NAM Chief: U.S. Needs to Stimulate Exports

WASHINGTON -- The U.S. needs to stimulate exports of machinery and other manufactured goods as part of a larger effort to regain factory jobs lost in this recession, says John Engler, president of the National Association of Manufacturers.

Calculations by the nation's largest manufacturing trade group show the U.S. ranks last among the world's 15 largest manufacturers in terms of "export intensity." Rather than measuring raw export numbers, export intensity gauges the proportion of the nation's manufacturing production that is exported.

Export powerhouses Germany and Taiwan top the list. But others, including Brazil, Turkey and Spain, also exceed the U.S. in terms of the proportion of their goods that are exported.

"If we could simply get exports up to the world average -- which is a little more than two times where it is -- we could eliminate the trade deficit," says Mr. Engler. The NAM favors a variety of measures, including tax relief and other support for domestic production, such as greater federal support for export promotion.

Exports are increasingly important for U.S. producers: In the past, the U.S. market was considered so large and vibrant than many producers didn't have to spend the money to develop foreign customers. But as the U.S. and other countries come out of recession, more producers are looking globally for growth opportunities.

Mr. Engler said other areas which should benefit U.S. manufacturers in coming months are spending on infrastructure -- which creates demand for everything from bulldozers to I-beams -- and investments in expanding energy production and distribution systems.

Write to Timothy Aeppel at timothy.aeppel@wsj.com

Leaders of G-20 Vow to Reshape Global Economy

PITTSBURGH — One year after a financial crisis that began in the United States tipped the world into a severe recession, leaders from both rich countries and fast-growing powerhouses like China agreed on Friday to a far-reaching effort to revamp the economic system.

The agreements, if carried out by national governments, would lead to much tighter regulation over financial institutions, complex financial instruments and executive pay. They could also lead to big changes and more outside scrutiny over the economic strategies of individual countries, including the United States.

“We have achieved a level of tangible, global economic cooperation that we’ve never seen before,” President Obama said shortly after the summit meeting of 20 leading economies concluded here. “Our financial system will be far different and more secure than the one that failed so dramatically last year.”

The leaders pledged to rethink their economic policies in a coordinated effort to reduce the immense imbalances between export-dominated countries like China and Japan and debt-laden countries like the United States, which has long been the world’s most willing consumer.

The United States will be expected to increase its savings rate, reduce its trade deficit and address its huge budget deficit. Countries like China, Japan and Germany will be expected to reduce their dependence on exports by promoting more consumer spending and investment at home.

The ideas are not new, and there is no enforcement mechanism to penalize countries if they stick to their old habits. But for the first time ever, each country agreed to submit its policies to a “peer review” from the other governments as well as to monitoring by the International Monetary Fund.

That in itself would be a big change, given how prickly national leaders have often been toward outside criticism of their policies. American officials, who pushed for the plan during weeks of negotiations before the summit meeting, argued that governments were so shocked by the economic crisis that they were willing to rethink what was in their self-interest.

“I’m quite impressed,” said Eswar S. Prasad, an economist at Cornell University who had initially been skeptical about the proposed “framework” for stable growth. “A commitment by the U.S. to take the process seriously is a potential game-changer that would give the framework some credibility.”

The outcome was revealed the same day the leaders formally announced that discussions about global economic issues would shift permanently from the Group of 7 big industrial nations — the United States, Britain, France, Canada, Italy, Germany and Japan — to the Group of 20, which includes China, India, Brazil, South Korea and South Africa, reflecting the increased clout of fast-growing developing nations in the global economy.

The decision reflected both symbolic and practical needs. Poorer but fast-growing nations have long complained that their influence on global policy has lagged behind their economic role. As a practical matter, China and other developing countries played a central role in fighting the global downturn by undertaking aggressive stimulus programs in concert with the United States and Europe.

American officials had been negotiating with their foreign counterparts for months before the summit meeting, and the agreements endorsed on Friday were mostly pledges rather than binding commitments.

One of the most important elements of the agreement calls on the Group of 20 countries to require higher levels of capital at banks and other financial institutions. The goal is to reduce risk-taking by forcing institutions to keep bigger reserves as a buffer against unexpected losses or disruptions in credit markets.

The Group of 20 communiqué outlines a long set of principles for tougher rules, and governments pledged to develop “internationally agreed” regulations by the end of 2010.

But the communiqué includes no specific numbers on how high capital reserves should be, and there are big disagreements over that issue.

French and German banks generally have lower capital reserves than their American rivals, and European officials have complained that their banks could be at a disadvantage because they would have to set aside more money to meet new requirements. Japanese officials have warned that they need to pursue their own approach, contending that Japanese banks are inherently more conservative than American banks.

Similarly, American and French officials disagreed before the summit meeting on how to clamp down on executive pay. Officials on both sides agreed that executive bonuses contributed to the financial crisis by rewarding short-term performance without regard to longer-term risks. But French officials wanted to impose specific caps on bonuses, perhaps based on a percentage of a bank’s profits.

American and British officials thought specific caps were too rigid, and pushed for rules that would defer the payout of bonuses for several years and reduce the incentive for people to take short-term gambles. The American view prevailed, but that does not preclude governments from imposing tighter restrictions.

For all the unanswered questions, the final communiqué covered an extraordinary number of complex financial issues. The leaders agreed, for example, to devise policies by the end of 2010 for closing troubled financial institutions that were considered “too big to fail.” They also agreed on the need to regulate financial derivatives, endorsing the approach proposed by the Obama administration in its bill to overhaul the regulatory system.

