NEWS Bulletin from Indian Society For Sustainable Agriculture And Rural Development -------------------------------
1. UNCTAD calls for overhaul of global monetary and financial system 2. UN report calls for new growth patterns with low carbon emission 3.Political considerations should not cloud quality norm setting process, says Codex chief 4. India to give hasle-free entry to Bangladesh food items 5. Nepal seeks greater Indian investments 6. India 's new foreign trade policy calls for tapping LatAm, African markets
The report says that the crisis, which originated from the subprime mortgage segment of the United States in 2008, has engulfed the world and is now having an adverse and dramatic effect on developing and poor countries and therefore the 2015 deadline for achieving the UN Millennium Development Goals is at risk.
The report calls for an overhaul of the entire monetary and financial system for ensuring greater global stability. Financial instruments with no social returns should be weeded out to prevent any similar crisis in the future. It suggests improving regulation of commodity futures exchanges so that it can provide reliable price signals to producers and consumers of primary commodities. A new monetary system and a stable pattern of currency exchange rates based on multilaterally agreed principles and rules are needed for macroeconomic stability in the globalised economy and for a level playing field for international trade.
On emerging "green shoots" in some economies like improvement of certain financial indicators from their lows reached in the first quarter of 2009, falling interest rate spreads on emerging-market debt and corporate bonds, combined with rebound of securities, commodity prices and the exchange rates of several emerging-market currencies by mid-2009, the UNCTAD report says "the economic winter is far from over."
As the crisis is global, reliance on exports offers no easy way out, since trade is expected to decline by about 11% in real terms and any new trade expansion requires a recovery in consumption and investment somewhere in the world, the report says
Economic growth in developed countries is strongly hit by shocks from the financial sector which impacted on the demand for durable and capital goods and exports., while that in developing countries is affected by falling international trade volumes, falling commodity prices, lower remittances or higher borrowing costs, the report says.
It notes that the crisis has caused slowdown in growth in almost all economies. Some developing and emerging markets economies that had managed to avoid large current account deficits or even posted surpluses for several years before the current crisis erupted have proved less vulnerable than in previous crisis. This is particularly true for several Asian and Latin American developing countries that were hit by financial and currency crisis between 1997 and 2001. The leading economies of East and South Asia – in particular China, Indonesia and India – have resisted recessionary forces better than others because their domestic markets play a more important and increasingly growing role in total demand. Moreover, the rebound in China in the second quarter of 2009 proves the efficacy of government deficit spending if it is applied quickly and forcefully.
The UNCTAD's Trade and Development Report 2009, however failed to detail as to why India and China could insulate itself from the adverse effects of global financial crisis. The main reason for these countries being insulated from the adverse effect is that their banks and financial sectors are largely under government control and well regulated. These two countries have not yet fully opened up their economies.
The report says that the global financial crisis was predictable. It broke out following years of huge disequilibria within and among major national economies. The most visible evidence of imbalances were the large current account deficits in the United States, United Kingdom, Spain and several East European economies, on the one hand and large and growing surpluses in China, Japan, Germany and the oil-exporting countries on the other. In the United States and the other booming economies, growth was driven to a large extent by debt-financed household consumption, made possible by reckless lending and growing bubbles in housing and stock markets
In the build-up to the present crisis, a large proportion of the credit expansion in the United States and other developed economies financed real estate acquisition, fuelled asset price inflation and spurred debt-financed private consumption rather than investment in productive capacity that could have generated higher real income and employment in a sustainable manner.
After 2000, household debt increased rapidly in many countries, particularly in those economies where current account deficits had widened, leading to an accumulation of external liabilities. What makes this crisis exceptionally widespread and deep is the fact that financial deregulation, innovation of many opaque products and total ineptitude of credit rating agencies raised credit leverage to unprecedented levels. Blind faith in the "efficiency" of deregulated financial markets led authorities to allow the emergence of a shadow financial system and several global "casinos" with little or no supervision and inadequate capital requirements, the report says.
According to the UNCTAD report the financial shockwave submerged equity and bond markets in many countries, exchange rates of some emerging market currencies and primary commodity markets all at the same time. Financial distress spread from one market to another, regardless of long-term "fundamentals"
The behaviour of financial investors on commodity markets is motivated by considerations that are largely unrelated to commodity market fundamentals. They regard commodities as an investment alternative to asset classes such as equities, bonds or real estate, based on the belief that diversifying their portfolio by adding commodity futures contracts improves their portfolios' overall risk-return characteristics. They take position in commodities as a group. The impact of index traders on commodity prices seems to have been concentrated in agricultural markets. Close correlation between commodities and other asset classes during the second half of 2008 shows that financial investors may have a strong influence on commodity prices.
