|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1076.45 |
USD/Ton |
0% |
5/2/2016 |
|
VSF |
2049.42 |
USD/Ton |
-0.23% |
5/2/2016 |
|
ASF |
1945.94 |
USD/Ton |
0% |
5/2/2016 |
|
Polyester POY |
1062.55 |
USD/Ton |
0% |
5/2/2016 |
|
Nylon FDY |
2332.04 |
USD/Ton |
-0.33% |
5/2/2016 |
|
40D Spandex |
4478.76 |
USD/Ton |
0% |
5/2/2016 |
|
Nylon DTY |
1305.02 |
USD/Ton |
0% |
5/2/2016 |
|
Viscose Long Filament |
2169.88 |
USD/Ton |
0% |
5/2/2016 |
|
Polyester DTY |
2123.55 |
USD/Ton |
0% |
5/2/2016 |
|
Nylon POY |
1177.61 |
USD/Ton |
-6.44% |
5/2/2016 |
|
Acrylic Top 3D |
2548.26 |
USD/Ton |
0% |
5/2/2016 |
|
Polyester FDY |
5759.07 |
USD/Ton |
0% |
5/2/2016 |
|
30S Spun Rayon Yarn |
2818.53 |
USD/Ton |
0% |
5/2/2016 |
|
32S Polyester Yarn |
1729.73 |
USD/Ton |
0% |
5/2/2016 |
|
45S T/C Yarn |
2471.04 |
USD/Ton |
0% |
5/2/2016 |
|
45S Polyester Yarn |
2996.14 |
USD/Ton |
0% |
5/2/2016 |
|
T/C Yarn 65/35 32S |
2270.27 |
USD/Ton |
0% |
5/2/2016 |
|
40S Rayon Yarn |
1868.72 |
USD/Ton |
0% |
5/2/2016 |
|
T/R Yarn 65/35 32S |
2162.16 |
USD/Ton |
0% |
5/2/2016 |
|
10S Denim Fabric |
1.37 |
USD/Meter |
0% |
5/2/2016 |
|
32S Twill Fabric |
0.82 |
USD/Meter |
0% |
5/2/2016 |
|
40S Combed Poplin |
0.71 |
USD/Meter |
0% |
5/2/2016 |
|
30S Rayon Fabric |
0.69 |
USD/Meter |
0% |
5/2/2016 |
|
45S T/C Fabric |
0.69 |
USD/Meter |
0% |
5/2/2016 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.15444 USD dtd. 02/05/2016)
The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Maharashtra government plans to develop Amravati, infamous for farmer suicides, as a textiles city to promote this industry in cotton-growing areas of the Vidarbha region, Chief Minister Devendra Fadnavis said. “The state government is promoting textile industries in suicide-prone region of Vidarbha to give a value addition and alternate market linkage to the cotton growers of the region on the lines of sugarcane belt of Western Maharashtra to prevent farmers’ suicide in the cotton growing region of western part of Vidarbha.” He added that cane growers don’t commit suicides. The Nandgaon industrial estate would be developed as “textile park” and Amravati would soon be recognised as the textiles city, he said after laying the foundation stone for a Raymond’s manufacturing facility near here. Raymond Ltd will extend all possible help to the state government in setting up the Apparel Park here with a full-fledged fashion designing facility, Fadnavis said. Chairman and Managing Director of Raymond Ltd Gautam Hari Singhania said his company will invest Rs 1,400 crore and the unit will provide job opportunities to about 8,000 persons. “The Yavatmal Denim plant was set up with an investment of Rs 750 crore and 2,500 persons are working there. Raymond started from Thane and is proud to be part of development of Maharashtra,” he added. The Nandgoan MIDC is spread across 200 hectares in Amravati on the busy National Highway 7.
Appreciating the assurance by Raymond that the unit willstart production by March 31 next year, Fadnavis said, Raymond has a unit in Yavatmal and the cotton growers will be greatly benefited by the second unit in Amravati. He also lauded Raymond’s visionary approach in setting up a housing complex with an international standard school and described it as “holistic approach”. Maharashtra Industries Minister Subhash Desai also lauded the speedy process of Raymond in setting up the unit in Amravati and assured all possible help from his department.