They also renewed their vow to give China and other Asian nations a bigger share of the vote at the International Monetary Fund and the World Bank. Asian countries have long complained that their stakes no longer reflect their financial contributions.

In another nod to developing countries, the leaders agreed to revive talks to reach a new global trade agreement by the end of 2010 that would, among other things, reduce barriers to agricultural exports. The goal may be optimistic: the Obama administration has shown no enthusiasm for new trade deals, and many Democrats want to see more protections rather than fewer.

The big question is whether the Group of 20 will be more effective because it includes important new players like India and Brazil, or whether it will simply be more unwieldy.

American officials acknowledged that the economic crisis crystallized priorities of countries with normally conflicting agendas in ways that occur only rarely in normal times. But they said they were betting that individual governments would see their self-interest as more tied than before to the stability of the rest of the world.

“The announcement today is more than symbolic,” said Robert M. Kimmitt, who served as deputy Treasury secretary under President George W. Bush. “The fact that leaders are turning to the strategic challenge and doing it in a coordinated way at the level of the Group of 20 is significant.”

By EDMUND L. ANDREWS

Angola, IMF reach understanding for loans

The International Monetary Fund has reached a preliminary deal with Angola that could lead to significant loans to help the African nation cope with a global economic downturn and lower oil prices, the IMF said on Tuesday. In a statement, IMF mission chief Lamin Leigh said the programme was designed to alleviate immediate liquidity pressures and Angola's Economy Minister Manuel Nunes Junior added that the deal would bolster the country's credibility. Angola, which rivals Nigeria as sub-Saharn Africa's biggest oil producer, has been hit by the global slowdown and lower oil prices - from last year's highs - have knocked government revenue and foreign reserves. "The programme aims to alleviate immediate liquidity pressures, boost market confidence, and restore a sustainable macroeconomic position," Leigh told reporters, adding that one of the goals of the programme was to increase transparency in Angola. "The contribution from the IMF will be significant. But we have to work out all of these details, subsequent from our mission we have to finalise these details given the large financing needs from Angola." The country could borrow up to 200% of its IMF quota, he said, or more if needs were deemed "exceptional". The quota currently stands at 286,3-million Special Drawing Rights (about $445-million). Angola and the IMF declined to give a final figure for the loans, with the preliminary agreement still to be confirmed by the fund's board. Leigh said the 27-month stand-by arrangement programme should be approved by the IMF board in November and that an IMF mission should return to Luanda in January or February to review the process. "It is centred on the authorities' objective of strengthening the public finances through an appropriately tight 2010 budget, backed by firm policies on monetary management," he said. Nunes Junior hailed the preliminary agreement as a victory for Angola and said his country could soon "benefit from the biggest loan ever granted by the IMF to a sub-Saharan nation in recent years". The deal is seen as a milestone in relations between Angola and the IMF, which has been critical in the past about the way the African nation manages and accounts for its oil revenues. The Angolan government broke off talks with the IMF in 2007 and turned to China instead for billions in oil-backed loans. But a sharp drop in oil prices has weighed on Angola's coffers, dependent on oil for nearly 90 percent of their income. Angola, which has huge development needs after a civil war that lasted for decades, has revised downwards its GDP growth forecast for 2009 to 6,2% from 11,8%. A Reuters poll last week predicted growth of just 0,4%. Angola has been trying hard to increase transparency by publishing its oil revenues online but still ranks among the world's 22 most corrupt nations in a Transparency International Index. Angola's oil revenues have been hit by low crude prices and foreign exchange reserves have plunged around 30% in the January to August period . Oil is trading at around $68 per barrel, less than half of last year's record high of over $147 per barrel.

U.N. Investigator Presents Report on Gaza War

GENEVA — The lead investigator in a recent United Nations inquiry into the Gaza conflict warned on Tuesday that the lack of accountability for war crimes in he Middle East has “reached a crisis point” and is undermining any hope of peace.

The investigator, Richard Goldstone, made his comments here as he presented the Human Rights Council with his final report on violations of human rights and international law in the three-week war in Gaza last winter, which accuses both Israel and Palestinian groups of committing atrocities.

“A culture of impunity in the region has existed far too long,” Mr. Goldstone said. “The lack of accountability for war crimes and possible crimes against humanity has reached a crisis point; the ongoing lack of justice is undermining any hope for a successful peace process and reinforcing an environment that fosters violence.”

Mr. Goldstone said that the mission is “highly critical of the pusillanimous efforts by Israel to investigate alleged violations of international law and the complete failure of the Gaza authorities to do so.”

The 575-page report looked at 36 specific attacks in Gaza and a number on the West Bank and in Israel, concluding that both the Israeli Defense Forces and Palestinian armed groups committed war crimes and possible crimes against humanity. Israel, which refused to cooperate with the mission, said that the report ignored Israel’s right of self-defense and ignored the militants’ use of civilians as human shields.

Mr. Goldstone, a former South African judge, urged the 47-member Human Rights Council to adopt the report, which recommends that the Secretary Council require Israel to report within six months on the results of its own investigations into the reports’ findings. If no good faith investigations take place within that time, the report calls on the Security Council to refer the issue to the International Criminal Court.

Mr. Goldstone rejected accusations of bias and expressed regret that “the response to date of the Government of Israel avoids dealing with the substance of the report.”

