Sun, 22nd January 2017

Anirudh Sethi Report


Archives of “world trade organization” Tag

India shifts defenses against cheap steel imports

India is planning to shift fully from limiting cheap steel imports by way of minimum prices to applying anti-dumping duties, according to Steel Secretary Aruna Sharma.

“The [Minimum Import Price] was initially imposed on 173 steel items, which came down to 66 and now it is down to 19,” Sharma said in an interview with the Nikkei Asian Review. “On balance, 19 items, if [the] case is made out by industry, they will also be shifted.”

 The main objective of the move is to target foreign suppliers alleged to be selling steel below cost. India started imposing an anti-dumping duty of $474-$557 a ton on hot-rolled flat products of alloy and non-alloy steel imported from China, Japan, South Korea, Russia, Brazil and Indonesia in August. These six nations account for almost 90% of India’s steel imports.

Other categories of steel, such as color-coated products, are expected to be hit with anti-dumping duties amounting to the difference between the producer’s current price and approximately $800 a ton. By contrast, minimum import prices have been set at $350 to $700 a ton depending on the category of steel. The shift is expected to lift import prices to a level more on a par with the cost of domestic production.

MIP is calculated as the weighted average international price of a particular category of steel product, while anti-dumping duties are based on an estimate of the cost of production in the exporting country.

Between 2013 and 2016, India’s imports of finished steel more than doubled from about 5 million tons to 11 million tons a year. The government claims to have “sufficient evidence” against Japan and other countries of dumping cheap steel, Sharma said. India signed a preferential trade agreement with Japan in 2012.

Trade zones out, tough bargains in for 2017

A reversal in U.S. trade policy could make 2017 the year that efforts to build multinational trade zones crumble, returning the focus to tough, bilateral dealmaking.

In October 2015, officials from 12 nations including the U.S. and Japan gathered in the American city of Atlanta to ink the historic Trans-Pacific Partnership, confident of the dawning of a new age of trade governed by such high-level, multilateral agreements. Yet that dream lies all but dead just over a year later, not least due to Donald Trump’s presidential victory and his pledge to pull the U.S. from the agreement upon taking office Jan. 20.

 Many bilateral free trade agreements, which reduce or abolish tariffs and set rules for trade in goods and services between two nations, have been struck over the years. Multilateral agreements extend this notion to the regional level and improve security in the areas they cover, further greasing the wheels of commerce.

Yet Trump prefers his trade pacts one on one — the better to drive hard bargains, leveraging U.S. economic and diplomatic might to secure the most advantageous terms. Multilateral pacts involve far more careful compromise and require each nation to give and take small concessions rather than pushing for an unambiguous win.

Us first

China “Shocked” By Navarro Appointment, As Trump Team Proposes 10% Import Tariff

As the FT first reported yesetrday, in a dramatic development for Sino-US relations, Trump picked Peter Navarro, a Harvard-trained economist and one-time daytrader, to head the National Trade Council, an organization within the White House to oversee industrial policy and promote manufacturing. Navarro, a hardcore China hawk, is the author of books such as “Death by China” and “Crouching Tiger: What China’s Militarism Means for the World” has for years warned that the US is engaged in an economic war with China and should adopt a more aggressive stance, a message that the president-elect sold to voters across the US during his campaign.


In the aftermath of Navarro’s appointment, many were curious to see what China’s reaction would be, and according to the FT, Beijin’s response has been nothing short of “shocked.” To wit:

 The appointment of Peter Navarro, a campaign adviser, to a formal White House post shocked Chinese officials and scholars who had hoped that Mr Trump would tone down his anti-Beijing rhetoric after assuming office.

“Chinese officials had hoped that, as a businessman, Trump would be open to negotiating deals,” said Zhu Ning, a finance professor at Tsinghua University in Beijing. “But they have been surprised by his decision to appoint such a hawk to a key post.”

Mexico seen contributing to non-OPEC oil output cuts- Sources

Sources cited.

Mexico could contribute as much as 150,000 barrels per day to non-OPEC oil cuts – OPEC source. 
Russia has already said they would cut output by 300,000.
The non-OPEC  members meet with OPEC members in Vienna  tomorrow.
in other Mexican news Fitch  downgrades outlook for Mexico to negative.
As per Fitch:
The revision in Mexico’s Outlook reflects increased downside risks to the country’s growth outlook and the challenges this could pose for stabilization of the public debt burden. Growth has been under-performing rating peers and the general government debt burden has been increasing steadily in recent years. The victory of Donald Trump in the U.S. presidential election has increased economic uncertainty and asset price volatility in Mexico as the President-elect has alluded to renegotiating or terminating the North American Free Trade Agreement (NAFTA) with Mexico and tightening immigration controls. 
For the full report, CLICK HERE

Deutsche Bank on a ‘Once in a century event’

Deutsche Bank strategist George Saravelos says to stop whining about globalisation   

  • Its not irreversible
  • Globalization ebbs and flows over long cycles
  • And right now it is ebbing, and Trump’s election win will see an acceleration of this shift: “the peak and potential unwind of globalization.”
Saravelos  writes in his note: “Deglobalization Is Here: What It Means for Global Macro:”
  • The weakness in global trade, the rise of anti-globalization politics and the decrease in capital mobility all point towards a reversal of the neo-liberal word order constructed since World War II. In this note we introduce a framework to think about the impact of de-globalization on global macro
  • First, we argue de-globalization will shrink international trade imbalances. Because these are mirror images of international capital flows, de-globalization should also shrink the pool of global savings. Surplus nations such as Germany and Japan will have to spend more while deficit nations such as the US will have to pay more to borrow, which means Treasury yields will rise

India : Tug-of-war over met coke levy

Sharp differences have emerged within the government over imposing an anti-dumping duty on met coke imports from China and Australia, with the commerce ministry pushing for the move and the steel ministry opposing it.