SOURCE: The Tecoya Trend
The Commerce Ministry has again invited bids from global consultants to prepare a white paper on the functioning of the Directorate General of Foreign Trade (DGFT), Parliament for informed today. The last date of submitting the proposals is May 13. The Department of Commerce had invited request for proposal (RFP) from consultancy firms for preparing a white paper to identify key policy and regulatory objectives related to the functioning of the DGFT. "Since no response was received till April 11, which was the last date of submission of the proposal, the RFP has been floated again. The last date for submission of the proposal is May 13," Commerce and Industry Minister Nirmala Sitharaman said in a written reply to the Lok Sabha. She also said that as part of the ongoing review of functioning of the DGFT, many procedures and processes are being streamlined in order to facilitate ease of doing business for the exporters. DGFT, under the commerce ministry, deals with the exports and import policy of the country. In a separate reply, she said the government has released Rs 42.29 crore under the Marketing Development Assistance (MDA) scheme and Rs 127.42 crore under the Market Access Initiative (MAI) to the export promotion councils in 2015-16.
SOURCE: The Economic Times
The periodic review of the Special Economic Zone (SEZ) policy will not hurt industry, Commerce Minister Nirmala Sitharaman said in the Lok Sabha on Monday. She said policy review was a continuous process and would ensure that SEZs are made more effective. Replying to a supplementary during Question Hour from BJP member Kirit Somaiya on SEZs turning into “land grab and tax havens” and that the proposed “sunset clause” with regard to tax incentives would have a “retrospective impact” on IT-based SEZs, Sitharaman said the matter would be looked into, “but the fact remains that we are not going to hurt the industry by bringing in something either in retrospect or that which is going to hurt the industry.” On another question by Trinamool Congress member Saugata Roy on the scarcity of land for SEZs, the Minister said under the law, land is acquired by the State governments and it was for them to take a position on it. She said in 2007, it was made plain that no fertile lands could be acquired and no compulsory acquisition of land for the SEZs could happen, adding that wherever land had been acquired, it was barren or infertile. Single crop land can be acquired to some extent, she added.
SOURCE: The Hindu Business Line
India needs to build a bigger pool of international trade lawyers to keep a close watch on restrictive measures being adopted by other countries and take timely action wherever required, Commerce Secretary Rita Teaotia has said. With the slowdown in global trade, there is higher protectionism worldwide and increasing use of trade remedies, Teaotia pointed out at a conference on WTO dispute settlement organised on Monday by the Centre for WTO Studies. The Commerce Secretary said while India had the required legal professionals to look at actions that are obviously affecting the country’s interest at the WTO, it needs to build on its capacity to stay more vigilant. “We need greater capacity for comprehensive routine examination of trade measures of other countries. We do let many of the smaller measures that affect our trade interest go completely unchallenged,” she said. India is also concerned about efforts by some countries to include disputes at the World Trade Organisation on issues that do not fall within the realm of trade such as environment. “This is a great challenge for developing countries and affects freedom of trade,” Teaotia said, adding that there was a need to build domestic capacities in international trade laws.
Over the years, a number of members have tried to impose trade restrictions based on environmental concerns, such as EU’s restriction on seal products and the US legislation on import of shrimp turtle, and tried to justify them at the WTO. The secretary said there is a need to work with law schools within India to deepen the specific courses and to increase the interest of the younger generation of the legal fraternity in trade laws. “I believe that cost (to contest cases in WTO) is also one of the reason why developing countries are not utilising this (dispute) mechanism,” she added.
SOURCE: The Hindu Business Line
There is welcome policy action on the trade front, in a scenario of weak and declining trend in merchandise exports. The proposed new green channel for export of manufactures, which would reportedly reduce cargo clearance to a few hours rather than the norm of an entire week, makes excellent sense. It would reduce transaction costs, hugely improve ease of doing business and boost our trade competitiveness. India stands 133rd in the World Bank’s ease of doing business ranking on the parameter of ‘trading across borders’. The new facility would be functional at select ports in a month, after the Finance Bill is passed. It would allow export shipment sans upfront payment of duties, as proposed in the Budget. The idea is to remove procedural delays and documentation requirements and move to a system where exporters and importers need file just one form at ports, as per the Single Window Interface for Facilitating Trade, or SWIFT. The way ahead is to diffuse SWIFT across the board, and address manpower shortage at customs to transparently facilitate trade. But in tandem, there’s the vital need to correct duty structures that give rise to questionable domestic value addition behind relatively high tariff walls. For instance, a duty of 2.5% on printed circuit boards and of 12.5% on finished handsets really incentivizes trading passing itself off as an assembly operation here. And the way forward is to have moderate, uniform duty protection across components and finished products. Merchandise exports have fallen from a high of $30.5 billion in March 2013 to a low of 22 billion in March 2016, even as the rupee has depreciated 17% vis-à-vis the dollar. World trade is slowing. We do need strategy and brand-building to boost trade in the entire gamut of skill-intensive services.