Michael Posner, the assistant secretary of state for democracy, human rights and labor, released a statement saying the United States took the mission’s allegations seriously and encouraged Israel to use “meaningful” efforts to investigate “credible allegations.” However, he also described the report as “deeply flawed,” and said it failed to deal adequately with the asymmetrical nature of the conflict.

By NICK CUMMING-BRUCE

US Secy Locke: Colombia Trade Pact Not Likely Ratified In '09

The U.S. Congress won't likely ratify a free trade agreement with Colombia this year as it's currently focusing on health care reform and energy-related legislation, U.S. Commerce Secretary Gary Locke said Tuesday.

"It's pretty doubtful" that the pact will be ratified this year, although the Obama administration is pushing forward with this agreement and similar ones with South Korea and Panama, the secretary said, noting that U.S. Trade Representative Ron Kirk is heading up the effort to conclude the trade deals.

Speaking to reporters in Santiago on the sidelines of the third Americas Competitiveness Forum, Locke said the U.S. aims to strenghten its trade ties with Latin America as the U.S. and Latin economies have greatly benefitted from existing ties.

"It's in everyone's economic interest to have trade agreements and lower tariff barriers," Locke said. He added that President Barack Obama has indicated the U.S. is seeking an equal partnership with the countries in the region.

One of the topics covered in the forum was the threat of protectionism and how it can affect open economies. Many economies in Latin America are heavily dependent on their exports, which can be damaged by protectionism.

Protectionism "can only lead to retaliation and eventually to trade wars, Locke said.

When queried whether a recent move by the Obama administration to raise a tariff on tire imports from China could be seen as a retaliation that could lead to a trade war, Locke said the U.S. was only enforcing the terms of its trade agreement with China.

"This was much more about enforcing the trade agreement and not about protectionism; (trade) must be on a level playing field," he said.

Earlier this month, the U.S. said it would impose duties of between 25% and 35% on imports of tires from China for the next three years, responding to what the U.S. International Trade Commission determined to be a surge of Chinese tire exports.

Beijing then responded with a probe into whether to restrict some U.S. imports and later China called for talks with the U.S. at the World Trade Organization.

"We're still seeing good faith efforts to improve the flow of goods and services across our borders," Locke told reporters and denied there was a trade war with China.

According to the secretary, in addition to seeking new trade agremeents, the U.S. is rethinking some of its trade policies, including its export control regime and the strict visa policy which prevents some business travelers from entering the U.S.

"This could increase opportunities for U.S. companies to sell their goods abroad," the official said. Some products that are considered strategic, such as certain electronic goods, cannot be exported out of the U.S.

By Carolina Pica, Dow Jones Newswires; 56-2-820-4244; carolina.pica@dowjones.com 

David Altman - US Export Council

David Altman, The US Export Council.

The US Export Council specializes in facilitating market entry for US companies to the Middle East and Africa. Its consultants include former government, foreign trade, legal, investment, media and marketing experts.

We offer consulting, marketing and media skills to U.S. companies and access to our network and services within the US on behalf of our internationally based clients.


The US Export Council started officially in January 1992 and today has clients in six countries including the United States, UAE, North Africa and Southern Africa.


In 1993, with the support from U.S. Secretary of Commerce, Ron Brown, President Bill Clinton and Nelson Mandela, we developed the annual "Made In USA Expo" in Johannesburg. Bringing the first US companies to a Post Apartheid, South Africa. These events, soon became the largest showcases of US Products and Services in Southern Africa.


According to the US Department of Commerce, the US Export Council's efforts in the area of bi-lateral trade generated in excess of $2 billion in new exports from the United States to Southern Africa, in addition to numerous joint ventures, investments and technology transfers.


In South and East Africa, Mr. Altman was instrumental in opening the doors to the first formal trade and investment between Kenya, Uganda, Tanzania and South Africa in over thirty years.


We also played a role in South Africa's first Post Apartheid $750 million bond issue, which was managed by Goldman Sachs in London and the Swiss Bank Corporation.


Similarly, in Kuwait in 1995, 1996 and 1997 under the auspices ofU.S. Ambassador Ryan Crocker and the U.S. Department of Commerce, our team launched the first "Made In USA" events in Kuwait City which produced joint ventures and significant additional U.S Exports
to that region.


Building on these successes, we have over a decade, consulted with dozens of U.S. companies, guiding them in successful entry to high growth markets in The Middle East and Africa.


In the United Arab Emirates we recently concluded a deal with Tejari a division of Dubai World providing electronic access for small and medium sized US exporters to the Middle East export markets.


We also provide targeted services to internationally based clients looking for business opportunities and market entry in to the U.S.


Prior to joining the US Export Council, Mr. Altman was President of East West, a management and marketing company based in Los Angeles and Milan, Italy for 10 years.


Mr. Altman serves on the Advisory Board of Disaster Psychiatry Outreach in New York and has worked in support of Amnesty International, UNICEF, The International Rescue Committee, El Rescate and the Red Cross


Mr. Altman also serves as President of his media firm, Jungle Media Ltd. which in addition to film finance, and public relations has produced films for television, most recently Dead at Daybreak, released as "Orion" an award winning, foreign language detective series, based on the best selling novel by Deon Meyer. 


Founder Global Leadership Institute (GLI) in New York, a social entrepreneurship venture.