The IMF lending has surged since the outbreak of the current crisis, extending to nearly 50 countries by the end of may 2009. But the policy conditions attached to these IMF loans are fairly similar to those of the past. This is at odds with many declarations in which coordinated countercyclical policies and large fiscal stimulus packages have been recognized as the most effective means to compensate for the fall in aggregate demand.
Indeed, deflation – not inflation – is the real danger, the UNCTAD report says. Wage deflation is the imminent and most dangerous threat in many countries today, because governments will find it much more difficult to stabilize a tumbling economy when there is a largescale fall in wages and consumption. However, deflation will not cure itself. Therefore the most important task is to break the spiral of falling wages, prices and demand as early as possible and to revive the financial sector's ability to provide credit for productive investment to stimulate real economic growth.# -------------------------------------------
WORLD ECONOMIC AND SOCIAL SURVEY 2009
UN report calls for new growth patterns with low carbon emission
Developing nations have right to economic growth
http://anypursuit.com/news/tiki-read_article.php?articleId=651
By: ASHOK B SHARMA on: Wed 02 of Sep., 2009 13:03 GMT
New Delhi, Sep 2 : The United Nations has called for re-inventing growth patterns and low carbon economies and has recognized the right of developing countries for rapid economic growth Investment push, particularly by the governments. coupled with technology transfer can help ushering in of low carbon economy in the Third World , it suggested.
The report, The World Economic and Social Survey 2009 : Promoting Development, Saving the Planet was released by the UN Department of Economic and Social Affairs on Wednesday as the negotiations for a new global agreement to address climate change is on the verge of entering the final stages before the Copenhagen Climate Change Conference scheduled by the turn of 2009.
According to the report business-as-usual would not solve the problem and there is little benefits in incremental actions. Urgent and drastic actions are needed to address the issue of climate change. The report challenges the thinking that the climate problem can simply be addressed by across-the-board emission cuts by all countries from their present levels or by relying exclusively on market-based solutions to generate the needed investments.
The developing countries, the report finds, are facing "vastly more daunting challenges than those confronting developed countries and in a far more constrained environment." Economic growth remains a priority for them, not only to reduce poverty but also to bring about a gradual narrowing of the huge income differentials with wealthy countries. "The idea of freezing the current level of global inequality over the next half century or more (as the world goes about trying to solve the climate problem) is economically, politically and ethically unacceptable," the UN survey says.
According to the Intergovernmental Panel on Climate Change there needs to be acut in global emissions by 2050 in the range of 50% to 80%, which is equivalent to a reduction in carbon dioxide levels from roughly 40 gigatons (gt) per year (at present) to 8 to 20 Gt. Since 1950, the advanced countries have contributed as much as three-quarters of the increase in global emissions, despite accounting for less than 15% of the world's population.
Estimates cited in the report show that for every 1 degree C rise in average global temperature, annual average growth in poor countries could drop by two to three percentage points, with no change in the growth performance of rich countries. At the same time, the report notes that developed countries have per capita emissions that are still on average six to seven times greater than those in developing countries.
One of the most overlooked aspects of the climate debate , the UN survey argues, is that the energy needs of developing countries are very different from those of developed countries. The latter have adequate, even excessive, energy services and infrastructure. Most of the developing countries, on the other hand, struggle to provide even basic energy services from inadequate infrastructure. Globally, between 1.6 and 2 billion people lack access to electricity and connecting these people to energy services will cost an estimated $25 billion per year over the next 20 years, the report says.
The amount of development aid pledged by the developed countries on energy is only about $4 billion annually, where at least $10 billion is needed annually. Currently, it is estimated that about $21 billion in official development assistance is decidated each year to addressing climate change, much of this for mitigation. The total amount of climate financing that is needed is a large multiple of this figure, the report observes.
The rich and poor countries, therefore, need different mitigation strategies to address climate change. While a rise in the price of fossil fuels or changes in lifestyles may result in the increased use of renewable sources of energy in developed countries, higher fuel costs in developing countries would simply place any modern energy services beyond the means of many more people.
Market solutions, including the development of a carbon market through "cap and trade" mechanisms or taxation schemes in developed countries are not the solution for developing countries, the UN report says
"Perhaps the more sensible, forward-looking view," the report says and adds "is to recognize that carbon markets will continue to expand but that the pace and scale will not be sufficient to help developing countries break the financial constraints on proceeding along a low-emissions development pathway."
Saying the energy scheme as prohibitively expensive, the report says such a transformation would need "a level of international support and solidarity rarely mustered outside a wartime setting." The report sets out a range of possible multilateral measures in support of a global investment programme, including a global clean energy fund, a global feed-in tariff regime in support of renewable energy sources, a climate technology programme and a more balanced intellectual property regime for aiding the transfer of clean technologies.
The survey argues that large upfront investments will need to be made, particularly by the public sector, in new energy infrastructure and in complimentary research and development to bring down the costs.
