While responding to the GT reporter Li Yanjie’s query about the investment environment in N Korea, Gao said North Korea had low credibility. However, he admitted though in the short term there was a high level of risk, but in the long term Chinese companies might benefit from investing there.

The history of Sino-North Korean trade dates back to 1954 as China’s Ministry of Foreign Trade, as it was then known, approved border trade between both sides in regards to local residents’ demands for food items. At that time, China’s main exports to North Korea were clothes, paper, textile pigments and other light industry products, and China imported seafood and fruits from the North.

Between 1971 and 1981the trade was interrupted, it got revived since 1982 to hit a trade volume of about $540,000, and grew manifold to reach at around $52.08mn in 1989. According to the Dandong statistics department, the trade volume between Dandong, the main border province and North Korea increased from $15.39mn to $314mn between 1990 and 2004.

At the beginning of the 1990s, the bilateral trade accounted for only 11.6 percent of North Korea’s total foreign trade volume. But by mid-1990s, the border trade reached around 30 percent of North Korea’s total foreign trade volume. However, North Korea’s economy went through a recession during the latter half of 1990s, causing slide in trade.

Gao further added that since 2001, Sino-North Korean trade volume had grown rapidly due to two reasons, one being economic sanctions, and other as China needed the Korean mineral resources in exchange of food. According to the statistics from China’s Ministry of Commerce, by 2007, the two-way trade has reached 41.71 percent of North Korea’s total foreign trade volume.

Although the recent accidental killings of three Chinese by the North Korean border guards have earned nation-wide ire from the people of China, the ties seemed to be strong as North Korean administration is purportedly willing to reciprocate to any Chinese call amicably. Furthermore, Pyongyang has no option other than yield to any kind of Chinese pressure, if applied, as it is hugely dependent on China in diplomatic and trading needs.

Toboc Trade News

Interestingly, an internal Pentagon memo, states that Afghanistan could become the “Saudi Arabia of lithium,” a key raw material in the manufacture of batteries for laptops and mobile phones. It also reports that the country is home to previously unknown deposits — including huge veins of iron, copper, cobalt, gold and large deposits of niobium, a soft metal used in producing superconducting steel, besides lithium.

The memo compels to probe, what is Pentagon’s task in Afghanistan? Is it mining, peace-keeping or capturing the elusive terrorists? The timing of the announcement also induces the misgivings on the veracity of the study as well as the US interest in the country. Is the US trying to stay longer in Afghanistan on this pretext to thwart the increasing presence of the regional powers, China and India, by providing business options to the county?

In November, a 30-year lease, to start mining copper in the Aynak valley, southwest of Kabul, which holds one of the world’s biggest untapped copper deposits, was sold to the China Metallurgical Group for $3bn, making it the biggest foreign investment and private business venture in Afghanistan’s history. Likewise, post-Taliban, India is also heavily involved in the re-construction and development of Afghanistan’s infrastructure.

The retrospective chronicling of the events on the recent discovery compel to call for more queries. Why Russia did not show much interest in Afghanistan despite having the cognizance of country’s rare mineral wealth?

According to the study, while leaving Afghanistan in 1989 after nearly a decade-old occupation the Soviets left behind a horde of old charts and data hinting on the massive mineral deposits in the country. Incidentally, it says, it was with these data, the US Geological Survey began a series of aerial surveys of Afghanistan’s mineral resources in 2006.

Consequently, it establishes a fact that the US entered Afghanistan with prior knowledge of potential mineral wealth in the country. If there is truth in the find, then the Afghanistan’s new found fortune fuels the perception that any ‘offensive’ war includes an exploration agenda for natural resources or knowledge treasure trove behind it whenever any country initiates a war in a foreign land, especially a far-off one.

Toboc Trade News

The Trade Minister’s words were marked by clear ideas on which the country’s economic path would be paved in the coming years regardless of its size. He said NZ started its reform process 30 years ago with very high protectionist barriers but now was solidly centred on reciprocal trade liberalisation.

