a significant surge from 74 in the previous week.

It’s important to note how the beginning of the U.S. crude oil exports might affect the Guggenheim Shipping ETF (SEA) and crude tanker owners such as Tsakos Energy Navigation Ltd. (TNP), Teekay Tanker Ltd. (TNK), Nordic American Tanker Ltd. (NAT), and Frontline Ltd. (FRO).

Outlook

Although the market believes that the condensate export volumes are likely to be limited and minimal, any increase in export volumes should have a net positive impact on the crude oil tanker market. Given the limited condensate field production in the U.S. and limited scope of approvals, U.S. exports of condensate are likely to be limited over the next 18 months. Also, any heavy condensate volumes exported out of the U.S. would be carried out on either Aframax crude oil tankers or Panamax crude oil tankers.

As a result of the Department of Commerce ruling, shipment of condensates could begin as soon as August. Initially, the shipments are likely to be smaller with the U.S. forecasted to export 300,000 barrels of condensate per day by the end of the year.

World Cup Brazil Will Generate $4 Billion for FIFA, 66% More Than 2010 Tournament

World Cup Brazil will generate $4 billion in total revenue for FIFA, or 66% more than the previous tournament in South Africa in 2010. The vast majority of the money will come from the sale of television and marketing rights. The World Cup generates more revenue for its association than any other sports tournament, save the Olympics (based on revenue per-event-day, the NFL’s Super Bowl reigns supreme). FIFA’s profit for the Brazil World Cup: $2 billion.

Almost all of the revenue FIFA generates comes from television rights ($1.7 billion) and marketing rights ($1.35 billion) from corporate partners like Adidas Emirates, Sony , Visa V+0.87%, Hyundai and Coca-Cola . Blue chip companies love to throw money at the World Cup because it is followed passionately throughout most of the world.

FIFA research, which took a year to produce after the 2010 World Cup in South Africa, said 909 million television viewers tuned in to at least one minute of the 2010 final at home. Some 619.7 million people also watched at least 20 consecutive minutes of Spain’s 1-0 extra-time win over the Netherlands in Johannesburg. More than 3.2 billion people watched live coverage of the 2010 tournament for a minimum of one minute. The average official rating was 188.4 million for each match.

The 2010 Men’s World Cup drew the most US viewers ever for the tournament. ESPN announced that broadcasts averaged a 2.1 rating (2.29 million households and 3.26 million viewers), a 31% increase over 2006. The final between the Netherlands and Spain was the most-watched men’s World Cup game with 15.6 million viewers.

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