GLI was formed to help build Southern Africa’s capacities and address urgent matters of human concern. Partnering with leading institutions and experts in Southern Africa and around the world, programs created by GLI are designed to teach essential leadership skills, analytical thinking, long-term planning, collaborative decision-making and problem-solving


Mr. Altman was the Founding Publisher of South Africa, The Journal of Trade, Industry and Investment which received a Golden Ink Award in New York for publishing excellence.


http://www.usexportcouncil.com

Wisconsin exports dive 21.5% in 1st half of year

Wisconsin's exports, from paper products to massive shovels used in coal mines, appear headed for their sharpest yearly decline since at least the 1980s - the latest indicator that the economic slump has been as wide as it is deep.

Foreign demand for made-in-Wisconsin goods declined 21.5% in the first six months compared with the same period a year ago, paralleling a 23.8% national decline in U.S. exports, according to the U.S. Census Bureau.

Exports from the state previously had grown every year since at least 1987, except for three minor declines in the period from 1998 to 2001, according to state and federal records.

The decline so far this year has been unusually severe, in Wisconsin and globally.

"This is by far the deepest decline in world trade since the 1930s," said Bernard Hoekman, director for international trade at the World Bank, a multinational lender to developing nations.

Cross-border trade always has been a lubricant of global growth, but the World Bank expects the overall volume of international trade to retreat by 9% to 10% in 2009. That, in turn, has gummed up global economic output, which is expected to decline in 2009 for the first time since World War II, the World Bank said.

Foreign demand for industrial machinery from Wisconsin - the state's single biggest export category - fell 24%, to $1.4 billion, in the second quarter from the same period a year ago.

The impact on southeastern Wisconsin is acute, said Tim Sullivan, president and chief executive officer of Bucyrus International Inc., the Milwaukee-based maker of mining equipment. Most jobs at Bucyrus in the Milwaukee area - where it employs more than 1,300 people, out of a global workforce of 7,200 - "are very dependent on foreign business," Sullivan said.

Of the $1 billion a year in parts and equipment that Bucyrus ships from metro Milwaukee, 75% goes overseas, Sullivan said. That could climb to 80% next year as the company continues to seek business abroad to offset weakness in its North American markets.

The company's traditional export markets - Australia, South America and southern Africa - have all seen orders fall by double digits in the first half of the year, Sullivan said. But Bucyrus has stabilized itself by working off a strong order backlog that it accumulated last year, which has kept production at last year's level.

Also, new markets including China, India and eastern Europe have continued to expand. "Those markets are carrying us right now," he said.

In recent weeks, there have been indications that foreign markets have hit bottom, Sullivan said, echoing a recent analysis by the World Bank.

Gamut of goods

In addition to the drop in exports of industrial machines during the first half of this year, declines were spread among a gamut of Wisconsin-shipped goods: plastics, down 15%; paper goods, down 26%; and medical instruments, down 27%.

Declines also were evident among many of the state's major export destinations, from Mexico to Canada to Germany.

Declines in exports to China, the No. 3 buyer of goods from both Wisconsin and the U.S., were less severe.

"Mexico has slowed down, and so has all of Latin America," said Bill Niehaus, chief financial officer of Medica International Ltd., a Port Washington firm that acts as the export arm for U.S.-based pharmaceutical makers that aren't large enough to have their own international logistics staff. Medica offset the international slowdown by adding new clients, Niehaus said.

GE Healthcare Ltd. said its exports from Wisconsin have fallen in 2009 but wouldn't give precise figures. The medical technologies division of General Electric Co., which has a big base of manufacturing in southeastern Wisconsin, has been focused this year on turning around a slump in sales. Late last year, GE began cutting jobs in Wisconsin, where it employed nearly 7,000 workers before the downturn began.

The government does not track imports on a state-by-state level. Wisconsin is the nation's No. 27 export state, in the middle of the national rankings, census numbers show.

In 2005 and 2006, Wisconsin accounted for 1.7% of the nation's total exports. That slid to 1.6% in 2007 and 2008.

Slow recovery

Even as economists talk hopefully of a turnaround, however, sluggish international demand could mean the U.S. recovery will be slow to gather momentum, Hoekman said. Growth in trade volumes is expected to resume next year, but Hoekman said there's too much uncertainty to offer a more precise outlook.

Pockets of growth remain, although they are easier to find in China and India than in North America and western Europe. The Asian Development Bank last week said it expects China to post 8.2% economic growth this year, while India clocks in at 6%.

Around the world, exports are the locomotive that pulls other cars on the economic train, analysts argue. Just as a household needs income to pay bills, national economies need exports to afford imports and accumulate the national currency reserves to drive new investment and growth. Jobs created through foreign demand rank at the top of the economic food chain because they import new income into a region.

"Exports equals jobs; that's about as basic as it gets," Hoekman said.

That raises the stakes for the United States. As a nation, the U.S. buys more than it sells and borrows more than it lends. A drop in exports only widens those gaps and makes the U.S. more reliant on foreign loans, Hoekman and other economists note.

China ranks as the No. 1 supplier of U.S. imports. For every dollar of made-in-America goods sold in China, the U.S. purchased $4.84 in made-in-China goods. In 2008, the U.S. ran a record $268 billion trade deficit with China, which also ranks as the biggest trade deficit between any two nations in history.

To pay for imports, the U.S. borrows funds, often from the central banks of China, Japan and the Middle East.

"The U.S. is building up a pretty large pile of debt," Hoekman said.

By John Schmid of the Journal Sentinel

California exports drop for ninth straight month

Signs of global economic recovery were nowhere to be found in California's latest trade figures, although national figures did point to an uptick in spending.

California exports were down sharply for the ninth straight month in July from the same period a year ago, according to the University of California Center Sacramento.

