Brazil wins race for next WTO director
The World Trade Organisation has settled on
Roberto Azevedo of Brazil, a well-known
diplomat and consummate insider in Geneva circles, to serve as
its director general for the next four years, officials said on Tuesday.
The directorship is chosen by consensus in a complex and secretive
process, and the runner-up is expected to concede afterward. Diplomats emerged
from consultations Tuesday to rush past journalists out of the building, barely
acknowledging that Azevedo had defeated Mexican former trade minister Herminio
Blanco in the final round.Two diplomats confirmed Azevedo's selection to journalists on condition of anonymity because they were not authorised to reveal the winner ahead of the formal announcement, but Azevedo also re-tweeted that he has been chosen for the job and comments from various trade circles began trickling in.
A formal announcement on his selection is not expected until Wednesday.
In Washington, Jack Colvin, a vice president of the National Foreign Trade Council, said Azevedo's selection reflects "his extensive experience and deep familiarity with international trade institutions and processes on behalf of Brazil and the focus he has placed on consensus-building in Geneva."
Under WTO rules, a meeting of member-nations must be convened no later than May 31 to formally appoint Azevedo. The selection - not an election - spanned months of consultations among ambassadors from all 159 members, most of them nations but also some territories such as Hong Kong and Macau.
Azevedo is to take over the organisation on September 1 from Pascal Lamy of France, who has been the director-general for eight years.
He is poised to become the first Latin American to head the Geneva-based trade organisation since its creation in 1995. He won out in a field that originally had nine candidates at the start of this year.
Azevedo will be taking over an organisation whose role as a multilateral forum for negotiations is, according to insiders and observers, in growing doubt.
In recent years, the WTO has been used more as forum to settle trade disputes and monitor policy than as a host for serious trade negotiations. That tendency reflects the rise of regional and bilateral trade negotiations among the major powers.
Azevedo, who has insider knowledge of the WTO's workings, calls himself a consensus-builder between developed and developing countries. He says he will set aside his Brazilian hat to take on the global role.
But it has been no secret during the selection process that member nations wanted the next director to come from a developing nation after having a director from one of Europe's major economies.
The original nine candidates also included contenders from Ghana, Costa Rica, Indonesia, New Zealand, Kenya, Jordan and Korea.
China's exports jump 14.7% in April
China's trade accelerated in April in a possible positive sign for its shaky
economic recovery.
Exports rose 14.7% over a year earlier, up from March's 10% growth,
customs data showed Wednesday. Imports gained 16.8%, up from the previous
month's 14.1%.The stronger data suggest growth of the world's second-largest economy might be improving after an unexpected decline to 7.7% in the first three months of the year from the previous quarter's 7.9%.
Some analysts suggest Chinese trade data are distorted by reporting errors and unreliable as an economic indicator. Still, April's stronger numbers might help to reassure companies and investors after the weaker first-quarter growth jolted global financial markets.
"Subdued actual export growth in April points to sluggish global demand," said RBS economists Louis Kuijs and Tiffany Qiu in a report. "Reasonable import growth suggests domestic demand has held up better so far."
Surveys by HSBC Corp. and a Chinese industry group showed Chinese manufacturing growth weakened in April. HSBC said new export orders fell for the first time this year.
Some analysts have warned China's recovery is being shored up by state-led investment and bank lending and could be vulnerable if trade or investment weakens. The weaker-than-expected first quarter numbers prompted the World Bank and private sector analysts to trim forecasts for full-year growth, though to still robust levels of about 8%.
Chinese leaders are trying to nurture self-sustaining growth driven by domestic consumption instead of trade and investment. But consumer spending is growing more slowly than they want.
A Cabinet statement last month promised to improve the role of consumption as a driver of economic growth. It pledged changes in medical, pension and other policies but gave no details. Analysts say more government spending on such social programs will be required to free up household budgets for consumer spending.
April's stronger gains in imports compared with exports caused China's global trade surplus to narrow by about 1%, though to a still-wide $18.2bn.
China runs a deficit with most of its trading partners, which supply oil, other raw materials and industrial components, and makes up for it by running large surpluses with its US and European export markets.
China's exports to Europe, hurt by the continent's debt troubles, declined 6.5% to $25.9bn and the surplus with the 27-nation European Union narrowed by 32% to $7.9bn.
Trade with some European countries suffered even bigger declines. Germany's imports of Chinese goods fell 7.2% and France's by 6.7%.
Exports to the United States edged down by a fraction of 1% to $28.1bn while the trade gap with the US narrowed by 13% to $14.7bn.
China's data on exports have been under scrutiny since some analysts pointed out last year that they failed to match up with its trading partners' lower figures for their purchases of Chinese goods.
Some analysts suggested Chinese exporters might be inflating values on customs declarations as a way to evade Beijing's currency controls and bring money into the country for investment.
