WTO Director General Pascal Lamy

GENEVA, Dec. 5--The head of the World Trade Organization marked sixty years of the multilateral trading system on Tuesday with a warning against any revival of protectionism.
WTO Director General Pascal Lamy noted that the global economy was now much more interlinked than at the time of the Great Depression in the 1930s and that “protectionist policies would lead to a domino effect with far more catastrophic consequences.“
The WTO was set up in 1995 as a successor to the General Agreement on Tariffs and Trade (GATT), itself founded on January 1, 1948 in a bid to avoid the rampant protectionism of the pre-Second World War economy, AFP wrote.
For the past six years, the WTO’s 151 members have wrestled with the Doha Development Round’s proposals to further liberalize trade, without much success, as developed and developing countries remain at loggerheads over agricultural subsidies and industrial tariffs. The impasse has led to some calls for more protectionist measures, notably in the United States.
Lamy warned against such calls, saying that “one must always be on guard against protectionist impulses, which seem inevitable at certain moments.
Lamy was speaking at the launch of the WTO’s annual trade report for 2007 which took an overview of the past 60 years of the multilateral trading system.
Meanwhile, Brazil on Tuesday sharply criticized joint US and European Union proposals for fewer tariffs and other trade barriers on “green“ goods and services as protectionist and only serving their own interests.
“Brazil is deeply disappointed. We find the proposal modest, biased and protectionist,“ Brazil’s trade negotiator at the WTO, Roberto Azevedo told reporters.
The EU and US on Friday proposed that all 151 members of the WTO cut tariffs on at least 43 types of environmentally-friendly goods and services in order to boost their use worldwide.
But Brazil said the measure was “essentially protectionist“ and took issue with the definition of “green“ products, not least the absence of biofuels.
“The exclusion of biofuels is particularly striking,“ Azevedo said. Brazil is a key exporter of this alternative fuel source. “The approach of the proponents ignores high tariffs and other barriers they impose on goods they do not produce,“ he added.

DOHA, Qatar, Dec. 5--The six-nation Persian Gulf Cooperation Council announced the formation of a common market Tuesday similar to the one launched by Europe over 50 years ago.
Starting at the beginning of 2008, citizens from Bahrain, Kuwait, Oman, Saudi Arabia, Qatar and the United Arab Emirates will have equal rights to carry out business in any PGCC country and equal residency rights, AP reported.
The announcement came at the closing session of the annual meeting of the heads of state of the PGCC, a union of states that was established shortly after the outbreak of Iraq-Iran war in 1980 to strengthen Arab sheikdoms and emirates in the Persian Gulf.
“The Persian Gulf common market aims to create one market ... raising production efficiency and optimum usage of available resources and improving the six countries’ negotiating position among international economic forums,“ said the final declaration from the meeting.
The PGCC states have been working on establishing a common market for the past five years and are also working toward a single currency by 2010.
PGCC Secretary-General Abdul-Rahman al-Attiyah called the creation of the PGCC common market “a historic declaration“ at a press conference after the end of the summit. “We want to have equal opportunity for all PGCC citizens,“ al-Attiyah told reporters.
The benefits include the right to work in all government and private institutions in the PGCC, make real estate and other investments, move freely between the countries, and receive education and health benefits, among others, according to the final declaration.