Groser shifted his focus from the FTA talks to WTO negotiations and expressed dismay over the inertia at the WTO. He said the WTO negotiating process was suffering from sclerosis, and criticized the WTO Director General’s use of the metaphor of having done 80 percent of the negotiation. He added that but last 20 percent or whatever number one chose to illustrate the remaining negotiating gap – was proving elusive.

He arrayed data on NZ trade policies including the collective effort in the early 1990s that it would not put all its eggs in the then GATT or now WTO basket. He pointed out since then, while emphasising multilateral trade policy, successive NZ Governments had aggressively and successively pursued a bi-partisan strategy of developing FTAs with economies which were either major trading partners or promised to be – i.e. the emerging economies.

“All projections suggest that in even twenty to thirty years’ time, the countries with the largest populations will have the largest economies. We will be living in a truly multi-polar world in which we are highly likely to have four economic super-powers with huge populations (China, India, the US and the hybrid model of the 27 Member EU) plus a range of very significant economies on a second tier including Japan, Korea, Indonesia and, of course the other of the so-called ‘BRICs’ – the formulation that includes not just China and India but also Brazil and Russia”, claimed Groser.

The gist of the address disclosed that NZ current FTAs including China, Thailand, Singapore and Chile and future FTAs or any other trade deals were and will be designed to follow an extreme application of what is called ‘first mover advantage’ strategy – getting in first, to avoid the possibility of being left to last.

NZ is the first developed country to have established a comprehensive FTA with China. Besides, NZ has negotiated a parallel FTA with Hong Kong – NZ is the only country in the world so far, other than China itself, to have such a relationship.

At a glance, the NZ-Russia FTA opens up business opportunities for not only the NZ dairy industry but also extend to other areas such as agro-tech, tourism and education. New Zealand’s exports to Russia are worth NZ$187mn ($127mn) last year, of which about two-thirds are dairy products. That’s just a fraction of the more than the $30bn of food Russia purchases annually.

Toboc Trade News

Ahead of Sri Lankan President Mahinda Rajapaksa’s visit to India next month, hundreds of protesters took to the streets against the proposed trade pact, claiming it would hugely benefit the neighbouring country by forcing the domestic industry into appalling risks. The CEPA which was supposed to be signed two years ago is likely to come to fruition during Rajapaksa’s visit to New Delhi on June 8.

Many highly educated, including doctors and engineers who were part of the recent protest along with businessmen fear that the island could be dominated by cheaper and skilled Indian services at the expense of the domestic industry. But this argument is unfounded as India’s educated unemployed were largely jobless because their reluctance to work for less or in remote places. Moreover, Sri Lanka being a country less than half the currency value of India would not have to panic about the products or services from India going cheap rather can ensure superior quality which could help the country build its economy on a firmer footing.

The Indo-Sri Lanka Free Trade Agreement (ISFTA) signed in 1998 and which is effective since March 1, 2000 has been able to boost trade between both nations significantly with near equal opportunity for the Sri Lankans. The ISFTA that is confined to the trading of only goods pushed country’s exports by manifold from $55.7mn in 2000 to $516.4mn in 2007.

On the contrary, in 2002, the traded volume between China and Sri Lanka totalled about $350mn, of which China’s exports accounted for $340mn providing room for Sri Lankan exports at about a meagre $10mn. Although Sino-Lankan trade witnessed tremendous growth over the years with bilateral trade crossing $2bn in 2009, imports from China remained predominately greater than the efflux.

Toboc Trade News

China’s State Council on its last Thursday’s release said the government encouraged private investment in domestic oil and gas exploration and crude oil, natural gas, refined oil storage and transportation and pipeline transportation facilities and networks. China’s strategy to bring private players to the energy sector in a big way is regarded as an attempt to support its economy that is projected to grow more than 10 percent, eventually increasing energy needs.

Zhao Youshan, head of the Commercial Petroleum Flow Committee of China, opined the involvement of private oil enterprises in the national strategic reserve of oil could relieve the pressure of oil exploration and production to some extent. Currently, all prospective domestic oil and gas blocks are owned by the state. The new oil and gas directive is likely to allow private enterprises to have significant stake in domestic oil and gas exploration as well as production.