The report mentions varying estimates for how much additional financing is needed to address the mitigation and adaptation aspects of climate change, often depending upon on a number of factors, including the range of the greenhouse gas reduction target. These estimates can range from as little as 0.2% to 2% of the World Gross Product (WGP) or between $180 billion and $1.2 trillion per year. However, in most projections the big investment would not be required until 2030.
But the report warns that failure to make additional investments at least at least to the tune of 1% of the WGP annually or between $500 billion to $600 billion annually in the immediate future on adaptation and mitigation may result in the permanent loss of the projected WGP by 20%.# Unnecessary stringent norms acting as non-tariff barriers to trade Political considerations should not cloud quality norm setting process, says Codex chief Concerns of developing nations would be addressed By: ASHOK B SHARMA on: Fri 28 of Aug., 2009 13:13 GMT "The process may be slow but we are successful in our negotiations. Codex believes in science with a human face. Our success depends upon relationships and trust won overtime.. We intend to serve all stakeholders," she said. Dr Hulebak, however, admitted and said "we need to find a way in dealing with political and non-science problems in the long term." ------------------------------------------ The meeting of 6th Joint Working Group concludes India to give hasle-free entry to Bangladesh food items Decision on setting up of a SEZ by Indian investors in Bangladesh defered Several food items from Bangladesh were facing problems of entering into Indian market as they did not conform to the quality norms laid down by the Bureau of Indian Standards and other food standards prevalant in the country. The JWG also decided that henceforth, Bangladesh trucks carrying consignments can offload in warehouses at Petrapole border in India . The leader of the Bangladesh delegation, Dr Mohammad Ruhul Amin Sarkar, who is a joint secretary of commerce and industry, said "the meeting was held in a cordial atmosphere." He experessed other outstanding issues would be resolved through further discussions and dialogues. The joint secretary in the Indian ministry for commerce and industry, Rajeev Kher said that the JWG meeting was taking place after a gap of one year. Last meeting was held in 2008 in Dhaka . The JWG meets alternatively in Delhi and Dhaka . He said : " Bangladesh side was open and candid and we discussed all issues with an open mind." According to sources Indian request for setting up of a Special Economic Zone (SEZ) in Bangladesh would be considered in due course and Bangladesh side has requested Indian investors to invest in the existing Export Processing Zones in Bangladesh . India-Nepal Trade Treaty likely to be revised Nepal seeks greater Indian investments Urges for bridging the trade deficit http://anypursuit.com/news/tiki-read_article.php?articleId=580 By: ASHOK B SHARMA on: Wed 19 of Aug., 2009 13:34 GMT New Delhi, Aug 19 : With a view to bridge its trade deficit with India and to benefit from the positive spillover effects from its economically resurgent neighbour, Nepal on Wednesday invited Indian investments in hydropower, roads, bridges, infrastructure, construction materials, tourism industry, agro processing, education, IT, light manufacturing, health and financial services. Saying that the full potential of bilateral trade and investment still remained untapped, Nepal urged the Indian industry to take advantage of the situation and invest in his country. He said that investment climate in Nepal was likely to improve with the adoption of the new Constitution and the success of the peace process. "We will do our best to ensure security and pecefull environment in the country by building consensus and cooperation among all parties including those in the Opposition. We have already come out with a new security plan, which we are committed to implement," he said. The Nepalese Prime Minister revealed that his country's new industrial Policy would be comprehensive and effective in attracting foreign investment by eliminating double taxation, promoting transfer of technology, enhancing productivity and competitiveness of the industrial sector. Special attention would be given to the areas of competitive advantage and comparative benefits, development and operationalisation of special economic zones, strengthening of the industrial governance and promoting collaboration with all. The President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Narendra Kumar Joshi hoped that the proposed modification in the trade treaty would aim at removal of tariff barriers, CVD, canalisation of imports, quota and discriminatory taxes, restrictions on movement of agricultural products and increase in number of border custom points and enhancing facilities, expediting setting up of test laboratories and recognising Nepal standard in India and more flexibilitry in the Rules of Origin. He said that joint task force have started its work and is expected to submit its report by the end of August, this year. He urged the Indian industry to utilise rich deposits of cement grade limestone and abundant medicinal herbs found in Nepal. He called upon the Indian government and the industry to set up Special Economic Zone near the southern border in Nepal, designate and set up special `trade corridors' that would link Bangladesh, Bhutan, India and Pakistan, allowing Indian companies to be listed in Nepal Stock Exchange and allowing Nepalese companies to be listed in the Indian stock exchanges .# India 's new foreign trade policy calls for tapping LatAm, African markets Aims at negating the impact of global recession on exports http://anypursuit.com/news/tiki-read_article..php?articleId=620 |
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