Germany’s Imports Rebound in January

U.S. exports may be ready to recover after a downturn in the Fall.  German imports have rebounded in January 2013. There is hope that increased trade will shrink Germany’s trade surplus. From October 2012 to December 2012, Germany’s economy shrank by 0.6%.

German domestic demand is anticipated to play a large role in boosting the Germany and Eurozone economy this year. Since currently borrowing costs for businesses are purposefully low, perhaps German demand will increase.

Will China surpass the U.S. to become the dominant trader?


As recent as 6 years ago, the United States was the larger trading partner for 127 countries, China only 70. Now, the table turns – China got 124 and U.S. 76.  A recent article at NPR points out that this trend is changing the way people live and do business across the globe – the “most abrupt global shift of its kind since World War II”.

Indeed, from businessmen to farmers, more and more people are signing up to learn Mandarin. Firms and organizations are looking at the Chinese markets for opportunities and investments. Without a doubt, China has enormous potential to become the biggest trader of goods and services in the world.

But not yet. The United States still does the largest trade in terms trade volume, and unlike China who occupies mostly lower-end goods and commodities, the U.S. controls the high-end and most value-added products and services. Most of China’s largest firms are state-owned. It would take these gigantic a while to transform and travel beyond the Great Wall, becoming internationally renowned like GE or Ford. Trade in services is still dominated by the U.S., beyond the reach of the Chinese.

Nonetheless, the focus of global lenses is shifting to the East. China has shown prudence in the recent financial crisis and has become politically important at the international arena.  With the change of new leadership, China is inevitably facing tremendous opportunities and challenges in this the global economic winter season.

Protection and regulation: WTO’s anti-dumping actions review

On 24 October 2012, WTO’s Committee on Anti-Dumping Practice reviewed reports filed by 32 members on anti-dumping actions for the first half of 2012 and by 25 members for more recent submissions, a total of 75 issues.

Among the 75 issues, for instance, Japan raised concerns about anti-dumping investigations by China on some stainless steel seamless tubes, by India on melamine and aniline, by Indonesia on cold rolled coil/sheet, and by the United States on maintaining anti-dumping measures against Japan that are 30 years old.

The United States complained about China’s investigation into thylene glycol monobutyl ether and  diethylene glycol monobutyl ether, and India’s investigation into stainless steel cold rolled flat products.

As fair as it may sound, anti-dumping practices can in fact be used as a strategic shelter for large domestic firms against foreign competitors.

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WTO Director-General spoke in Washington D.C., Oct. 1 2012

Source: WTO Website

On October 1, 2012 in Washington D.C.,  WTO Director-General Pascal Lamy gave a speech at Brookings Institutes about the future of trade.  In his speech, he mentioned about new trading powers – China, Brazil, India, Mexico and Malaysia as the drives of global export growth. Nature of trade has changed because of the increasing integration of production of products.

“For centuries, the mercantilist approach of single country product was a driving force in trade policy”, Lamy said, and has still been a heated argument about whether exports were good and imports bad.  It is now very hard to disintegrate the goods and services since nearly 60% of the merchandise trade happened in components.  Such changes in the nature of trade from single manufacturing sites to global value-chain productions has urged for re-thinking of our trade calculation. According to Lamy, “if the measure of trade was in value-added rather than gross statistical terms, bilateral trade balances would look very different” – WTO economists believe that China’s $295 billion trade surplus with the U.S. would be reduced by nearly half.

On the other hand, Lamy also suggested that tariffs and other trade regulations can have profound impact in trade.  He points out that an “open” conversation on international trade should be facilitated given the changing environment.

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