According to Beijing Times, the enterprises bidding for the project should meet certain criteria, such as the volume of a single oil storage tank should be no less than 10,000 cubic meters. Though the reserve capacities of private enterprises are comparatively small, the private players seemed to be eager to join the national oil reserves with state support including finance, infrastructure and easily adaptable laws.

At present, the private enterprises involved in the supply of crude oil is very limited since they are stipulated to import 2,530 tons of crude oil per annum or about the daily imports 500,000 barrels. However, the private participation in oil and gas sector comes at a time when the country plans to augment the use of non-fossil fuels from the current 8.5 percent to 15 percent by this year end.

Toboc Trade News

According to sources, the US cotton industry, the largest producer is experiencing unexpected orders from China and Bangladesh. This new development at the cotton front has also pushed up demand for West African cotton. If the ban sustains for a longer period it may even help Australia and Brazil to chip in to the demands of the Asian buyers.

The global prices of cotton also witnessed sudden rise soon after the announcement of India’s ban on its cotton exports, a decision made to mitigate domestic yarn spinners’ woes. China, Bangladesh and Pakistan rely on India particularly due to low prices and inexpensive procurement overheads.

China is the largest importer of cotton, and its imports are estimated at 9.5mn bales per annum. Furthermore, China’s cotton demand is mainly met through the supplies from Indian cotton growers. Until India takes a review on the ban in favor of exports, which it does based on periodical production status; China along with other countries will have to procure cotton for higher prices.

But the Cotton Association of India fears that the ban may damage the reputation of India as an authentic source for cotton procurement in the future. Moreover, it is not clear how India’s cotton shipments would double to some 8mn bales by September this year as last month forecast by India’s Cotton Advisory Board (CAB).

Some figures show the US, Brazil and Pakistan have no surplus cotton, while China’s cotton acreage has dipped 10 percent this year. As per CAB, India has estimated cotton crop close to 30mn bales for 2009-10.

Toboc Trade News

In 2007, Bush administration began negotiations on ACTA particularly to contain several developing countries engaged in piracy acts, and to protect the interests of leading US firms which lost their price competitiveness on account of counterfeiting. Incidentally, the ACTA effect will not be restricted to internet activities alone but extends to counterfeit pharmaceuticals, designer merchandise, music, movies, etc.

Surprisingly, the final draft will not have the endorsement of China, one of the largest counterfeit producers. Hence, looking back to past events on taking action against China in regards to infringements, the trade pact is expected to encounter similar stalemate while implementing a likely ratified deal. Participants in the negotiations included Australia, Canada, the European Union, represented by the European Commission, the European Union Presidency (Spain) and EU Member States, Japan, Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland and the US.

Many ACTA dissidents blame the secretive or undemocratic nature of reaching the agreement by not revealing the details for public discussion. On the other hand, WIPO provides scope for public scrutiny with an added advantage of the inclusion of major counterfeiting countries in negotiations.

Meanwhile, the tech firms are understood to be apprehensive about ACTA’s secondary liability clause, which recommends the responsibility of copyright infringement behaviour of the user on the online service provider. The clause will possibly affect social networking sites, video-sharing sites and several other user-generated content sites including the online encyclopaedia, Wikipedia.

Last month, a statement signed by senior trade-union officials from New Zealand, Australia, Singapore and the US raised the question of intellectual property rights becoming an element in the free-trade negotiations. However that fear is put to rest by officials at the eighth round of ACTA negotiations calling the deal as a ‘standalone’ one, and would not tinker with FTAs.

According to sources, the draft will leave out three-strikes provision that would require border agents to search the contents of electronic devices. Experts term three-strikes a preposterous idea as it would virtually bring every transit cell to a standstill.

Toboc Trade News

As per the latest updates on volcano, many of Europe’s busiest airline routes will remain closed until Saturday. Furthermore, if one goes by the volcanologists warnings, the eruptions could continue on-and-off for months, potentially meaning continued delays and closures. It is estimated just three days of air traffic closure alone will take months for the aviation industry to recover from the mammoth losses.