Kuijs and Qiu of RBS said that after factoring out irregularities, they estimated China's exports rose only by about 5.7% in April, about 9 percentage points lower than the reported level. They said they saw no obvious irregularities in import data and no reason to inflate the values of goods.
Slovenia scrambles to avert bailout
Slovenia pledged on Thursday to sell 15 state firms including its second-largest bank, biggest telecoms operator and the national airline under a crisis package to avert an international bailout.
Prime Minister Alenka Bratusek said value added tax would rise from 20% to 22% from July but that the government was still in talks with unions on planned cuts to the public sector wage bill.
She said the budget deficit would soar to 7.8% of national output this year but the government aimed to bring it down to 3.3% in 2014.
US jobless claims fall to 5-year low
The number of Americans filing new claims for unemployment benefits dropped to its lowest level in nearly 5-1/2 years last week, signaling labour market resilience in the face of fiscal austerity.
Initial claims for state unemployment benefits fell 4 000 to a seasonally adjusted 323 000, the lowest level since January 2008, the Labor Department said on Thursday.
Claims for the prior week were revised to show 3 000 more applications received than previously reported. Economists polled by Reuters had expected first-time applications to rise to 335 000 last week.
US stock index futures pared losses on the report, while Treasury debt prices trimmed gains. The dollar trimmed losses against the yen.
The third straight weekly decline in claims pushed them further below the 350 000 mark, which economists normally associate with a firming labour market.
Claims are showing no sign of a pick-up in layoffs even as other parts of the economy such as manufacturing start to show strain from tighter fiscal policy.
"It's nice to see improvement in claims. We are not worried about the separation side of the equation. We continue to be worried about the hiring side," said Jacob Oubina, senior economist at RBC Capital Markets in New York.
A Labor Department analyst said no states had been estimated and there was nothing unusual in the state-level data.
The four-week moving average for new claims, a better gauge of job market trends, dropped 6 250 to 336 750 - the lowest level since November 2007.
Coming on the heels of data last week showing surprising strength in the labor market, the claims report could further assuage fears of an abrupt slowdown in the economy.
Employers added 165,000 new jobs to their payrolls in April and hiring in the previous two months was stronger than initially reported. The unemployment rate dropped to a four-year low of 7.5%.
The improvement in employment contrasts sharply with other data, including retail sales and manufacturing, that have suggested a cooling in the economy at the end of the first quarter, which persisted early in the April-June period.
The slowdown in activity after the economy expanded at a 2.5% annual pace in the first three months of the year has been blamed on higher taxes which went into effect on January 1 and $85bn in government budget cuts known as the "sequester."
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid dropped 27 000 to 3.0 million in the week ended April 27. That was the lowest level since May 2008.
Obama set to renew focus on jobs
President Barack Obama travels to Texas on Thursday to put his focus back on job creation and economic growth after giving intensive attention to gun control legislation and immigration reform.
The president is due to hold events around the country to draw attention to his efforts to boost economic growth through jobs that benefit the middle class, a White House official said.
The trip comes as a poll shows Americans say what they want most from politicians in Washington is job creation and helping the economy grow.
In a visit to the Austin, Texas, area, Obama is due to visit Applied Materials which makes semiconductors and other technology, and a high school focused on math and science. He will also meet local residents and entrepreneurs.
Obama's jobs tour follows some policy frustrations for him. The president failed to persuade Congress to accept expanded background checks for gun buyers, a disappointing setback to his efforts to toughen gun rules after the December murders of 20 children and six adults at an elementary school in Newtown, Connecticut.
He is also at an impasse with congressional Republicans over a deficit reduction deal that he insists should include higher tax revenues, which Republicans oppose.
The president does appear to be making headway in his efforts to change immigration laws to open a path to citizenship for a portion of the 11 million people who are in the United States without proper documentation. However, final legislation is months off.
In the meantime, a Gallup poll released Tuesday found 86% of those surveyed this month ranked creating more jobs as their top priority for action by Congress and the president, tied at 86% with helping the economy grow.
Lower on the priority list were reducing the federal deficit at 69%, reforming the tax code 59%, reducing gun violence 55% and reforming immigration 50%.
The U.S. economy is recovering slowly after the deep recession of 2007-2009. Despite some encouraging signs of economic resurgence, such as stock market record highs, the jobless rate, while falling, remains at an elevated 7.5%.
The president will announce a competition for locations to site three manufacturing institutes where businesses, government and educational institutions will get funding to develop new technologies, the White House official said.
He will also issue an executive order requiring that newly released government data be made freely available in easily readable formats.
The president's jobs tour is also likely be a chance for him to argue that across-the-board spending cuts referred to as sequestration that went into effect March 1 are slowing economic growth and should be replaced.
The spending reductions went into force after congressional Republicans balked at the president's insistence that any alternative spending cuts be offset by some tax increases.
