NEW DELHI, Sep (IPS/South Centre) Since January 2012, aviation has been included in the European Union’s Emissions Trading Scheme (ETS) that requires aircraft operators to surrender one allowance per tonne of carbon-dioxide emitted on a flight to and from (and within) the EU. This covers passenger, cargo and non-commercial flights and applies no matter where an aircraft operator is based.

Anuradha R.V.

Each such airline would have to comply with a benchmark set by the EU on the basis of its average annual emissions in respect of flights to and from the EU. One of the most controversial aspects of the measure is that it calculates an airline’s emissions from the point of take off; this means that a flight from New Delhi to London, which flies within the EU only for a few hours, would have to account to the EU for its emissions from New Delhi itself. EU’s rationale in putting in place the system is to ensure that its own operators are not at a competitive disadvantage.

The economic impact of the EU-ETS for the global airline industry has been estimated to be 1.5 billion dollars annually, and 13.8 billion dollars through 2020, according to Thomson Reuters Point Carbon. The annual financial impact on major airlines from India has been estimated to be in the range of 30 to 40 million dollars.

The EU system offers airlines some allowances for free, and they are required to purchase the rest at EU auctions. If an airline exceeds the benchmark set for it, it can buy carbon credits from the market. Revenue from the auction of aviation allowances is expected to earn the EU close to 334 million dollars in 2012.

Airlines would simply pass on the enhanced costs of EU-ETS compliance to consumers, and it could indeed be argued that perhaps it is not such a bad thing for international air travellers to pay for their carbon footprint.

However, the EU’s action is essentially a statement that it would take measures on its own to police climate change, disregarding multilateral processes, which impact activity both within its own territory and outside of it.

There are potentially other forms that such unilateral action could take, for instance, through imposition of taxes or other charges on imports, or other non-tariff regulatory requirements, whose impact on goods and services from countries like India could be more severe.

EU-ETS in fact already includes a provision stating that the EU would consider measures for “carbon equalisation”, which could affect imports from countries that do not have comparable emission reduction norms, depending on the outcome of the ongoing multilateral negotiations. The main reasoning seems to be that if multilateral negotiations do not have the effect that EU desires, then EU will impose unilateral measures.

To state the obvious, any unilateralism would make a mockery of the multilateral processes. Under the United Nations Framework Convention on Climate Change (UNFCCC), any unilateral action would run contrary to the principle that only Annex I (developed) countries have quantitative legally-binding emission reduction targets, while other countries have no binding quantitative targets of any kind.

This principle – also referred to as the principle of “common but differentiated responsibilities”, is clearly violated by EU-ETS requirements, which effectively treat Annex I and non-Annex I countries in the same way.

The Kyoto Protocol to the UNFCCC required Annex I countries to pursue reduction of aviation emissions by working through the International Civil Aviation Organisation (ICAO). ICAO resolutions in 2007 and 2010 emphasised that countries should undertake market-based measures relating to aviation emissions only subject to multilateral or bilateral agreements. Such a mandate essentially means that measures such as EU-ETS can be enforced against an aircraft operator from a third country only if the EU has entered into an agreement with such a country. EU-ETS, however, ignores this principle.

As a response to EU-ETS, 23 members of the ICAO (including the U.S., Japan, Singapore, India, China and Brazil) met in February 2012 to condemn EU’s move. These countries have outlined a basket of measures which they would want to explore against the EU, which include:

- filing of an application under ICAO’s convention for resolution of the dispute;

- prohibiting their airlines/aircraft operators from participating in the EU-ETS;

- imposing additional levies/charges on EU carriers/ aircraft operators as a form of counter-measure;

- reviewing Bilateral Air Services Agreements, including Open Skies with individual EU member states;

- suspending current and future discussions and/or negotiations to enhance operating rights for EU airlines/ aircraft operators;

- exploring action under WTO agreements.

Following the above declaration, the governments of China and India have taken the position that their airlines would not comply with EU-ETS. Under the EU directive, non-complying aircraft operators face a penalty of 100 pounds per missing allowance, and also face a potential ban from operating in the EU. The extent to which the stalemate continues, and the extent to which EU will enforce its penalties or even suspend non-complying airlines from entering its airspace, remains to be seen.