The Centre for Asia Pacific Aviation or CAPA figures show that some six million passengers could be affected world-wide if the closures continued for up to three days. The volcanic clouds spewed above 30,000 feet have forced air travel virtually impossible as the jet engines could be shut down if they sucked in volcanic debris.

High-flying volcanic ash consists of extremely fine silica particulates that could easily enter jet engines, which operate at temperatures of about 2,500 degrees Fahrenheit. Silica melts at about 2,000 degrees, and at that point it fuses to turbine blades, nozzles and other critical engine parts, causing the engine to clog, overheat and eventually shut down.

It is now evident that the losses to the aviation industry and auxiliary ones would run into billions of dollars. London’s Heathrow Airport, which is the worst affected due to the second Iceland’s volcanic eruption, itself clearly supports to that logic since one of the world’s busiest airport manages more than 1,200 flights and 180,000 travelers per day. And any delay to the resumption of air travel and cargo movement is bound to create grievous financial problems to the industry which is showing some signs of revival along with global trade after the meltdown.

Toboc Trade News

During the meet, the Chinese premier announced that his country would continue to encourage its enterprises to invest and increase trade with Vanuatu primarily to improve the island nation’s business capabilities. Wen further added that his country was committed to proceed with comprehensive aid package to Vanuatu without any quid pro quo arrangements.

While Natapei reciprocated by saying his country would like to strengthen communication and coordination with China in addressing financial crisis and climate change. Both the premiers were present at the signing ceremony of bilateral agreements on economic and technological co-operation.

Wen observed that the developing countries, in particular, the least developed ones, small island states and African countries, have suffered a lot from global issues including financial crisis and climate change. And therefore he felt, the international community should give meticulous care to countries like Vanuatu to ensure a balanced and sustainable development of the world.

China has confirmed that it would co-operate and support technologically, technically and financially to improve Vanuatu’s citizens’ livelihood along with an accent on infrastructure and personnel training promotion, to enhance the country’s self-development capabilities. It said that it would try to create several platforms for people to make social exchanges to strengthen bilateral ties.

Vanuatu, an island nation situated in the South Pacific Ocean, off Australia also maintains strong economic and cultural ties with Australia, France, New Zealand and the UK, though it stopped direct aid since 2005. Australia continues to provide support to Vanuatu since its independence in 1980, the bulk of external assistance, including to the police force, which has a paramilitary wing.

Besides his visit to Beijing, Natapei would be covering cities including Changsha, Guangzhou and Shenzhen. He hopes to utilize china’s expertise in different fields for the development of his country through this trip.

Toboc Trade News

The president of the Washington Apple Commission (WAC) Todd Fryhover said Iraq and Iran could be future expansion points for the otherwise stable but highly competitive Middle East market for Washington apples. Likewise, he informed apple exports to China and India from Washington were likely to double as these countries had large populations with increasing purchasing power.

The WAC identifies that direct access to these markets are key to increase sales. Washington shipped 1.9mn boxes of apples into Hong Kong and China in the 2008-09 sales season and that could double if “we had full varietal access,” Fryhover said. Under the prevailing agreements, Washington can export Red and Golden Delicious apples directly into China, but Gala, Granny Smith and any other varieties are not allowed. And these varieties reach China through the grey market route of Hong Kong.

According to the WAC figures, India’s appetite in the last five years increased significantly to 1.75mn boxes of Washington apples in the 2008-09 sales season. Higher buying power and lower quality of domestically sourced apples were the major factors cited as the reasons for tremendous acceptance of Washington apples in India despite very high customs duty.

Fryhover said Iraq already receives some Washington apples through Dubai, re-exporting centre of the UAE and Kuwait, but Iran did not have any such source. Iran being the second largest populated country of the Middle East after Egypt, which has two to three times more buying power than the Egyptians hold potential provided the Washington apples get direct access. Similarly, the changing trends in Iraq also will be explored through its efforts in the Middle East.

Last July, the WAC has tied up with the Arab Marketing Financing International (AMFI) to boost its presence in the Middle East. The AMFI, a Beirut-based company, with promotional representatives in Dubai, Saudi Arabia and Egypt, takes up the responsibility of marketing of the apples through retail displays and consumer awareness about the Washington variety.

