The latest trends in the world of trade

Asia/Pacific

Nothing comes

between me and my Intel jeans?

So, when did Intel begin making jeans, Rolex start rolling out cigarettes, and Sony undertake undergarments? These and other well-known consumer brand names are appearing on all sorts of products in Indonesia. Trademark infringement has been the ire of foreign manufacturers for years when it comes to Indonesia. At last, the country's legal system has begun taking steps towards curbing the practice. A recent ruling by the Indonesian Supreme Court in favor of Britain's Imperial Tobacco Group PLC, has awakened cautious optimism from foreign manufacturers. Specifically, the court ruled that Sumatra Tobacco Trading must stop using the Davidoff brand name. This is only the first step towards combating years of gross trademark piracy in a country where the legal system has virtually turned a blind eye to violators of international trademark laws. If other courts in the country uphold the precedent, foreign investors may begin to feel slightly more confident in the legal system's intent to crack down on piracy. In turn, that could help put a dent in the country's high unemployment rate.

DaimlerChrysler joins China's driving

economy and

appetite for luxury

China's thriving economy is putting more money in the pockets of Chinese citizens, while taking them off the bicycle seat and behind the car wheel. The country's sustainable economic rise has created wealth, and where there's wealth there's a taste for the good life, particularly luxury automobiles. DaimlerChrysler has partnered with Beijing Automotive Industry Holding Co. in a $1.11 billion deal to produce the Mercedes C Class and E Class sedans in China. Along with the luxury sedan, the company plans on producing a higher end truck in what has become the world's largest growing truck market. The race by automakers to cash in on the nouveaux riche's disposable income may stall future sales, though. According to a report by KPMG, China may face an oversaturated auto market within the next two years-dismal news for such companies as Toyota Motor Corp., General Motors, Ford Motor Co., Volkswagen AG, Bayerisch Motoren Werke AG, and now DaimlerChrysler AG, all of whom already have a presence in China. With a growing inventory of autos on the market, price wars are undoubtedly down the road. Industry executives predict that automobile prices will drop at a rate of 6 percent per year. Furthermore, a glut in the auto market may prompt the Chinese government to implement new restrictions such as higher tariffs on imported parts.

U.S. trade interests

target China for

trade sanctions

The National Association of Manufacturers (NAM) is spearheading an effort to file a trade complaint with the Bush administration to halt China's "illegal currency manipulation." With support from a host of U.S. industrial and agricultural groups, as well as trade unions, NAM hopes to develop a "Section 301" trade action against China for its policy of pegging the value of its currency to the U.S. dollar, which the group says constitutes an unfair trade practice. The complaint must first be filed with the U.S. Trade Representative for investigation. Afterwards, it can be filed with the WTO by the Bush administration, which could prompt the WTO to stage talks on the issue and maybe even result in sanctions. At the same time, Japan, South Korea, and Taiwan were also blamed for similar illegal currency manipulations, although China remains the worst offender. By keeping its currency at "40 percent below its market value," China, in particular, has severely hurt U.S. exports, stated a resolution introduced by several members of the U.S. House of Representatives. The resolution added that the illegal currency manipulation has contributed "significantly" to the loss of 2.7 million American manufacturing jobs since the summer of 2000. Rep. Don Manzullo, R-Ill. and chairman of the House Committee on Small Business, said economists have calculated that illegal currency manipulations give products from Asia a 15%-50% competitive advantage over U.S. manufacturers.

Americas

Wharton's M.B.A.

program takes the

top spot

This year's survey of the leading business schools by the Wall Street Journal/Harris Interactive ranks the University of Pennsylvania's Wharton School as number one. Wharton is the world's oldest business school, founded in 1881. Corporate recruiters voted on an array of criteria, including students' financial and analytical skills, financial and ethical accountability, leadership potential, fit with the corporate culture, as well as the school's "mass appeal" to recruits. With the current spotlight on the merits of corporate responsibility in the business world, it was perhaps expected that this year's results would bode well for those programs with a strong emphasis on ethics and accountability. Conversely, the survey of corporate recruiters revealed that student arrogance was frowned upon while schools with more well rounded students made points. The top 10 schools in order of their ranking are: 1) University of Pennsylvania (Wharton School); 2) Dartmouth College; 3) University of Michigan; 4) Northwestern University; 5) University of Chicago; 6) Carnegie Mellon University; 7) Columbia University; 8) Harvard University; 9) Yale University; and 10) University of North Carolina at Chapel Hill.