As seen from the joint declaration of the countries opposing the EU’s move, the only effect of EU’s unilateral action could be a spate of unilateral measures from other countries.

Will good sense prevail to enable an amicable resolution? Otherwise, between the various unilateral measures – threatened and actual – the only casualty would be climate change. (END/COPYRIGHT IPS)

* Anuradha R.V. is a partner at Clarus Law Associates, New Delhi, and works on law and policy relating to international trade and climate change. For further analysis see Climate Policy Brief, September 2012 (http://www.southcentre.org).

Cristina Fernández and Wen Jiabao in a videoconference with Dilma Rousseff and José Mujica. Credit: Office of the president of Argentina.

BUENOS AIRES, Aug 8 2012 (IPS) - There is little likelihood that South America’s Mercosur trade bloc will take up China’s proposal to establish a free trade agreement, at least in the short term. Experts and industrialists fear an invasion of cheap Chinese goods, and unequal competition.

Although the sources consulted by IPS agreed that trade and investment between Mercosur (Southern Common Market) and China will continue to expand, they said a free trade deal was unrealistic under the present circumstances.

Chinese Premier Wen Jiabao expressed interest in such an agreement on his Jun. 25 visit to Buenos Aires, in a videoconference with Presidents Cristina Fernández of Argentina, Dilma Rousseff of Brazil, and José Mujica of Uruguay.

The four leaders welcomed the idea of forging closer trade ties between Mercosur and China.

Paraguay, Mercosur’s fourth founding member, has been suspended from the bloc since that country’s legislature removed President Fernando Lugo in a lightning-quick impeachment trial on Jun. 22.

At any rate, Paraguay is facing the dilemma of maintaining diplomatic relations with Taiwan or agreeing to cut off ties in order to negotiate with Beijing.

The fifth full member of Mercosur, Venezuela, had not yet been admitted to the bloc at the time of the videoconference. It officially joined on Jul. 31 in Brasilia.

At the last Mercosur summit, held in the Argentine province of Mendoza four days after Wen’s visit, the governments of Argentina, Brazil and Uruguay agreed to strengthen cooperation with China.

They also approved a proposal to send a joint trade mission this year to China ‘s commercial hub, Shanghai.

But they did not elaborate on the Asian giant’s suggestion of freeing up trade, which analysts agree will be a long, complex process.

Mauricio Mesquita Moreira, an Inter-American Development Bank (IDB) expert on international trade, said the conditions are not in place for reaching a free trade deal in the near future.

“On one hand, Argentina and Brazil have industries that are highly vulnerable to competition from Asia. And on the other, the state still has too much of an influence in the promotion of industry in the Chinese economy for Mercosur to accept a liberalisation of trade,” the Brazilian economist told IPS.

“The smaller partners, Uruguay and Paraguay, lack industrial structure, and could benefit from an agreement with China. But being in Mercosur also gives them benefits such as privileged access to the bloc’s larger markets,” he said.

Mesquita Moreira was in Buenos Aires this month to present a study carried out by the IDB together with experts from the Asian Development Bank Institute, which analyses the future of ties between Asia and Latin America.

The study recommends an increase in trade and investment between the two regions.

Argentine economist Guillermo Rozenwurcel, director of the Centre for Research on Economic Development in South America (IDEAS), said “the Chinese proposal is not viable in the least, over the next 10 to 15 years.

“The presidents gave a diplomatic response to the Chinese interlocutors, to show that they had listened to the proposal. But until the playing field is level, there are few prospects for real discussions on free trade,” he told IPS.

Rozenwurcel also said there was little “political margin” for considering the question.

On the other hand, “there is a challenging and complex, but possible, outlook” for boosting trade, investment and scientific and technological cooperation between this region and Asia, he added.

According to the study by the IDB and the Asian Development Bank Institute, trade between Latin America and Asia has grown by an average of 20.5 percent a year since 2000, to 442 billion dollars today.