MOSCOW, Dec. 5--Ukraine will pay nearly US$180 (122 euros) per thousand cubic meters of Russian natural gas beginning next year, Russia’s state-run gas monopoly said Tuesday--a 40 percent increase over current prices.
The deal comes after months of negotiations between Moscow and Kiev and is part of what Russia describes as an effort to end its practice of providing energy supplies to former Soviet republics at cut-rate prices, AP reported.
That effort escalated into a full-blown dispute two years ago, during which Russia cut supplies to Ukraine. The dispute affected some European countries farther along the export pipeline and raising worries about Russia’s reliability as Europe’s main energy supplier.
OAO Gazprom said in a statement that, under the deal signed by Gazprom CEO Alexei Miller and Ukrainian Energy Minister Yury Boiko, Ukraine had agreed to pay US$179.50 (121.70 euros) per thousand cubic meters beginning in 2008. It also said transit prices would be set at US$1.70 (1.15 euros), the same transit price for gas shipping across Russian territory.
Ukraine currently pays US$130 (88.19 euros) per thousand cubic meters of gas imported from Russia.
Andrei Knutov, a spokesman for the joint gas concern RosUkrEnergo, said no official documents had been signed yet, though that was expected in the coming days.
Since the January 2006 supply disruption and a similar incident involving oil shipped across Belarus, Russia has sought to assure the European Union that export supplies would not be affected.
In October, Russia urged Ukraine to make good on what it said was a US$1.3 billion (890 million euros) debt for gas shipments, a demand some Ukrainian officials described as an attempt to exert influence on Ukrainian politics after September’s parliamentary elections.
The deal comes one week after Gazprom announced it would pay up to 50 percent more beginning next year for natural gas from Turkmenistan. Russia controls nearly all gas exports from the Central Asian nation and nearly of it is destined for Ukraine.

STOCKHOLM, Sweden, Dec. 5--A Qatar investment group on Tuesday withdrew its application to be assessed as a potential future owner of Nordic stock exchange operator OMX.
The move by Qatar Holding LLC could clear the way for a joint US$4.9 billion (3.3 billion euros) takeover bid for Stockholm-based OMX by Borse Dubai and Nasdaq Stock Market Inc.
The Qatar group owns just under 10 percent of the shares in OMX and applied in October for permission to buy up to 100 percent of the company, fueling speculation of a bidding war, AP wrote.
Qatar Holding said in a statement it regarded its OMX investment “as a very valuable asset“ for which it was considering a range options to “maximize returns.“
“The said options, however, no longer currently require an application to the Swedish Financial Supervisory Authority,“ the company said.
Nasdaq Stock Market Inc. and Borse Dubai settled their own takeover fight for OMX earlier this year with a deal that would ultimately see Nasdaq take control of OMX while Dubai would gain stakes in Nasdaq as well as the London Stock Exchange.

ALGIERS, Algeria, Dec. 5--France and Algeria Tuesday signed billions of dollars of oil and gas deals and a nuclear accord, on day two of a state visit by President Nicolas Sarkozy that sought to heal wounds from the colonial past.
Sarkozy has used his trip to promote a new economic partnership with the energy-rich north African nation and draw a line under historic tensions between France and its former colony, AFP reported.
On Monday he was applauded at an Algiers business forum for a speech denouncing colonialism as “unjust“, though he stopped short of apologizing for atrocities blamed on French troops and settlers during Algeria’s 1954-1962 war of independence.
After an early morning visit to the World Heritage archaeological site of Tipaza, west of Algiers, Sarkozy’s delegation got down to deal-making, finalizing some five billion dollars’ worth of contracts.
Algerian and French officials signed a wide-ranging accord on civil nuclear energy, covering the “use and development of nuclear energy for peaceful ends“--described by a French source as the first of its kind between Paris and an Arab-Muslim country.
The deal covers research, technology transfers and electricity production, as well as prospecting and digging for uranium.
As part of a raft of gas and oil accords, French oil giant Total signed a deal to invest $1.5 billion (one billion euros) in a new petrochemical plant in Algeria. Under the deal, Total will develop a plant at the port of Arzan, west of the capital, in partnership with Algeria’s Sonatrach, at a total estimated cost of three billion dollars.
Gaz de France (GDF) extended its existing gas contracts with Sonatrach from 2013 to 2019, a deal worth around 2.5 billion euros a year at current market prices, GDF said.
Finally, Alstom--as head of a consortium that includes the Egyptian firm Orascom--finalized a deal with Algeria for a combined cycle gas turbine power plant to be built in the western Terga region.