Some Republicans have welcomed the cuts as necessary austerity measures to check government overspending.
Cameron: Britain must stay in EU
British Prime Minister David Cameron took on critics in his own Conservative party on Thursday, saying it would be wrong for Britain to leave the European Union.
Some pessimists "say there is no prospect of reforming the European Union, you simply have to leave", Cameron told an investment conference
"I think they are wrong ... I think it is possible to change and reform this organisation."
Cameron came under renewed pressure from EU sceptics this week when former finance minister Nigel Lawson said the prime minister's plan to renegotiate Britain's commitments to the EU before a planned membership referendum in 2017 were doomed to fail and the country should leave the bloc.
Cameron used his speech on Thursday to underscore his determination to keep on narrowing Britain's budget deficit at a "sensible and measured pace" and to help push for new trade deals between the EU and the United States and Canada.
He also said he would continue to defend Britain's financial services industry against some European measures such as a planned financial transaction tax which has been agreed by most countries in the eurozone and would affect the City of London.
"We shouldn't spend our time in politics endlessly bashing banks and financial institutions. If you want the economy to recover and if you want the economy to grow, you have got to play to your strengths," Cameron said.
G7 finance chiefs to discuss bank reforms
Some of the world's most powerful finance chiefs will meet in an English stately home on Friday and Saturday to try to speed up banking and finance reforms, with Cyprus' near meltdown fresh in their minds.
Finance ministers and central bank governors from the Group of Seven industrialized economies probably will not break new ground on how to fix the weak world economy as discussions at the International Monetary Fund took place just three weeks ago.
Officials from two of the G7 economies said the talks - on Friday and Saturday at a 17th-century country house 40 miles northwest of London - were likely to focus more on the slow progress of reforms to banking and finance around the world.
"It's very rare for a G7 to focus on financial regulation," one of the officials said, speaking on condition of anonymity.
The emergency rescue of Cyprus in March acted as a reminder of the need to finish an overhaul of the banking sector, five years after the financial crisis began.
"It makes sense for the G7 financial leaders to send out a message, from high up, that global efforts to ensure financial stability via appropriate regulation must continue," the official said.
Germany may come under renewed pressure to give more support to a banking union in the euro zone as it did at the recent IMF/G20 meeting in Washington.
The idea was proposed last year to help strengthen the single currency area but Berlin worries it may foot the bill for future bank bailouts.
While the first step - to create a single bank supervisor under the European Central Bank - looks set to be in place by mid-2014, a second pillar, a 'resolution' agency and fund to close failed banks, is in doubt. And there is little prospect that a third leg, a single deposit guarantee scheme, will ever see the light of day.
"We welcome those discussions," a senior US Treasury official told reporters in Washington. "I think Cyprus just further highlighted the importance of moving to break that feedback loop between sovereigns and bank balance sheets."
Another G7 official said new rules for derivatives trading and the Basel III plan for minimum bank capital levels were running behind schedule and would be among the issues the G7 would discuss, as well as the risk of a reversal in soaring share prices in some countries which contrasts with weak growth.
But some of the officials said they said they did not know why Britain, which is chairing the G7, had called the meeting.
"I am really annoyed that I've got to give up my weekend for this," one complained, adding the talks could have taken place on the sidelines of IMF's meetings in Washington in mid-April.
A British finance ministry official said there was value in informal talks among the world's biggest industrialized economies but declined to comment on the agenda.
Changed role for G7
G7 finance ministers and central bank governors used to hold global markets in their thrall when they met, given the combined financial firepower of the group's members - the United States, Germany, Japan, Britain, Italy, France and Canada.
But it lost its mantle as the main forum for thrashing out differences over the global economy in 2009 when responsibility was passed to the wider Group of 20 which includes emerging heavyweights such as China, Brazil and India.
Since then, the G7 has met on the sidelines of G20 and IMF meetings but has held few standalone meetings although officials say the smaller grouping makes for more open discussion.
"As often is the case, the G7 is a photo opportunity. But it's important that it stays together as a forum to address the issues," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
The U.S. official said Washington would keep up its calls on Europe to boost demand and maintain its focus on Japan's aggressive monetary policy which has raised US concerns about a weakening of the yen.
A Canadian official said discussions would again focus on the right degree of belt-tightening for debt-laden countries which are struggling to get their moribund economies growing and have relied heavily on massive central bank stimulus.
No communique and no formal decisions are expected at the meeting which would instead help prepare the way for a G20 leaders' summit in Russia in September.
It comes at a relatively good time for its host, UK finance minister George Osborne. He will be able to point to a few signs of life in Britain's stagnant economy that have taken some of the heat out of criticism of his austerity policies.
The meeting will also be a chance for the G7 to get to know new members of the group - such as the finance ministers of the United States and Italy - and to bid farewell to Mervyn King, who retires from the Bank of England in June.