Exports were valued at $9.77 billion, down 23.5 percent from $12.77 billion in July 2008.

"Adjusting for inflation, this was the lowest export total for the month of July California has recorded since 2003," said Jock O'Connell, the UC center's international trade and economics adviser.

The center based its analysis on data released Thursday by the U.S. Department of Commerce. As reported by the Associated Press, the department said international trade activity was on the rise, boosting foreign demand for U.S. goods for a third straight month. However, the United States also saw its appetite for foreign products increase.

U.S. exports rose 2.2 percent to $127.6 billion from June to July, and imports rose 4.7 percent to $159.6 billion, the largest monthly advance since record-keeping began in 1992.

The Commerce Department said those corresponding increases pushed the U.S. trade deficit to $32 billion in July, its highest level in six months.

Some economists saw increased imports as a sign that retailers and manufacturers are rebuilding their inventories, which could lead to greater production.

"Eventually the factories have to come back online to restock the shelves," said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities, which raised its forecast for third-quarter U.S. economic growth from 2 percent to 3 percent. In its analysis of California trade, the UC center said manufactured exports from the state fell by 25.2 percent in July, compared with a year ago, while agricultural goods and other non-manufactured exports dipped by 29 percent. Re-exports of goods previously imported into the state were off by 13.2 percent.

The UC center said California's year-to-date exports of $66.12 billion are down 23.1 percent from $85.99 billion in the 2008 January-to-July period.

The center said the value of foreign goods entering the United States through California in July was $29.1 billion, a 29 percent decrease from $41 billion last year.

State-specific imports are not broken down, because some goods entering California are bound for other states. Consequently, exports of California-produced goods are considered the key indicator of Golden State trade.

O'Connell pointed to some slivers of hope, noting that some California agricultural imports were up and that export totals have been edging up since spring.

Still, he said California's high unemployment and wobbly economy are "not likely to produce any robust recovery."

Other financial experts agreed.

"It's going to be very tough, because unemployment in this state is probably close to 25 percent if you consider the level of underemployment," said Keith Springer, president of Capital Financial Advisory Services in Sacramento.

Springer cited major losses, such as the scheduled March 2010 closure of the NUMMI vehicle-assembly plant in Fremont, the 25-year-old General Motors-Toyota joint venture that once employed 20,000.

"That's big and there's really no place to make up that many job losses in this economy," Springer said.

US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/

Trade and Development Report 2009

The Trade and Development Report 2009 presents a gloomy global economic outlook in the context of the ongoing global financial and economic crisis. It looks at the channels through which this deep crisis, which originated in developed countries, is spreading to developing and transition economies: through financial flows, international trade and commodity prices, migrants´ remittances and external debt.

The Trade and Development Report 2009 examine in some detail the short-term policy responses taken to tackle the immediate effects of this crisis. These include fiscal stimulus packages, monetary policy easing, and support for ailing financial institutions. Monetary easing and large bailout operations may have prevented a meltdown of the financial system, but they have been insufficient to revive global demand and halt rising unemployment. Countercyclical fiscal policy measures that have a direct effect on aggregate demand should be reinforced, in a coordinated global manner.

Full report in PDF format 92.79MB); Number of pages: 218p

http://www.unctad.org/en/docs/tdr2009_en.pdf

US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/

U.S. Trade Deficit Grows in July

The U.S. trade deficit in goods and services for July was $32 billion, up from $27.5 billion in June, the U.S. Department of Commerce announced Thursday.

Total U.S. exports in July amounted to $127.6 billion and U.S. imports were $159.6 billion, accounting for the deficit, according to the U.S. Census Bureau and the U.S. Bureau of Economic Analysis, reporting through the Commerce Department. Although exports in July were $2.7 billion higher than in June, imports in July grew even more, exceeding June imports by $7.2 billion. Compared with July 2008, however, the U.S. goods and services deficit in July 2009 declined by $32.9 billion, as exports dropped $36.8 billion, or 22.4 percent, and imports declined $69.8 billion, or 30.4 percent, over that 12-month period.

In July, the U.S. goods deficit increased $4.3 billion from June to $42.7 billion, and the services surplus declined by $100 million to $10.7 billion. Exports of goods increased $2.7 billion to $86.7 billion, and imports of goods increased $7 billion to $129.4 billion. Exports of services increased $100 million to $40.9 billion, and imports of services increased $200 million to $30.2 billion.

Compared with June 2009, U.S. exports in July 2009 grew in automotive vehicles, parts, and engines (up $1.3 billion); capital goods ($700 million); industrial supplies and materials ($400 million); consumer goods ($400 million); and other goods ($200 million). However, exports of foods, feeds, and beverages dropped by $400 million.

Compared with June 2009, U.S. imports in July 2009 increased in automotive vehicles, parts, and engines (up $2.4 billion); consumer goods ($1.7 billion); industrial supplies and materials ($1.4 billion); capital goods ($1.3 billion); and other goods ($200 million). Imports of foods, feeds, and beverages declined $100 million.

Compared with July 2008, U.S. exports in July 2009 declined in industrial supplies and materials (down $13.1 billion); capital goods ($7.9 billion); automotive vehicles, parts, and engines ($4.7 billion); foods, feeds, and beverages ($2.2 billion); consumer goods ($2.1 billion); and other goods ($400 million). Over the same period, U.S. imports declined in these sectors: industrial supplies and materials (down $41.5 billion); capital goods ($8.6 billion); automotive vehicles, parts, and engines ($6.8 billion); consumer goods ($5.5 billion); other goods ($1.1 billion); and foods, feeds, and beverages ($700 million).