With that sharp increase over the last 12 years, China, Asia’s biggest supplier of imports to Latin America, is now the region’s second largest trading partner, after the United States.

But the pattern of trade between the two regions is based mainly on exports of raw materials from Latin America and sales of manufactured goods from Asia, experts point out.

Abeceb, a private consultancy in Argentina, reported that trade between Mercosur and China climbed from 10.3 billion dollars a year in 2003 to 77.9 billion dollars in 2011, and could reach 200 billion dollars by 2016.

But Abeceb also noted that in the same period, Argentina’s purchases of manufactured goods from Brazil such as textiles, capital goods, plastics or pharmaceutical products fell as a result of competition from lower-cost imports from China.

In the case of textiles, for example, 56 percent of Argentina’s imports came from Brazil in 2003, but today that proportion is less than 23 percent. Meanwhile, purchases of textiles from China grew from two to 34 percent of the total.

And while footwear imports from Brazil fell from 79.2 percent to 37.5 percent between 2003 and 2011, purchases from China rose from 12.6 to 36 percent in the same period.

The president of Argentina’s toy industry chamber, Miguel Faraoni, said a free trade accord between Mercosur and China “would be very counterproductive.”

“Competition is impossible due to the differences between the policies of each one. China produces between 75 and 80 percent of the toys sold around the world, which means it would be an unequal fight,” he said.

Faraoni said the share of locally produced toys sold on the domestic market has gone up from 10 percent in 2002 to 50 percent today. He also noted that the number of foreign companies producing toys in Argentina has increased.

“Production, employment and investment in machinery and new technologies have grown, and we are exporting eight percent of what is produced to the region and to the Latino market in the United States,” he said.

Faraoni stated that Argentine industry could compete in terms of price and quality with Brazil, “which has the same rules of the game,” but that “opening up the market to China would reverse the gains made in the last few years.”

JEREMOABO, Brazil, Jun 16 2012 (IPS) – Many grow lettuce, tomatoes, carrots, beets and other vegetables. But cilantro is ever-present in the gardens that are helping rural families weather the lengthy drought that is once again wracking Brazil’s impoverished Northeast.

Cilantro is the favourite “because of the flavour it adds to beans, meat, pasta – everything,” said Silvia Santana Santos, a beneficiary of the Projeto Gente de Valor (PGV), a project that has helped families create “productive backyards” in 34 municipalities in the state of Bahia, where poverty is aggravated by water scarcity.

The taste for cilantro has drawn families to get involved in initiatives that are enabling people to deal better with the semi-arid climate in the state and improving living conditions in the 282 poorest rural communities in Bahia, as identified by the Regional Action and Development Agency (CAR), the government body that is carrying out the project.

The PGV’s three main goals are to install small-scale water tanks for harvesting and storage of rainwater, boost production, and provide training. The total investment is 60 million dollars, half of which is financed by the International Fund for Agricultural Development (IFAD) and the other half by the Bahia state government.

“No one buys beans, but they do buy cilantro,” said Julio Santos, who lives with Silvia Santana and their seven children in the community of Sitio Taperinha of just over 100 families, in Jeremoabo, one of the municipalities included in the project, which IPS visited.

The drought destroyed the maize and bean crops, but “we sell our vegetables every 15 days” without interruption, said Santos, who agreed to abandon his traditional grain crop, which is vulnerable to the risks posed by the semi-arid climate of the Northeast, a region that is home to 22 million of the country’s 198 million people.

Vegetable gardens could become the main activity of families in the future, he said. A profit margin is ensured by irrigation using water from two 5,000-litre half-buried rainwater tanks built with support from the project, which capture water that runs along the ground.

During drought conditions, the water harvested by the tanks is used up in two months. But the Santos family also has a pump to draw water from a nearby spring, which has allowed them to continue growing fresh produce. In addition, with assistance from the project, they have begun to produce honey.

As of February, the project had created 5,644 gardens, which have “changed people’s eating habits,” said Gilberto de Alcántara from Curralinho, a community in the municipality of Itapicurú, 175 km south of Jeremoabo, a town of 35,000 people that is the seat of the municipality.