Europe

EU's proposed

regulations could burn U.S. chemical industry

The European Union, the world's second largest economy, is proposing strict regulations that could have profound implications for the U.S. chemical industry. In an effort to lower healthcare costs in the range of $18 to $54 billion over the next 30 years, the EU is proposing that tens of thousands of chemicals be tested for environmental and health hazards. The Bush Administration is backing the chemical industry, including Dow Chemical Co., Rohm & Haas Co. and Lyondell Chemical Co., in its fight to stop approval of the legislation. According to the American Chemistry Council, the regulations could cost the industry approximately $8 billion dollars to test targeted chemicals over the next 10 years. This could force some companies, particularly those who specialize in certain chemicals, to go out of business while preventing others from doing business with the EU. In an effort to gain support against the EU's proposal, the U.S. is rallying support from other countries such as China, Canada, Japan and Brazil, whose chemical exports industries will also be affected. For their part, environmentalists are hoping the EU's initiative will be approved, following years of fighting the chemical industry giants to try and stop potentially hazardous chemicals from being used. A final version of the EU's proposed regulations, known as REACH (Registration, Evaluation and Authorization of Chemicals), is due to be released this fall.

Europe will contribute little to global

economic recovery, says Fitch Ratings

International ratings agency Fitch Ratings says that debt-laden European countries won't be much help towards a global economic recovery. Budget deficits in Germany and France as well as high levels of consumer debt in the UK were examples of Europe's problems, but they weren't the only drag on an economic recovery. The agency's semiannual review also said the U.S.' widening budget, lower tax revenues due to tax cuts, and mounting government debt will temper the turnaround. In fact, most every region of the world provides challenges, according to the review. Asia's "reliance on the U.S. as the sole engine of growth renders the global recovery more vulnerable to being derailed," stated Fitch's economists, who also expressed concern about the region's political stability. "A number of countries face elections in 2004, sporadic terrorist events persist and tensions remain unresolved on the Korean peninsula," the review concluded.

Middle East/Africa

A chance for

economic growth amidst the conflict

Although it seems at times that the Middle East is more about political conflict than economic opportunity, beneath the turmoil there exist signs of healthy economic developments. Egypt, the Palestinian territories, Jordan, and Israel are some of the shining stars in a region that holds 8 percent of the world's population. Although dwindling tourist dollars and stagnant foreign investment have hurt countries like Egypt, the country's $100 billion (GDP) economy is exhibiting signs of moderate growth. Other developments, such as the Palestine Investment Fund, organized by Salam Fayyad, the finance minister of the Palestinian Authority, which rules the West Bank and Gaza, has more than a few people impressed. Monies collected from its citizens ($600 million), which previously were used at Chairman Yasser Arafat's discretion, are now being invested directly into local companies. Oversight of the fund is coming in part from the Los Angeles-based Democracy Council, whose president, James Prince, has his sights set on creating a border company for Gaza to perform freight and security services on the 500 trucks that cross the Israeli border daily. Meanwhile, the two-year old U.S.-Jordan free trade agreement is starting to pay off for the textile and apparel industries. Also encouraging is the cooperation between Israel and the Palestinian Authority on a water treatment project, which is also receiving support from the Milken Institute in Santa Monica, California. Now, that's growth.

WTO clears the way

for Africa to import generic versions of patented drugs

The WTO has relaxed intellectual property rules to allow African countries to import generic drugs for fighting serious diseases like AIDS, tuberculosis, and malaria. "It's especially good news for the people of Africa who desperately need access to affordable medicine," said Kenyan Ambassador Amina Chawahir Mohamed. U.S. drug manufacturers had been reluctant to agree to such a deal, and the issue has been deadlocked since last December. Among the deals' provisions: A country can issue a "compulsory license" to import a drug if it confirms it "has insufficient or no manufacturing capacities in the pharmaceutical sector for the product(s) in question." The agreement does not make restrictions on which drugs or diseases are covered; the license only covers the amount of the drug needed by the importing nation, and the specifics must be posted on a web site and the WTO notified. wt