SOURCE: The Economic Times
Foreign direct investment (FDI) in India increased to USD 37.53 billion during April-February period of the last fiscal, Parliament was informed today. It was USD 30.93 billion in 2014-15. "FDI equity inflow has increased from USD 22.42 billion in 2012-13 to USD 37.53 billion in 2015-16 (up to February)," Commerce and Industry Minister Nirmala Sitharaman said in a written reply to the Lok Sabha. Services attracted the most (USD 5.95 billion) during the first eleven months period of 2015-16. It was followed by computer software and hardware (USD 5.83 billion), trading (USD 3.67 billion) and automobile (USD 2.44 billion).
Replying to a separate query, she said during the past three years, two applications for compulsory licensing (CL) under section 92 of the Patent Act 1970 have been received by the Department of Industrial Policy and Promotion (DIPP). Under the Indian Patents Act, a CL can be issued for a drug if the medicine is deemed unfordable by the government and grants permission to qualified generic drug makers to manufacture it. In March 2012, Hyderabad-based Natco Pharma was allowed to manufacture and sell cancer-treatment drug Nexavar at a price over 30 times lower than charged by patent-holder Bayer Corp., under CL. As per the World Trade Organization (WTO) agreement, a CL can be invoked by a national government allowing a company to produce a patented product without the consent of the patent owner in public interest. The US had raised concerns over issuance of the licence by India. New Delhi had so far issued only one such licence.
SOURCE: The Economic Times
India can save up to $50 billion if logistics costs are brought down from 14 per cent to nine per cent of country’s gross domestic product (GDP) thereby making domestic goods more competitive in global markets, an ASSOCHAM Resurgent India joint study said today. “With expected inflow of new investments owing to government’s thrust on promoting domestic manufacturing sector, India’s cargo and logistics industry is likely to clock a compounded annual growth rate of about 16 per cent during the course of next few years,” noted the study on ‘Cargo and logistics industry in India,’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) jointly with knowledge firm Resurgent India. “The ‘Make in India,’ campaign will see investments connect India to global production networks that would generate new business for logistics in the country thereby making it an attractive location to do business as compared to other regions in the world,” it said. “Growth in logistics sector would imply improved service delivery and customer satisfaction thereby leading to growth in exports of Indian goods and potential to create job opportunities,” the study said further. However, the government needs to put in place requisite infrastructure to keep pace with development across the world. “This will help in bringing down the costs considerably, boost gross domestic product (GDP) and generate employment opportunities.” “Appropriate policy changes and opening up capacity together with increase in speed for transportation of goods and services through various modes, viz., rail, road, water and others is imperative for the growth of cargo and logistics industry in India,” said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the study. “Transportation of bulk commodities through waterways can free up capacity for fast moving goods, besides, setting benchmarks and standards for industry will drive uniformity of warehouses, storage and transport equipment,” said Mr Rawat.
Access to cheap capital should be made available to logistics service providers for investments in infrastructure, enabling them to extend longer credit periods to their clients and supplementing their working capital, suggested the ASSOCHAM-Resurgent India study. “The government should create a uniform tax structure and do away with multiple checkpoints and documentation requirements which would lead to speedier delivery of cargo,” it said. The study highlighted that passage of goods and services tax (GST) will further improve the logistics sector’s performance by bringing down distribution costs by up to 15 per cent.
SOURCE: The Tecoya Trend
Manufacturing activities in the country were close to stagnation in April against eight-month high growth in March as new orders remained flat, according to a widely-tracked Nikkei purchasing managers’ index (PMI) survey. The survey showed that PMI fell sharply to 50.5 in April from 52.4 in March. The seasonally-adjusted index is a composite single figure indicator of manufacturing performance. A reading above 50 represents expansion, while one below this level means contraction. However, April still represented a fourth consecutive month of output growth mainly due to improvements in new export business remaining sustained, although growth was at a six-month low. Manufacturing had last contracted in December at 49.1 points.