Currently, Dubai is the re-exporting portal for Washington apples into Saudi Arabia, Kuwait, Sudan, Qatar, Oman, Yemen and Jordan. And about 1.8mn boxes of Washington apples were sold to Dubai in the 2008-09 sales season.

Toboc Trade News

Along with changes in trade policies which would help exports from developing countries the Chinese manufacturers also will get incentives to maintain price competitiveness in the global markets. China’s exports, which experienced robust growth of more than 25 percent before 2008, dropped by 16 percent last year.

Chinese Commerce Minister Chen Deming at the sidelines of the meet stated all China’s financial policies, including its devalued status of yuan/renminbi, were part of China’s stimulus package comprehensively designed to counter global economic meltdown. He also defended the subsidies, claiming the stimulus incentives “abide by the rule of the World Trade Organisation and bear no protectionism.”

While announcing the policy statement, China admitted that it would “eliminate unreasonable restrictions” on the import front. A re-look at this policy comes after repeated complaints from India to its Chinese counterparts at every platform they met. The policy statement said “imports from developing countries will be expanded so as to satisfy domestic demand on the one hand, and promote mutual benefits and common development on the other.”

Zhang Zhigang, a member of the CPPCC said that if the country wanted to encourage consumption, exports were “vital”. Likewise, Chen said that export-related sectors provide at least 90mn jobs – about 7 percent of the national population – and therefore affect consumption.

Barring surprises, most members during the meet felt export was key to China’s economy indicating the most censured yuan’s low currency value that is tied to the Chinese export advantage would be moreover the same for the coming months until it gets even with its early 2008 export growth. Chen statement corroborates that fact as he said “although yuan faces appreciation pressure, China still plans to keep the exchange rate of yuan stable”.

Toboc Trade News

The US government is understood to have responded to the call by Google to include Internet Access Freedom (IAF) as an international trade policy of the country. Nicole Wong, Google Vice President and Deputy General Counsel had urged earlier an open internet should be part of the US trade agenda as economic impact of censorship was huge on e-commerce as well as other companies which used Web services.

In January, Google.cn, the China version of the Google search engine announced it was considering pulling out of China after its portal along with some other 20 tech companies including Adobe, Yahoo and Intel was attacked by allegedly state-sponsored hackers. Though China has denied any such interception, but some companies who were victims of these attacks claim they have ample evidence to prove the government’s hand in this deplorable crime.

Google felt betrayed by the attacks, which resulted in the firm losing some intellectual property, despite compromising on internet freedom during the time of launch by signing an agreement with China in 2006. Under the controversial bargain, Google agreed to censor search results by prompting the users at the bottom of censored pages that results were withheld at the request of the Chinese government.

However, approaching the WTO to settle the issues related to the Chinese internet policies does not ensure any speedy outcome as trade disputes before the global trade body normally takes two or more years to litigate and appeal. Incidentally, according to the China Internet Network Information Center, a government agency that registers online domain names, China is the world’s biggest Internet market, with 384mn Web users at the end of 2009.

Toboc Trade News

The decree stipulated that any cash in excess of a certain limit would become invalid. This in turn forced citizens to convert the old won to goods including electronic items, kitchenware and so on to avoid losing their lifetime earnings. The Tribune News Service reported the price of rice last month in the North rose tenfold at private markets, and residents hoping to purchase food often had to wait in line for hours in subzero temperatures.

The North Koreans largely saved money in the physical form as they mistrusted state-run banks. Song Jung-su, a former railroad security official who defected from the North in 2006 but who is still in touch with his relatives apprised that the wresting of people’s life savings by the totalitarian government had made many to commit suicide.

The currency change is understood to have designed in a bid to check inflation as well as to re-establish Communist Kim Jong-Il regime’s control over the economy that was slipping from its hand for sometime from now to the increasing free market forces. As the direct fallout of the redenomination debacle, the dictatorial government has shown the door to the Workers’ Party finance and planning department chief Pak Nam Gi, the one who spearheaded the currency revamp. It is been rumoured that Pak has been made a whipping boy in an attempt to save the heir apparent to the Kim Il-sung dynasty, Kim Jong-Un, the third son of the current leader.