The project has also “helped people understand what a valuable role women play,” because it is women who care for the terraces where the vegetables are grown around their houses, said Cleonice Castro, a young community activist from Jeremoabo who works with the Pastoral da Criança, a Catholic organisation working on behalf of children that has helped reduce child mortality in Brazil.

And everyone is eating better, she added: “without poisons, because we don’t use toxic agricultural chemicals.”

“The excellent focus on the poorest communities” and the active participation of women and young people are aspects that make the PGV “one of the best of the experiences we have carried out in a number of countries,” said Ivan Cossio, IFAD country programme manager for Brazil.

The beneficiaries of the programme have also received training to administer the funds and assistance they have received “in an efficient, transparent manner,” he added.

The project has helped increase incomes by expanding traditional local activities like sheep and goat farming, beekeeping, production and gathering of cashews and native fruits, the production of yucca-based products, and craft-making.

Techniques have also been introduced to increase productivity in the vegetable gardens. For example, plastic sheeting has been placed underneath the traditional terraces to keep water from seeping into the ground, and shade screens are stretched over the crops to protect them from sun damage and curb evaporation, said Carlos Henrique Ramos, an agronomist with the CAR and assistant coordinator of the PGV.

Increasing food security and incomes are the production-related targets, Cossio said.

The “productive backyards”, with the double rainwater harvesting tanks and larger underground tanks used to provide drinking water, training in water use and management, and agricultural technical assistance are the mainstays of the project, which has benefited 36,500 people directly and 55,000 indirectly.

Eight local NGOs under guidance from the PGV have been involved in implementation of the project, with the goal of reaching “the poorest of the poor,” said Cesar Maynart, the coordinator of the project.

These social organisations form part of a broad movement involved in the development and expansion of low-cost technologies aimed at helping people “coexist” better with the semi-arid environment. One of the main actions of this movement was the installation throughout the Northeast of 400,000 16,000-litre tanks used to harvest rainwater from the roofs of houses.

Another of the PGV’s activities is harvesting and storing drought-resistant local plant species of the semi-arid “caatinga” region for forage, to guarantee animal feed during the most severe, lengthy dry seasons.

“I learned a lot, I didn’t know the moringa could be used as forage,” said Gilberto Alcántara, from the community of Curralinho.

The moringa tree (Moringa oleifera), also known as the drumstick or horseradish tree, is originally from India, grows in dry terrain, and adapted well to the climate conditions in the Northeast.

“I didn’t know the guandú (a perennial woody shrub), which I have been familiar with since I was a boy, also serves as forage,” added 26-year-old João dos Santos, a “subterritorial development agent” or ADS from Curralinho.

The ADS’s are promoters of the PGV who are generally young people chosen in the subterritorial divisions, as the groups of participating communities are known.

Forage from local species of plants is essential, especially in the municipality of Macururé, in the north of Bahia, where goats are raised because of their greater resistance to dry climate conditions. The local ADS, Adriano Souza, is heading an “agroecological experiment” there, growing 17 species as forage.

Miguel José dos Santos, 67, said he was getting ready “to sell everything I have left” for fear that the drought will linger. He said he has nine cows, “which are worth a lot” – around 450 dollars each. He explained that it had become too expensive to feed them “because the price of maize has doubled,” and added that he would now dedicate himself to raising goats.

Small farmers in the area continue to raise cattle because they see cows as “savings, or a reserve” for times of trouble, Ramos said. But they lose them to the drought, or are forced to sell them off for a song.

RIO DE JANEIRO, May 23 (IPS) – China's voracious demand for energy has prompted it to embrace Brazil as a major oil partner, fuelling the dramatic expansion of Chinese companies in this South American country. But while some see this as a boost to the Brazilian economy, others fear that it poses a risk to this country’s future self-sufficiency.

China has been Brazil's principal oil investor in the last three years, through China Petrochemical Corporation (Sinopec) and Sinochem Corporation (Sinochem), energy expert Adriano Pires told IPS.

The Asian giant, which is now Brazil's main trading partner, has invested some 15 billion dollars, especially in purchases of assets in companies already operating in Brazil in offshore oil exploration and production.