India's manufacturing PMI falls sharply in April 2016 “A marked slowdown in output expansion during April was caused by growth of new work grounding to a halt,” said Pollyanna De Lima, economist at Markit. The report showed that consumer goods producers fared better than their counterparts producing intermediate and investment goods, who saw a decline in both output and new orders. Manufacturing employment in India remained broadly unchanged yet again, a trend that has been evident for almost two years, the monthly survey noted. In the previous month of March, the survey had pointed to decreasing backlogs of work and thus spare capacity in the sector had staved off new hiring. However, in April the backlogs increased. Where backlogs of work increased, survey members blamed delayed payment from clients as well as shortages of some raw materials for this. Nevertheless, the rate of accumulation was only slight.
On the price front, input cost inflation accelerated to its fastest since May 2015. According to panel members, this was due to a range of raw materials such as metals, chemicals, plastics, paper and food increasing in price. Part of the additional cost burden was passed on to clients as selling prices rose further. That said, the rate of charge inflation softened marginally since March. “A softer overall increase in output prices suggests a strongly competitive environment, as cost inflation in fact accelerated to a 12 month high.” Lima pointed out. Figures for China, which came on Sunday showed manufacturing activity in the country expanded in a slower than expected rate in April, raising more doubts about the recent recovery in the world's second-largest economy grappling with a slowdown. The manufacturing PMI came in at 50.1 in April, slightly down from March's 50.2 and below market expectations of 50.3.
SOURCE: The Business Standard
The combined output of eight crucial infrastructure sectors jumped to a 16-month high of 6.4 per cent in March due to a double-digit growth in refinery products, fertilisers, cement and electricity. Data released by the commerce ministry on Monday showed the eight core industries — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — had a cumulative growth of 2.7 per cent in the financial year 2015-16 ended March. However, this was lower than 4.5 per cent for the previous financial year. The industries carrying a total weight of nearly 38 per cent in the Index of Industrial Production (IIP) has seen a straight fourth month of rise. This is expected to give a push to the IIP, which had risen by two per cent in February. Core sector expands 6.4% in March to 16-month high Economists, however, forecast only a mild increase in IIP. “...the pick-up in the pace of expansion of the core sector augurs well for a mild improvement in IIP growth in March 2016,” said Aditi Nayar, senior economist, Icra. Core sector growth had registered a 15-month rise of 5.7 per cent in February mainly due to growth in production of fertiliser and cement. In March, both sectors continued to outperform others with fertiliser production jumping by 22.9 per cent followed by cement, which grew at 11.9 per cent. The number of sectors which registered double-digit growth was taken to four in March from two in the previous month. Electricity generation, which has progressively risen since December, registered a growth of 11.3 per cent in March. The same is true for refinery products, growth rates for which rose from 2.1 per to 10.8 per cent over the same period.
Growth rates for coal however, continued to fall significantly from the 9.1 per cent rise in January to a mere 1.7 per cent rise in March. Steel production bounced back in March, rising at 3.4 per cent after the 0.5 per cent contraction seen in the previous month. Production volumes for both crude oil and natural gas crashed in March. While crude oil fell by 5.1 per cent, the fall was more than double for natural gas, which contracted by 10.5 per cent. The industries continue to be hit by falling international crude oil prices coupled with subdued domestic and international demand. While oil production has cumulatively declined by 1.4 per cent in the 2015-16 financial year, the decline has been highest among all industries, for natural gas at 4.2 per cent.
SOURCE: The Business Standard
India is committed to an early and balanced outcome of the European Union (EU) Broadbased Trade and Investment Agreement (BTIA) negotiations, Lok Sabha was informed today. Minister of State for Commerce Nirmala Sitharaman said EU BTIA negotiations were underway and 16 rounds of negotiations have been held so far. "Recently, two rounds of stock-taking meetings have taken place on January 18 and February 22, 2016. We are committed to an early and balanced outcome of the negotiations," she said during Question Hour. Issues in the India-EU BTIA talks relate to trade in goods and services, sanitary and phyto-sanitary measures, intellectual property rights, technical barriers to trade, dispute settlement, customs and trade facilitation and procurement among others. Sitharaman said the Trade Facilitation Agreement (TFA) of the World Trade Organisation aims to expedite movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customers and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area. "These objectives are in consonance with India's 'Ease of Doing Business' initiative," she said. The Minister said even though India has ratified TFA on April 22, it will enter into force once two-thirds of the WTO members have completed their domestic ratification process. It is expected that the effective implementation of TFA will reduce transaction costs and improve the overall ease of doing business, she said.