A diplomatic source is understood to have informed Chosun Ilbo newspaper that if the redenomination had been a success North Korea would have attributed it to the leadership of Jong-Un and used it to justify a third-generation succession. The situation is believed to have made worse by an order which permits shops to be opened only for four hours a day and operated by women above 40, and many have already downed shutters.

The North which is reeling under the pressure of hyperinflation has witnessed sporadic violence where any protest against the state is meted out with death penalties. Such incidences clearly indicate that people do not fear for their lives anymore as many feel they have already lost almost everything. The move which was supposed to curb rising prices backfired as the limited supply of goods in the public distribution system failed to keep up with the demand.

Ever since the formation of the North, it has largely suffered while yielding to be misused by failing states and emerging powers as a deterrent to the constantly intervening Western interests in the regional affairs. The Communist Korea has relied on the overseas essentials aid since the mid-1990s, when the economy crumpled owing to famine and mismanagement, which wiped out 2mn people. The absence of aid from the former and now defunct Soviet Union has also made it worse since then for the Stalinist state.

A state that used most of its revenues to build defense infrastructure is already facing the UN sanctions for its recent nuclear test. Prima facie, its economy looks frail with the country’s latest suicidal redenomination move. It is hoped that both the international community and the North Korean government would come to their senses to save the people of this failing economy.

Toboc Trade News

According to sources, the department responsible for business registration and regulation of China is likely to charge a registration fee between $15 and $30 depending upon the area of business. Similarly, sales tax of 3 percent will be charged on total online sales.

Though Beijing province promulgated similar registration and taxation process back in 2008 none of the online firms got enrolled in the program till date due to non-enforcement of the rule. An official of the Beijing Bureau of Industry and Commerce, Wu Song stated that all internet business entities should be in accordance with any other businesses in the country.

However, there was no confirmation on how the department would tackle those who infringe on the law. It is been assumed that the penalties would range from onsite warning that could damage the reputation of the firm to complete shutting down of the access to the respective perpetrator’s portal.

A recent release by an online marketing research firm, iResearch says that the online revenue generated in the country from advertising, games and shopping totaled about $11bn last year, up by 30 percent. Besides, the company is upbeat on the prospect of online revenue generation to grow by 51 percent to reach $16.5bn this fiscal.

On the flipside, some fear that the new regulation on e-tailers would hamper the industry’s stupendous growth as startup cost and prices of the merchandise on offer would rise significantly. Currently, online stores offer lower prices than the physical ones.

Nevertheless, another school of thought feel the new regulation would substantially reduce online frauds, and would rather streamline the industry. Online stores have negligible or no inventory cost, and therefore, they are able to offer products for lower prices as compared to its brick and mortar counterparts.

The figures from the Beijing Bureau of Industry and Commerce show that around 4,700 complaints on e-tailers were investigated in Beijing alone in 2009, with 1,067 prosecuted. The county which has close to 400mn internet users has today more than 1mn online stores to shop from.

Lately, China has taken several initiatives to regulate internet activities including alleged disinformation campaigns; and the new proposal is largely designed to protect consumer rights. According to China Internet Network Information Center, combined retail sales amounted to only about 2 percent of total retail sales of consumer goods in 2009, and the online retail sales grew 94 percent in the year to total $36.6bn.

Toboc Trade News

Sharma who was in China to attend the eighth Joint Economic Group dialogue urged the host country to remove tariff and non-tariff barriers on import of Indian rice, fruits and vegetables. He also requested to facilitate landing rights for Indian TV channels in China, and the import of more Indian films.

Sharma informed that New Delhi had doubled its foreign workers visa quota to 40, a decision that likely to help more Chinese firms than any other. However, the number of immigrant workers is still not allowed to exceed more than one percent of the total number of workers employed in any project. While China’s Commerce Minister Chen Demin reciprocated by saying that Indian workers would also get visas on liberal basis.