BRUSSELS, Belgium,
Dec. 5--EU finance ministers ended on Tuesday five years of deadlock over a shake-up of value added tax (VAT) on electronic commerce after overcoming deep opposition from Luxembourg.
“We have reached an agreement on the VAT package which means that we have been able to introduce a significant change into the tax system,“ Portuguese Finance Minister Fernando Dos Santos said after chairing a meeting with his EU colleagues, AFP reported
To end Luxembourg’s opposition, the ministers agreed to push back the application of the reform from 2010 to 2015 and to phase it in gradually by 2019.
Although most service suppliers and consumers are in the same country, the emergence of electronic trade has encouraged Internet and telecoms companies to set up shop in European countries with the lowest sales value added tax rates.
In order to adapt to the changing times, the European Commission had proposed that VAT for e-commerce, telecommunications and satellite television services be applied in the country where the consumer is.
However, Luxembourg, which has one of the lowest VAT rates in the European Union at 15 percent, had blocked the reform for years out of fear that it would lose many of the e-businesses that have set up in the Grand Duchy.
Under the compromise reached Tuesday, a member state where a service provider is located will be able to keep 30 percent of the VAT revenues as of 2015, with the amount gradually being lowered to zero by 2019.
EU Taxation Commissioner Laszlo Kovacs said that “as far as businesses are concerned there will be no (extra) burden“ due to the revenue sharing arrangement during the phase-in period.
Luxembourg has seen scores of Internet and technology companies flock to the country in recent years and now hosts the European headquarters of Apple’s iTunes and Skype.
Luxembourg Prime Minister Jean-Claude Juncker had warned that the reform could cost his country 220 million Euros ($325 million) a year in lost revenue, equal to one percent of output.
As with all issues regarding tax harmonization in the EU, member states had to unanimously accept the package.

BEIJING, Dec. 5--China said Wednesday it had approved initial work on a multi-billion-dollar oil refinery project in the south, in what the local press has hailed as the nation’s largest ever joint venture, AFP reported.
The official China Daily said Wednesday the project, to be jointly run by the nation’s top refiner Sinopec and Kuwait Petroleum Corp, would involve an investment of five billion dollars.
“Initial work can be started on the project now,“ an official surnamed Zhang with the National Development and Reform Commission, China’s top planning agency, told AFP.
Previous reports said that preliminary approval for the ambitious project was given in July 2006.
It will include a refinery and an ethylene plant to be located in Nansha city, Guangdong province, putting it in a position to help quench the severe energy shortage experienced by one of China’s top industrial powerhouses.
The province has contributed nearly 10 percent of the country’s economic growth in recent years but has been experiencing tight supplies of fuel for years, the report said. An executive surnamed Wu with Sinopec told AFP the facilities were expected to come online in 2010 at the earliest and would be capable of processing 15 million tons of crude and producing one million tons of ethylene a year.
Chinese demand for ethylene--a key component in the manufacturing of plastics products--has risen dramatically amid an economic boom.
The country had to import 57 percent of its ethylene needs in 2005, up from just 22 percent in 1990.

Northern Rock may have borrowed as much as 29 billion pounds ($60 billion) from the Bank of England since its mid-September financing crisis.

SINGAPORE, Dec. 5--The British government has drawn up a bill to nationalize Northern Rock Plc if the struggling lender fails to strike a deal with a private buyer, Reuters reported on Wednesday.
The Labour government is working with opposition Conservatives in hopes of winning bipartisan support for the nationalization bill as a fallback option, the Daily Telegraph newspaper wrote, without citing sources.
The paper quoted a Treasury spokesman as saying the preference was for Northern Rock to be bought by a private bidder.
The report helped sterling recover early losses in Asian trade and was cited by traders as supporting a modest recovery in Asian stocks.
Northern Rock may have borrowed as much as 29 billion pounds ($60 billion) from the Bank of England since its mid-September financing crisis, linked to a global credit crunch.