SOURCE: The Economic Times
Amid reports that India has developed cold feet on the India-EU Free Trade Agreement (FTA), the government has accused the European Union (EU) of adopting delaying tactics and not showing any interests in taking the talks further. At the 13th Indo-EU Summit held in Brussels late last month, Prime Minister Narendra Modi and his Belgian counterpart Charles Michel had pitched for resumption of FTA talks on “mutually agreed terms”. According to commerce and industry minister Nirmala Sitharaman, “India has written to EU trade negotiators for dates to resume trade talks, but there has been no response yet”. The minister, who chaired a consultation meeting with economists and media observers on ‘FTAs & India: the way forward’ organised by New Delhi-based think tank RIS, said the perception of India being a laggard on global trade negotiations needs to be fought both by the government and other stakeholders.
Dismissing allegations that New Delhi’s “negative and protectionist” attitude was the reason for delays, Sitharaman said the delays were due to the partner nations who are opposing India’s ‘ambitious offers’ in terms of services and investment. The negotiations are going on for FTAs with EU, Australia and RCEP (Regional Comprehensive Economic Partnership) among 16 nations from Asia-Pacific, also comprising India. Having expertise in the trade of services, India has been proposing for elimination of restrictions on temporary movement of skilled workers in all these FTAs on a mutual basis. According to the minister, countries like Australia, and EU, want removal of tariffs from India on even sensitive products like agriculture and industrial sectors with regard to the proposed FTAs. However, Sitharaman said India will not succumb to such pressure.
EU has been pushing India to agree to lower duties on automobiles as a pre-condition for resuming FTA negotiations. However, according to senior officials in the ministry, India has the right to protect its domestic auto industry. Sources added that the perception that India is indulging in delaying tactics has been compounded by recent comments made by the NITI Aayog, which insisted that India enter into a free trade pact with EU even if the country has to compromise, or else the benefits from rising wages in China will go to nations like Bangladesh and Vietnam. NITI Aayog CEO Amitabh Kant had last week said it was “better to compromise on wine and cheese and on large vehicles to push for our apparel exports with Europe” so that India could penetrate these global markets because “this is one sector which will enable us to create large-scale jobs”.
During Sitharaman’s recent visit to Brussels for the talks on FTA, her counterpart expressed regrets for not making it to the meeting. But the minister met other officials of EU. According to officials, on her return to India, the commerce ministry wrote to EU for setting up dates for taking talks forward. According to officials, the negotiations on the proposed India-EU FTA have been delayed due to the uncertainty over ‘Brexit’, a possibility of Britain leaving EU. Talks for FTA, officially known as the Broad-based Trade and Investment Agreement (BTIA), have been stalled since May 2013, as both sides are yet to bridge substantial gaps on crucial issues , including data security for the IT sector. On the EU side, there are concerns surrounding industries like auto components, wines and spirits, while on the Indian side, there are issues related to visas for professionals, especially those from the IT sector.
SOURCE: The Financial Express
Latin American and Caribbean countries are keen on forging business alliances with India. Speaking at the CII’s outreach programme with the delegation from Latin America and Caribbean (LAC) countries, Villagomez, Ambassador of Ecuador and Coordinator of the Latin American and Caribbean Group, said since the year 2000, Indian companies have invested about $12 billion in the LCA region, in sectors such as information technology, pharmaceuticals, agro chemicals, mining, energy, manufacturing and many other verticals. At Monday’s meet, ambassadors and senior officials from 14 Latin American and Caribbean countries, including Bolivia, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Mexico, Peru, Suriname, Trinidad & Tobago and Venezuela, made presentations on the vast potentials for cooperation between India and the LAC countries. Augusto Montiel, Ambassador of Venezuela to India, while inviting Indian investment in his country, assured India of uninterrupted supply of oil. Melba Pria, Ambassador of Mexico to India, said Mexico is the largest investor from Latin-America, with an FDI flow of over $800 million between 2009 and 2015. India’s FDI into Mexico totalled over $2.5 billion between 1999 and 2015. Trade between the two countries grew 387 per cent between 2004 and 2014, to $6.4 billion.