During the meet, Wen showed keen interest in improving bilateral ties with India and said that only if India and China shared common development platform that they could translate this century into an Asian one. Similarly, Sharma said the time for exclusivity in the international governance structure was over; and both nations would have to be at the front of a new global governance architecture.

After meeting several Chinese leaders, Sharma claimed the meet was very positive and substantive as it covered every component of the bilateral ties. He said that he received assurance from Beijing to encourage the Indian firms in the information technology, pharmaceutical and construction sectors to work with local partners to have ‘more presence and access’ in China.

In 2008–09, China exports to India stood at about $27bn while India’s remained around $11bn. China and India plan to take advantage of its vast consumer base of about 2.5bn people which could be larger than any bloc or region excluded of these two nations.

Toboc Trade News

According to Gartner, the most affected by the onslaught of knock-offs is Nokia but others such as, Sony Ericsson, Motorola and Samsung are also hit. The largest origin of counterfeits is from China, and absence of stringent laws created an environment for these illegal businesses to thrive in these countries.

Almost all the models of leading firms are available in the market within days of the launch either in same or similar names. Interestingly, most of them came with an extra feature of dual SIMs or Triple SIMs combined with GSM and CDMA options.

Although these knock-offs shared all the functions of the originals, the camera and music system distinctively lacked quality. Nevertheless, a quarter or below the price of the originals attracted customers from within China, the largest cell phone market, and from places including India, the Middle East, Africa, Russia and even the US.

The entry of the Taiwanese semiconductor design firm, Mediatek in 2005 became a game-changer to the industry as they manufactured circuit boards those mimicked the branded ones’ functions at a very low cost. Gartner analyst Carolina Milanesi said Between 80 and 90 percent of Mediatek’s products were used in the grey market. The timeline corroborates Milanesi’s statement as the fakes from around 37mn units in 2005, quadrupled growth by 2009.

Contrary to Gartner estimate, Richard Windsor, a tech expert at Nomura Investment Bank observed that this year Mediatek would sell about 350mn mobile phone chips, and 250mn of these would go into the illegal market. Major factors that helped businesses in China to venture into this grey area seemed to be the availability of raw materials, low cost of setting up a factory, manpower below 10, laws which allow running unlicensed and Mediatek chips.

Even Chinese mobile phone producers are losing market share to these illegal enterprises which have a built-in cost advantage because they evade taxes, regulatory fees and safety checks. The legitimate cell phone makers in China should shell out about 17 percent of their revenue as value added tax.

The only hope now for the cell phone powerhouses to counter the growth of grey market falls on the enforcement of laws from governments by discouraging practices including illegal manufacturing, sales and tabs on usage. Though recent India government’s decision to bar calls from phones without the IMEI code is for internal security, it is expected to contain the menace of illegal phones to a certain extent in this emerging cell phone market.

The IMEI or International Mobile Equipment Identity code allows identifying the device in the mobile phone network. The counterfeits either do not have an IMEI code, or it has been forged.

Toboc Trade News

Xu said the Chinese enterprises should conduct adequate market research and give punctilious care to the latest policy changes of individual ASEAN member states to improve the quality and efficiency of bilateral trade. The CAFTA will likely begin from Jan 1, 2010, with zero tariffs on 90 percent of the products traded between both sides, and the services trade market is expected to follow suit on a significant scale.

Xu also observed that the Chinese enterprises should be prepared for the competitions brought by zero-tariff product imports through the forthcoming FTA with the ASEAN region. According to sources, several Chinese enterprises have already been able to prepare for the new market reality as they enjoyed zero tariffs for various merchandises through other free trade zones set up since the preparation of the framework for the FTA with the ASEAN region was signed in 2002.

Once the CAFTA comes into force, it is expected to create huge business opportunities for the Chinese enterprises by providing access to the ASEAN market with 600mn population. It is set to become Asia’s largest and the world’s third largest FTA with a trade volume of $4.5 trillion and a combined GDP of $6 trillion, after the North American FTA and the European FTA.