The directorate general of anti-dumping (DGAD), which is part of the commerce and industry ministry, has recommended a duty of $25 per tonne on imports from China and $16 per tonne on shipments from Australia.

Officials said a decision could be expected next week. India had last year raised the import duty on Chinese met coke to 5 per cent from 2.5 per cent.

 Meanwhile, the steel ministry is lobbying for an anti-dumping duty on alloy and non-alloy flat steel products from China and the European Union. Imports of these products have increased four-fold over three years.

The DGAD had initiated an anti-dumping investigation in January following a complaint filed by the Indian Metallurgical Coke Manufacturers Association on behalf of producers such as Saurashtra Fuels, Gujarat NRE Coke, Carbon Edge Industries, Bhatia Coke and Energy and Basudha Udyog.

The companies claimed Australian and Chinese companies were dumping low ash metallurgical coke, and only a levy could save an “otherwise dying domestic industry”.

Global economic growth ‘sliding back into the morass’

The global economy is faltering again with growth rates “sliding back into the morass [they have] been stuck in for some time”, according to the Brookings Institution-Financial Times tracking index.

In a publication ahead of this week’s annual meetings of the International Monetary Fund and World Bank, the results will reinforce fears that many countries have become caught in a vicious circle of low growth, popular discontent and a backlash against trade and openness, resulting in more economic weakness.

The annual meetings will encourage policymakers to pursue inclusive and faster global growth as international organisations, finance ministers and central bank governors seek to reassure the public they can co-operate and that they have the necessary tools to break five years of economic disappointments.

Hanging over the meetings is the fear that the failure to improve living standards in advanced and emerging economies was important in the UK’s vote to leave the EU, may propel Donald Trump to the US presidency and will strengthen the hands of populists such as Marine Le Pen in France.

Global Trade To Grow At Slowest Pace Since Financial Crisis

Over the past several years, whenever we have looked at the IMF’s global growth forecasts, the only chart we said is worth keeping an eye on, is that of global trade, because while GDP can be massaged, retroactively revised, and “double-seasonally adjusted” when the need arises – and is far more a political “metric” than an economic one – trade remains the most objective indicator of how the world is truly doing at any given moment, especially since “central banks can’t print trade.”

In fact, it has been our contention for several years now that the single best indicator of the global economy is the rate of growth in global trade, which unfortunately has been slowing for the past 5 years.

Making matters worse, according to a new update from the World Trade Organization, global trade is now set to grow at the slowest pace since the financial crisis. In a report issued today, the WTO said that world trade will again grow more slowly than expected in 2016, expanding by just 1.7%, well below the April forecast of 2.8%.

The forecast for 2017 was also slashed, with trade now expected to grow between 1.8% and 3.1%, down from 3.6% previously. With expected global GDP growth of 2.2% in 2016, this year would mark the slowest pace of trade and output growth since the financial crisis of 2009.

ECB and China extend currency swap deal

The European Central Bank and its Chinese counterpart have agreed to extend an existing currency swap line between the euro and the renminbi first set up in 2013.

In a deal which will further cement the renminbi’s bid to become an international currency, the swap line has a maximum size of Rmb350bn and €45bn – the same conditions as that first set up three years ago and will be extended for another three years.

The ECB said the swap arrangement “serves as a backstop facility to address potential sudden and temporary disruptions in the renminbi market due to liquidity shortages in euro area banks”, adding:

Liquidity providing arrangements contribute to global financial stability. The arrangement with the PBC is a recognition of the rapidly growing bilateral trade and investment between the euro area and China.

As part of its bid to become a global reserve, the renminbi will be included in the International Monetary Fund’s Special Drawing Rights basket from October 1.

China is the EU’s second largest global trade partner behind the US.

India – Govt may not extend MIP on steel products beyond October 4

Government is unlikely to further extend the minimum import price (MIP) on certain steel products beyond October 4 as these items could be covered under anti-dumping duty, an official on September 5 said.

By the next month, the commerce ministry will complete the anti-dumping investigations on the 66 steel products on which MIP has been imposed and extended till October 4.

“Anti-dumping duties would cover those 66 items. After imposition of the anti-dumping duty, MIP is likely to be removed as MIP is a temporary measure,” the official said.

The commerce ministry believes that WTO-compliant measures like anti-dumping duty should be used to overcome the issue of cheap imports of commodities like steel. Last month, the government extended the MIP on only 66 steel products for two months as against 173 items earlier. The 66 products include semi-finished ones of iron or non-alloyed steel, flat-rolled products of different widths, bars and rods.

Growing imports from steel surplus countries like China, Japan and Korea with predatory prices have been a major concern for the domestic industry since September 2014.