SOURCE: The Hindu Business Line
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 44.59 per barrel (bbl) on 29.04.2016. This was higher than the price of US$ 43.86 per bbl on previous publishing day of 28.04.2016.
In rupee terms, the price of Indian Basket increased to Rs. 2965.99 per bbl on 29.04.2016 as compared to Rs. 2912.56 per bbl on 28.04.2016. Rupee closed weaker at Rs 66.52 per US$ on 29.04.2016 as against Rs 66.40 per US$ on 28.04.2016. The table below gives details in this regard:
|
Particulars |
Unit |
Price on April 29, 2016 (Previous trading day i.e. 28.04.2016) |
Pricing Fortnight for 01.05.2016 (13 Apr to 27 Apr, 2016) |
|
Crude Oil (Indian Basket) |
($/bbl) |
44.59 (43.86) |
41.08 |
|
(Rs/bbl |
2965.99 (2912.56) |
2732.23 |
|
|
Exchange Rate |
(Rs/$) |
66.52 (66.40) |
66.51 |
SOURCE: PIB
Thanks to fear mongering on the US presidential campaign trail, the trade debate and its impact on American workers is being distorted at both ends of the political spectrum. From China-bashing on the right to the backlash against the Trans-Pacific Partnership (TPP) on the left, politicians of both parties have mischaracterised foreign trade as America’s greatest economic threat. In 2015, the United States had trade deficits with 101 countries—a multilateral trade deficit in the jargon of economics. But this cannot be pinned on one or two “bad actors,” as politicians invariably put it. Yes, China—everyone’s favorite scapegoat—accounts for the biggest portion of this imbalance. But the combined deficits of the other 100 countries are even larger. What the candidates won’t tell the American people is that the trade deficit and the pressures it places on hard-pressed middle-class workers stem from problems made at home. In fact, the real reason the US has such a massive multilateral trade deficit is that Americans don’t save. Total US saving—the sum total of the saving of families, businesses, and the government sector—amounted to just 2.6% of national income in the fourth quarter of 2015. That is a 0.6-percentage-point drop from a year earlier and less than half the 6.3% average that prevailed during the final three decades of the 20th century. Any basic economics course stresses the iron-clad accounting identity that saving must equal investment at each and every point in time. Without saving, investing in the future is all but impossible. And yet that’s the position in which the US currently finds itself. Indeed, the saving numbers cited above are “net” of depreciation—meaning that they measure the saving available to fund new capacity rather than the replacement of worn-out facilities. Unfortunately, that is precisely what America is lacking.
So why is this relevant for the trade debate? In order to keep growing, the US must import surplus saving from abroad. As the world’s greatest economic power and issuer of what is essentially the global reserve currency, America has had no trouble—at least not yet—attracting the foreign capital it needs to compensate for a shortfall of domestic saving. But there is a critical twist: To import foreign saving, the US must run a massive international balance-of-payments deficit. The mirror image of America’s saving shortfall is its current-account deficit, which has averaged 2.6% of GDP since 1980. It is this chronic current-account gap that drives the multilateral trade deficit with 101 countries. To borrow from abroad, America must give its trading partners something in return for their capital: US demand for products made overseas. Therein lies the catch to the politicisation of America’s trade problems. Closing down trade with China, as Donald Trump would effectively do with his proposed 45% tariff on Chinese products sold in the US, would backfire. Without fixing the saving problem, the Chinese share of America’s multilateral trade imbalance would simply be redistributed to other countries—most likely to higher-cost producers. I have estimated that Chinese labor compensation rates remain far less than half of those prevailing in America’s other top-ten foreign suppliers. If those countries were to fill the void left by a penalty on China, like the one that Trump has proposed, higher-cost producers would undoubtedly charge more than China for products sold in the US. The resulting increase in import prices would be an effective tax hike on the American middle class. That underscores the futility of attempting to find a bilateral solution for a multilateral problem. The same perverse outcome could be expected from the reckless fiscal policies proposed by other politicians. Take, for example, the ten-year $14.5 trillion federal government spending binge proposed by Democratic presidential candidate Bernie Sanders—a program judged to be without any semblance of fiscal integrity by leading economic advisers within the very party whose nomination he seeks. Government budget deficits have long accounted for the largest share of America’s seemingly chronic saving shortfall. The added deficits of Sandersnomics, or for that matter those of any other politician, would further depress America’s national saving—thereby exacerbating the multilateral trade imbalance that puts such acute pressure on middle-class families.