"China's strategy is to secure oil reserves to guarantee its supply," said Pires, the director of the Brazilian Centre for Infrastructure (CBIE). It is following the same plan in other Latin American countries, such as Argentina and Venezuela, and in other regions, like Africa, he added.

The Brazilian Export Promotion Agency (APEX) reported that China intends to increase its strategic oil reserves by 60 percent, and is willing to go anywhere in the world to do this.

According to CBIE, China’s involvement in Brazil’s oil industry started in 2010 when Sinochem bought 40 percent of the shares of Norwegian company Statoil in the Peregrino field, in the Atlantic ocean off the southern port city of Santos, in a deal worth 3.1 billion dollars.

The same year, Sinopec invested 7.1 billion dollars to take over 40 percent of the Brazilian subsidiary of the Spanish transnational Repsol.

In March this year, Sinopec acquired a 30 percent stake in Petrogal Brasil, which is responsible for the oil and gas exploration and production activities of Portugal’s Galp Energia in Brazil, for 4.8 billion dollars.

Chinese capital also teamed up with Brazilian state oil giant Petrobras to develop offshore areas in the northern Pará-Maranhão basin, and with Anglo-French oil company Perenco in the southeastern Espirito Santo basin.

Pires said the Chinese firms are also interested in acquiring shares in OGX, an oil company owned by Brazilian millionaire Eike Batista, who already has Chinese partners in his mining and metal businesses.

"Brazil is a source of oil and gas, which are strategic resources for sustainable growth in China, but we are also very interested in the Brazilian market," Tang Wei, the head of the Brazilian-Chinese Chamber for Economic Development (CBCDE), told local media.

Pires said this interest is due to China's need to supply its rising demand for fuel, partly to fill the tanks of the cars driven by the growing middle class.

As he said, the Asian giant is today the world's second largest oil consumer, at 9.5 million barrels per day (bpd), following the United States, which uses between 18 and 20 million bpd. In a few years time, China is expected to take the lead.

In parallel with its economic activities in Brazil, China's oil purchases have also grown.

CBIE statistics indicate that China is the second largest importer of Brazilian crude, after the United States, and again the trend predicts that China will overtake the U.S. in the near future.

The Foreign Trade Secretariat of the Brazilian Ministry of Development, Industry and Commerce said exports of crude to China increased from 1.6 million barrels in 2001 to 50.6 million barrels in 2011.

But China wants still more, and has set its sights on the recently discovered deposits below the salt layer at the bottom of the Atlantic ocean off the Brazilian coast, at a depth of over 7,000 metres.

The 55 billion barrels of estimated recoverable oil in these reserves could make Brazil one of the world's major oil exporters.

"China has no experience operating offshore oil platforms, so it leaves that side of things to Petrobras or Repsol," which have more technical know-how for deep water drilling, Pires said.

Beijing's strategy became plain in 2009, when the China Development Bank agreed with the government of then president Luiz Inácio Lula da Silva (2003-2011) to lend Petrobras 10 billion dollars in return for guaranteeing Sinopec's exports of crude to China, initially 150,000 bpd, rising later to 200,000 bpd, at market prices.

The Brazilian business community takes a positive view of China's prominent role, saying it makes the market more dynamic.

China is also partnering Brazilian companies in the refinery sector and in production and distribution of equipment for crude oil exploration and extraction.

"There is no risk (in doing business with China). It suits Brazil because it brings in money. It's good business," said Pires.

In contrast, the head of the Association of Petrobras Engineers (AEPET), Silvio Sinedino, is concerned that China's insatiable appetite for oil and gas may lead to rapid exhaustion of these finite resources.

AEPET advocates a return to monopoly status for Petrobras, which has been partly opened up to foreign capital. The association believes Brazil should not aim to be a big oil exporter; instead, it should ensure its own self-sufficiency, and any exports "should be marginal."

"Countries like China and the United States are avid consumers of oil," said Sinedino. "With such voracious, growing demand, our pre-salt reserves could run out in 15 or 20 years, when we could make them last at least 30 years.