Contact Alan M. Field at afield@joc.com.

http://www.joc.com/node/413309

US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/

Comprehensive response to the global banking crisis

The Group of Central Bank Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, met on 6 September to review a comprehensive set of measures to strengthen the regulation, supervision and risk management of the banking sector. These measures will substantially reduce the probability and severity of economic and financial stress.

President Jean-Claude Trichet, who chairs the Group, noted that "the agreements reached today among 27 major countries of the world are essential as they set the new standards for banking regulation and supervision at the global level".

Mr Nout Wellink, Chairman of the Basel Committee and President of the Netherlands Bank, stated that "central banks and supervisors have responded to the crisis by strengthening microprudential regulation, in particular the Basel II framework. We are working toward the introduction of a macroprudential overlay which includes a countercyclical capital buffer, as well as practical steps to address the risks arising from systemic, interconnected banks".

The Central Bank Governors and Heads of Supervision reached agreement on the following key measures to strengthen the regulation of the banking sector:

• Raise the quality, consistency and transparency of the Tier 1 capital base. The predominant form of Tier 1 capital must be common shares and retained earnings. Appropriate principles will be developed for non-joint stock companies to ensure they hold comparable levels of high quality Tier 1 capital. Moreover, deductions and prudential filters will be harmonised internationally and generally applied at the level of common equity or its equivalent in the case of non-joint stock companies. Finally, all components of the capital base will be fully disclosed.
• Introduce a leverage ratio as a supplementary measure to the Basel II risk-based framework with a view to migrating to a Pillar 1 treatment based on appropriate review and calibration. To ensure comparability, the details of the leverage ratio will be harmonised internationally, fully adjusting for differences in accounting.
• Introduce a minimum global standard for funding liquidity that includes a stressed liquidity coverage ratio requirement, underpinned by a longer-term structural liquidity ratio.
• Introduce a framework for countercyclical capital buffers above the minimum requirement. The framework will include capital conservation measures such as constraints on capital distributions. The Basel Committee will review an appropriate set of indicators, such as earnings and credit-based variables, as a way to condition the build up and release of capital buffers. In addition, the Committee will promote more forward-looking provisions based on expected losses.
• Issue recommendations to reduce the systemic risk associated with the resolution of cross-border banks.

The Committee will also assess the need for a capital surcharge to mitigate the risk of systemic banks.

The Basel Committee will issue concrete proposals on these measures by the end of this year. It will carry out an impact assessment at the beginning of next year, with calibration of the new requirements to be completed by end-2010. Appropriate implementation standards will be developed to ensure a phase-in of these new measures that does not impede the recovery of the real economy. Government injections will be grandfathered.

Mr Wellink emphasised that "these measures will result over time in higher capital and liquidity requirements and less leverage in the banking system, less procyclicality, greater banking sector resilience to stress and strong incentives to ensure that compensation practices are properly aligned with long-term performance and prudent risk-taking".

The Group of Governors and Heads of Supervision endorsed the following principles to guide supervisors in the transition to a higher level and quality of capital in the banking system:

• Building on the framework for countercyclical capital buffers, supervisors should require banks to strengthen their capital base through a combination of capital conservation measures, including actions to limit excessive dividend payments, share buybacks and compensation.
• Compensation should be aligned with prudent risk-taking and long-term, sustainable performance, building on the Financial Stability Board (FSB) sound compensation principles.
• Banks will be required to move expeditiously to raise the level and quality of capital to the new standards, but in a manner that promotes stability of national banking systems and the broader economy.

Supervisors will ensure that the capital plans for the banks in their jurisdiction are consistent with these principles.

US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/

New groundbreaking fighting vehicle from South African company

South Africa's Benoni-based mine-protected and armoured fighting vehicle company, BAE Systems Land Systems OMC, unveiled its latest design, the RG35, at the major British biennial defence exhibition Defence Systems and Equipment International (better known as DSEi) in London on Tuesday.

"We have combined a 4x4 mine-protected vehicle with a modern 8x8 combat vehicle," announced BAE Systems Land Systems South Africa MD Johan Steyn.

"It is groundbreaking. It is a new class of vehicle. The standard model is the 6x6 version. But we plan a family of vehicles, and we will have a 4x4 vehicle."

There is no launch customer for the RG35 yet, but the vehicle is likely to be submitted for the British Army's Light Protected Patrol Vehicle project. The company is confident that its new vehicle will win orders from around the world.

It was the 6x6 standard model that was unveiled in London. Its development is based on expertise gained, on the one hand, from the development of the Ratel and iKlwa armoured vehicles and, on the other, from the development of the RG31 mine-protected vehicle family. The basic V-shaped design of the hull is taken from the RG31.

Advances found in the RG35 include a side-mounted power pack, which can be replaced in just 30 minutes. Traditionally, armoured vehicle power packs have been either at the front or rear of the vehicle.

Further, the vehicle has been designed to accommodate hybrid electric drive, once this becomes available. "It will be very easy to incorporate this drive into this vehicle," says Steyn.

Mounting the power pack on the side creates a large internal volume and the RG35's volume under armour is 15 cubic metres. The vehicle can carry a driver and up to 15 passengers. All critical systems are under armour, which was not the case with previous, mine-protected, vehicles. It has a dual-unit air-conditioning system, so that, if one unit is lost, the other is still available.