Seen through the same lens, mega trade deals, such as the TPP, would also have an important bearing on pressures that squeeze American workers. The TPP would effectively divert trade flows from those countries that are not a part of the agreement to those that are. With China excluded from the TPP, the same phenomenon noted above would result: American middle-class families would be taxed by the diversion of trade away from low-cost non-TPP producers such as China toward higher-cost TPP signatories such as Japan, Canada, and Australia. In short, trade bashing is a foil for the vacuous promises that politicians of both parties have long made to American voters. Saving is the seed corn of economic growth—the means to boost American competitiveness by investing in people, infrastructure, technology, and new manufacturing capacity. The US government, through decades of deficit spending and advocacy of policies that encourage households to consume rather than save, has forced America to rely on foreign saving for far too long. This has undermined US competitiveness, punishing workers with the job losses and wage compression that trade deficits invariably spawn. America’s 101 trade deficits don’t exist in a vacuum. They are a symptom of a deeper problem: a US economy that has lived beyond its means for decades. Saving is but a means to an end—in this case the sustenance of a thriving and secure middle class. Without saving, the American Dream is in danger of becoming a nightmare. The trade debate of the current presidential campaign heightens that risk.
SOURCE: The Financial Express
Donald Trump has accused China of “raping” the US, the sharpest criticism of the Communist giant's trade policies by the controversial Republican presidential front-runner. Trump, a billionaire businessman, compared the US’s balooning trade deficit with China, which he regularly laments and vows to tackle as president, to rape. “We can’t continue to allow China to rape our country, and that’s what they’re doing,”Trump said during his second rally yesterday in Fort Wayne, Indiana, referring to China’s growing exports to the US. Trump, 69, has repeatedly accused China of manipulating its currency to make its exports more competitive on the global market and has claimed that China is "killing" the US on trade. Sunday marks the first time in this campaign that Trump has used the term "rape" to refer to what he views as China's dominance in trade with the US, CNN reported. "We're going to turn it around. And we have the cards, don't forget it. We're like the piggy bank that's being robbed. We have the cards. We have a lot of power with China," Trump said before referring to China's relationship with the US as rape.
Trump added that he is not “angry at China”, but with US leaders whom he accused of being “grossly incompetent”. Latest figures from the US government show the trade deficit with China reached an all-time high of $365.7 billion last year. By February this year, it had already reached $57 billion. Trump previously claimed in 2011 that "China is raping this country". Trump's use of the analogy come as Trump is under fire for remarks he made about Democratic front-runner Hillary Clinton that critics are calling sexist and for touting the endorsement of boxer Mike Tyson, who was convicted of rape in Indiana. Trump has claimed that Clinton -- a former secretary of state, senator and first lady -- is using "the woman card" to get elected and that she would not have a shot at the presidency if she were not a woman.
SOURCE: The Business Standard
Sri Lanka and China will hold high level discussions in June on the possibility of signing a bilateral Free Trade Agreement (FTA), Sri Lanka's Ministry of Industry and Commerce said in a statement here on Monday. "China is a promising market for Sri Lanka's select, premium products such as gems, and an important round of bilateral talks on Sri Lanka-China FTA is scheduled for next month," the statement quoted Rishard Bathiudeen, minister of Industry and Commerce, as saying. The minister said that Sri Lanka was committed to pursuing an outward oriented trade regime following the principles of the World Trade Organization, with a view to enhancing overseas market access for its export products and achieving greater integration into the world economy.
Sri Lanka has already signed free trade agreements with India and Pakistan and both the agreements allow more than 4000 product lines to be exported to these markets at zero duty. "Sri Lanka actively involves in Joint Economic Commissions and bilateral forums with a number of countries in order to enhance our trade and commercial relations," the minister said. He added that trade between Sri Lanka and China crossed the 4 billion U.S. dollar mark last year for the first time in the bilateral trade history, surging by 17 percent from 2014's 3.58 billion U.S. dollars. About 93 percent of last year's total trade was imports from China, mainly iron and steel, fabrics & fibres, cotton and urea fertilizer.