Nonetheless, it will be the largest FTA in the world by means of the sheer size of the population at about 2bn people it represents. The two-way trade between both sides have grown exponentially since the negotiations began for the FTA in 2001 from about $41.6bn to $231.1bn.

Toboc Trade News

India in January even had banned Chinese toys on the grounds that they contained toxic lead paints and flawed designs. Commerce and Industry Minister of India, Anand Sharma informed the parliament that the country had however lifted the ban two months later on the condition of permitting products those maintained WTO standards as India complied with WTO rules.

During the same parliamentary session, the state minister for commerce of India, Jyotiraditya Scindia said that Indian Embassy in China is in constant touch with the authorities to resolve this issue. The ban on milk and milk products, including chocolate from China will be effective till December 24 this year.

Nonetheless, China purportedly as a retaliatory measure has informed New Delhi that its food and safety organization, GAQSIQ had encountered food safety problems in imported food products like seafood and sesame oil from India. China further clarified its stand that if India insisted on extending the ban on milk and milk products till the end of the year, it would be forced to respond to the quality of the Indian food imports too.

In 2008-09 fiscal, India-China bilateral trade has witnessed a significant jump of about $51bn from its previous year’s $38bn. China has become the largest trading partner of India in 2008-09 by replacing the US. But if China sets for a trade war with India by imposing restrictions on Indian imports as well, the growth in two-way trade is likely be in for drastic decline.

Toboc Trade News

The BRIC Summit is understood to have discussed the need for an alternative monetary trading system to save their earnings getting devalued due to the likely US dollar slide in the market triggered by over printing of the greenbacks. In a last week’s address, Russian President Dmitry Medvedev proposed that countries must begin to encourage a mix of currencies in bilateral trade to reduce over-dependence on US dollar.

Medvedev had also proposed to give greater emphasis on the IMF’s Special Drawing Rights. Russia further indicated that $400bn in the US Treasury would be relocated to the IMF. Reserve rich nations including China and Russia have huge holdings in the US Treasury.

BRIC member states hold a total of $2.8 trillion in international reserve assets excluding gold, 42 percent of the world’s total. BRIC nations also account for 15 percent of the $60.7 trillion global economy.

Last month, China and Brazil have signed an agreement to integrate respective currencies in their bilateral trade to reduce transaction costs incurred while currency exchange. It should be recalled that China’s central bank governor Zhou Xiaochuan had had suggested few months ago to dump US dollar as the global reserve currency and replace it with a different standard run by the IMF.

The summit is learned to have discussed various global issues including climate change and economic crisis besides the reliance on USD. Though it is unlikely to seal a concrete deal on the use of local currencies in bilateral trade, the member nations are expected to reach a tacit understanding in phasing out USD from future trade.

Toboc Trade News

Both countries have maintained steady link with each other through top level talks and exchanges ever since Nazarbayev assumed office in 1990. The countries have always extended their co-operation in all spheres within the multi-lateral frameworks of the UN, Shanghai Cooperation Organization and Conference on Interaction and Confidence-Building Measures in Asia.

Nazarbayev is a known ally of China in issues related to the Tibet and Taiwan. Even before the meet, the Kazakh president had reiterated his support for China in safeguarding its sovereignty and territorial integrity.

Kazakhstan and China share a borderline of more than 1,700 km, and bilateral ties got a boost especially after a rail link was established in the early 1990 through the Allah Mountain pass. The China-Kazakhstan Good-Neighborly Treaty of Friendship and Cooperation signed in 2002 has also helped both parties to improve their relations and do away with all outstanding border issues.

The Chinese president suggested four-pronged formula to Nazarbayev during the talks to boost and expand both countries’ bilateral co-operation to all areas. The Kazakh president not only agreed to the formula but also commended China’s effort in tackling the global economic crisis. On the other hand, Hu expressed gratitude to Kazakhstan for backing China on several occasions including issues related to Taiwan and Tibet, and while Beijing Olympics and Paralympics.

The Kazakhstan–China oil pipeline is China’s first direct oil import pipeline and will be 3000 km long once completed. The first stage of the pipeline became operational since 2003 is the major economic co-operation achieved by both countries so far.

Toboc Trade News