The RG35 has a payload of nearly 15 t. One of the benefits of this is that it makes it easy to attach add-on armour to the vehicle without overloading it. It has been so designed that an additional 120 mm of armour can be added to the hull bottom V, while the hull sides can take 50 mm of additional armour.

The basic version, displayed in London, is fitted with a new generation Overhead Manual Turret - Multiweapon, designed and developed by another unit of the company, Pretoria-based BAE Systems Land Systems Dynamics. However, a wide variety of alternative turrets will be available.

The RG35 will be available in a wide variety of versions, from the basic infantry-carrying combat vehicle, to command post vehicle, engineering vehicle, 120 mm mortar vehicle, anti-aircraft gun vehicle, recovery vehicle, and ambulance.

The 6x6 RG35 is 2,5 m wide, just over 7 m long, and 2,7 m high. It has a turning circle of 15 m, which is less than that of an RG31.

The company has already produced the hull for the first 4x4 version of the vehicle, and plans to have the prototype 4x4 completed and operational by this time next year.

By: Keith Campbell

http://www.engineeringnews.co.za/article/new-groundbreaking-fighting-vehicle-from-sa-company-2009-09-08

US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/

Exports strengthening, but consumers aren't

Foreign markets are becoming a source of strength for U.S. producers, helping shrink the trade deficit in one of the few bright spots in the global recession.

The international trade report will be one of the top economic stories of the coming week, along with data on consumer credit, consumer sentiment and unemployment benefits. The Federal Reserve will also release its Beige Book report, an anecdotal account of the economy designed to dig beneath the hard numbers to find deeper truths.

It'll be a relatively quiet week for data, and markets may pay as much attention to politics as to the economic data, with Congress returning to Washington and President Barack Obama giving a major speech on health care to the assembled lawmakers

MarketWatch consensus

date	report	forecast	previous
Sept. 8	Consumer credit	-$4.3 billion	-$10.3 billion
Sept. 10	Trade balance	-$27.5 billion	-$27.0 billion
Sept. 10	Jobless claims	558,000	570,000
Sept. 11	Import price index	1.0%	-0.7%
Sept. 11	Consumer sentiment	68.0	65.7

Trade gap

One of the few bright sides of the global recession has been a steady improvement in the U.S. trade deficit. After expanding to as much as $68 billion a month in 2006, the trade gap shrank to just $27 billion in June.

Imports have fallen in 10 of the past 11 months, a reflection of weak U.S. demand for foreign-made goods. Meanwhile, U.S. exports also fell, but not as rapidly as imports did.

In May and June, exports began to recover. In real terms (adjusted for price changes), exports rose at a 16% annual rate in the May and June, after dropping at a 60% annual rate around the first of the year.

Economists expect further improvements in exports going forward.

"The outlook for U.S. exports is becoming increasingly positive," wrote Michael Feroli, an economist for JP Morgan Chase Bank, who's expecting the trade gap to narrow to $26.5 billion in July from $27 billion in June. "Foreign economic growth has returned" with U.S. trading partners growing at a 4% annual rate in the second quarter, on a trade-weighted basis.

The median forecast of economists surveyed by MarketWatch looks for a small widening in the gap to $27.5 billion. The July report will be released by the Commerce Department on Thursday at 8:30 a.m. Eastern.

The improvement in exports is a key driver in the recovery in the manufacturing sector. The export orders index of the Institute for Supply Management survey rose to 55.5% in August, the highest in 14 months, and up from a low of 33.5% in December.

Feroli predicts real exports will rise at 6% annualized rate in the third quarter and 11% in the fourth quarter.

However, imports are likely to rise even faster, economists said. Feroli expects foreign trade to be a small drag on U.S. growth over the next three quarters.

For July (and likely August), the government's cash-for-clunkers program appears to have been a big winner for foreign automakers, said Meny Grauman, an economist for CIBC World Markets.

Consumers

While U.S. manufacturers are benefiting from the improvement in global trade, U.S. consumers are still nervous about the future.

Consumer credit (excluding mortgages) has declined in absolute terms for five months in a row and for nine of the past 11 months. The Fed will report on July debt levels on Tuesday. Economists surveyed by MarketWatch are looking for another decline of $4.3 billion after a $10.3 billion decline in June.

Consumer debt is down 2.8% in the past year. It's only the third time in 50 years that debt has been paid down. Credit card debt is down 5.1%, the first decline in 40 years.

Consumers aren't happy. In August, consumers offered their bleakest view of their own finances in the history of the University of Michigan's consumer sentiment survey. Just one in six consumers said their own finances had improved in the past month and only one in four expected their incomes to grow in the coming year.

The UMich survey will be updated with early September responses on Friday. Economists look for a slight improvement in the index to 68 from 65.7 in July, mostly because of the recent rally in the stock market and tentative signs that layoffs are stabilizing.

"Since April, the sentiment index has fluctuated in a range of 65 to 71, which is characteristic of weak spending," wrote IHS Global Insight U.S. economists Brian Bethune and Nigel Gault. "We don't expect that consumer sentiment will break out of this range until job growth resumes next spring. Meanwhile, consumer spending is likely to show only sluggish growth and be a relatively weak contributor to the recovery."

Rex Nutting is Washington bureau chief of MarketWatch.

US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/

South Africa Construction industry heading for tough 2011, 2012

South Africa's construction industry was heading for a tough period in 2011 and 2012, said Wilson Bayly Holmes – Ovcon Limited (WBHO) chairperson Mike Wylie on Monday, announcing the construction group's financial results for the year ended June 30.