SOURCE: China Daily.
US manufacturing activity rose for a second straight month in April but at a slightly slower pace, as new orders and production fell. The Institute for Supply Management (ISM) said on Monday its index of national factory activity slipped to 50.8 last month from a reading of 51.8 in March. A reading above 50 indicates expansion in the manufacturing sector. A gauge of orders received by factories fell 2.5 points to 55.8 per cent. Manufacturing, which accounts for about 12 per cent of the US economy, has been hurt by weak export growth stemming from a strong dollar and soft global demand. The sector has also been hammered by relentless aggressive spending cuts in the energy sector in the aftermath of last year's plunge in oil prices. Efforts by businesses to reduce an inventory overhang have resulted in fewer orders being placed with factories, causing further erosion of manufacturing.
Economic growth slowed to a 0.5 per cent annualised rate in the first quarter. Given a fairly robust labour market, which is expected to boost sluggish consumer spending, economists expect gross domestic product growth to rebound in the second quarter. The economy grew at a 1.4 per cent rate in the fourth quarter. Prices for US Treasuries fell after the data, as did the dollar against a basket of currencies. US stocks were trading higher. A second report from the Commerce Department showed construction spending rose to an 8-1/2-year high in March and the prior month's outlays were revised higher, pointing to sustained strength in the sector despite a sharp downturn in spending by energy firms. Construction spending increased 0.3 per cent to the highest level since October 2007, following an upwardly revised 1.0 per cent jump in February, the Commerce Department said on Monday.
Economists polled by Reuters had forecast construction spending rising 0.5 per cent in March after a previously reported 0.5 per cent decline in February. Construction outlays were up 8.0 per cent from a year ago. Though February's outlays were revised higher, construction spending for January was revised down to show a 0.3 per cent drop instead of the previously reported 2.1 per cent increase. In March, construction spending was supported by a 1.1 per cent surge in private construction, which hit its highest level since October 2007. Outlays on private residential construction increased 1.6 per cent. Spending on private non-residential structures, which also includes factories and offices, advanced 0.7 per cent to its highest level since October 2008. Public construction spending fell 1.9 per cent in March as outlays on state and local government construction projects, the largest portion of the public sector segment, declined 1.4 per cent. Federal government construction spending tumbled 7.4 per cent in March.
SOURCE: The Business Standard
China yesterday replaced all business tax with a value added tax (VAT) after extending the policy to cover four new sectors of construction, real estate, finance and consumer services, as part of reform agenda to halt economic slowdown in the world’s second biggest economy. The inclusion of the four remaining sectors will bring almost all goods and services under the VAT cover and is expected to save Chinese businesses billions of dollars. VAT refers to a tax levied on the difference between a commodity’s price before taxes and its production cost. Revenue tax refers to a levy on a business’s gross revenues. The expansion of the VAT scheme is expected to ease tax burdens by more than 500 billion yuan (USD 76.9 billion) this year. China’s service sector is increasingly picking up the slack of manufacturing as it shifts towards a more sustainable growth driven chiefly by consumer demand.
Expanding VAT to more service sectors is also part of the supply-side structural reforms authorities have been promising since last year to address the structural imbalances in the Chinese economy. The reforms were launched as Chinese economy last year slipped to 6.9 per cent and the government has fixed 6.5 to seven per cent as GDP target for this year. The pace of Chinese growth last year was at its weakest since 1990. The slowdown had prompted the International Monetary Fund to cut its global growth forecasts for China to only 6.3 per cent in 2016. “We now have to pay an 11-per cent value-added tax compared with 5.5 per cent business tax in the past. It appeared that the tax rate had increased but the base on which the tax is collected has shrank so ultimately our tax burden is reduced,” state-run Xinhua news agency quoted a treasurer with a construction firm. The VAT scheme first started in 2012 as a pilot program in Shanghai, covering a number of services including transportation, IT, and logistics. It was later expanded nationwide and to cover other businesses. Over the past four years, the VAT scheme has saved 640 billion yuan in taxes for businesses.
SOURCE: The Tecoya Trend