“At the moment, 2010 is still looking good.”

Wylie said it seemed as if government's planned R787-billion infrastructure programme was experiencing some funding pressure on the back of the economic crisis.

WBHO CEO Louwtjie Nel concurred, noting that 20% of this infrastructure budget was due to be spent in WBHO's markets, which meant a R150-billion pipeline of possible work for the company.

“In reality it could be half of this. Eskom and others are worrying us. There is pressure on funding.”

Wylie added that margins were tightening, and that they were much more likely to move downwards over the next two years, rather than upwards.

The company's operating margin dropped from 8,3% last year to 7,1% this year, reflecting the tighter conditions the construction sector had been experiencing at home and abroad.

However, Wylie believed WBHO was well-positioned to tackle the difficult times ahead, pinning his hopes on the company's R15,3-billion order book, as well as a strong balance sheet, which included R4-billion in cash.

Only R1,9-billion of the order book was World Cup related.

The order book stood at R18,3-billion at the same time last year.

Wylie said WBHO's strong cash position provided the company with “great opportunities for acquisitions”.

“It may be good . . . to fill up gaps we might have.”

Group turnover for the financial year ended June 30 was 37% higher, at R14,8-billion, while operating profit was up 16%, at R1-billion.

Headline earnings a share were 27% higher.

Wylie said he was pleased with this increase, considering that headline earnings growth had exceeded 70% for the past three years.

WBHO declared a final dividend of 200c, resulting in a total dividend for the year of 300c.

Divisionally, the roads and earthworks division had an exceptional year, with a 70% increase in turnover to R4,6-billion, said Wylie.

The division was busy on a host of major projects, including a R1,9-billion share in the Gauteng Freeway Improvement Project; the new King Shaka International Airport in Durban; a R700-million waterline replacement project for the eThekwini Metro; as well as several large mining and infrastructure projects in Botswana, Ghana, Zambia, the Democratic Republic of the Congo, and Mozambique.

The building and civil engineering division, which was more reliant on the private sector than the public sector, had been impacted negatively by the diminishing pool of development finance and the reduced global demand for commodities and resources, said Wylie.

However, the division still increased its revenue to R10,2-billion, with the Australian operation making a R4,7-billion contribution.

The division had already completed work on the new central terminal building at OR Tambo International Airport, as well as the Morningside shopping centre, and had started work on a number of shopping centres in Tshwane, Polokwane, Sandton, Rosebank, and the Eastern Cape.

In addition, the division was still active on construction work at the Peter Mokaba stadium, in Polokwane, and the Moses Mabhida stadium and the King Shaka International Airport, in Durban.

Included here were three hotels for 2010.

Offshore, WBHO’s Australian subsidiary, Probuild Constructions, increased turnover by 51% to A$661-million.

Sales in the company’s two property developments were slow because of the fall-off in the real estate market.

Similarly, conditions in the industrial division, where the group was invested in companies associated with steel pipe-making, ready-mix and quarrying operations, were also depressed because of the unfavourable economic climate.

Edited by: Creamer Media Reporter

US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/

Boeing Airbus and the WTO

The WTO has found that loans from European governments to Airbus were not only unfair subsidies but in some cases violated a tougher ban on export aid, according to sources familiar with a report that also rejected some U.S. complaints.

The findings are contained in a confidential interim report distributed by the World Trade Organization to the parties in a row between the United States and European Union over aircraft subsidies that could affect planemakers worldwide.

U.S. lawmakers briefed on the report said on Friday that the WTO had ruled against European government loans for Airbus, backing claims that they harmed Boeing. European sources denied there had been a clear-cut result.

Picking apart the contrasting claims, two sources familiar with the case told Reuters the draft conclusions of a five-year WTO probe overwhelmingly backed U.S. charges that the dozen or so loans were "actionable" subsidies that harmed Boeing.

Washington won a partial victory on a second key claim: that most of the same loans further violated WTO rules by amounting to prohibited export subsidies, the sources said. The extent of the U.S. victory on this point remained unclear.

SUPERJUMBO

Under trade rules, "prohibited" subsidies must be dismantled or amended swiftly after the conclusion of a case without the complainant needing to prove its firms were harmed. "Actionable" subsidies are seen as harder to attack and remedies are slower.

At least one of four loans given by European governments to help fund the A380 superjumbo was cleared of being a banned export subsidy, but the rest were found illegal, sources said.

Washington however lost a third claim: that the overall use of European loans was an invalid program of support in its own right, several sources familiar with the matter said.

The United States had not only attacked the individual loans but claimed they were part of a concerted and open-ended system in a bid to implicate future loans for Airbus's future A350, which fell outside the jurisdiction of the WTO complaint.

Washington is expected to protest those loans separately.

The United States broadly won its case against European Union research and development funding for Airbus, as well as infrastructure projects that Washington regards as a covert boost for the European planemaker, two of the sources said.

R&D spending and infrastructure projects in the United States are also at the center of an EU counter-claim against the United States. The process is about six months behind the U.S. case against Airbus, though the two are not officially linked.

The United States lost its case against loans by the European Investment Bank awarded to Airbus, the sources said.

None of the sources agreed to be identified because no one is authorized to speak publicly about the WTO findings ahead of their publication in several months.

The United States and European Union said on Friday they would not comment on the findings in the 1,000-plus page report, which was passed to them for comments ahead of a final ruling.

Airbus and Boeing declined comment. The European Investment Bank was unavailable for comment.

US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/