"Brazil cannot become another Middle East for crude exports. We have to meet our own needs first, and sell oil as and when possible, protecting our national wealth," he said, recalling the campaigns that led to the creation of Petrobras over half a century ago with the slogan "O petróleo é nosso!" (The Oil is Ours!)

"Oil is not just any commodity. It has great geopolitical importance," Sinedino emphasised. He said AEPET "is sympathetic" towards the Argentine government's expropriation of Repsol shares in order to take control of YPF, the biggest Argentine oil company.

China's interests in Brazil include other sectors that are key to supplying its appetite for commodities, like soybeans and iron ore.

(END/2012)

Canoa Quebrada dam on the Verde River in the west-central Brazilian state of Mato Grosso. / Mario Osava/IPS

Promoting the development of an integrated regional energy system, which will be "an example for the world," is a policy focus in Brazil, Ventura Filho said at the second Latin American hydropower summit, organised May 9-10 in the southern city of São Paulo by Business News Americas, an online business information service based in Santiago, Chile.

The process has already begun among the Mercosur (Southern Common Market) countries – Argentina, Brazil, Paraguay and Uruguay – with binational projects and interconnections that "avert conflicts," promote energy security, and bring down costs because they more than compensate for investment in power lines and plants, Ventura Filho said.

And integration with Argentina will be given an enormous boost with the construction of two binational hydroelectric plants, Garabí and Panambí, on the Uruguay River, which forms part of the border between Brazil and Argentina and between Argentina and Uruguay. The plants will have a combined capacity of 2,200 MW by the end of the decade.

Uruguay will be ready for full energy integration with Brazil’s national grid in November 2013, said Gonzalo Casaravilla, president of UTE, Uruguay’s state electric utility.

That will reduce the vulnerability of Uruguay’s energy supply, which depends on hydropower generated by just two rivers, meaning it is hit hard when rainfall is scarce, and the country must increase oil imports, Casaravilla pointed out.

"In winter, we need energy from Brazil, and in spring we have energy to offer," Casaravilla explained. He forecast a major reduction in the cost of meeting the electricity needs of the country of just 3.3 million people wedged between Brazil and Argentina.

South America, "the only energy self-sufficient region" thanks to the abundance of rivers, oil, natural gas, wind and sun, can optimise its resources by promoting integration in electricity systems between two groups of countries, said Sinval Zaidan Gama, head of operations abroad in Brazil’s state-owned power company Eletrobras.

The northern group comprises Guyana, French Guiana and Suriname, small territories on the north coast of South America. The idea is to interconnect them and integrate them with the rest of the region, while developing their enormous hydropower potential, Gama said. Because they consume little energy, they would generate a large surplus to export to their neighbours.

The southern group would have far greater weight in the move towards regional integration, because it would include large Mercosur and Andean nations rich in water resources.

Harnessing the rivers in Peru, for example, would supply that country’s less-developed, energy-poor south, as well as arid northern Chile.

It would be "positive for both countries," and would also help "clean up Chile’s energy matrix," especially in the north, which currently depends mainly on fossil fuels, Gama said.

Chile, meanwhile, could export hydropower from its southern rivers to Argentina. Transmission of the energy would be cheaper and more efficient, because the power lines would stretch just 200 kilometres on average, compared to the thousands of kilometres of lines needed to reach the country’s large cities, the Eletrobras executive said.

In fact, Chile would benefit greatly from these interconnections because its hydroelectric potential is concentrated in the south of the country, while demand is highest in the centre – around the capital, Santiago, about 2,000 km to the north – and the even more distant copper-rich north, Gabriel Olguín, assistant manager of research in new technologies in Transelec, a private Chilean electricity transmission company, told IPS.

Transmission is the big problem in Chile, he said, because the unusual long, narrow shape of the country drives up the costs.

Among the Mercosur countries, integration is more advanced, with energy exchange agreements and binational hydroelectric dams like Itaipú, which Brazil shares with Paraguay; Yacyretá between Argentina and Paraguay; and Salto Grande, the first one built by two South American partners, Argentina and Uruguay, in the 1970s.

"Building a hydroelectric dam in one single country is already a complex undertaking" which becomes even more difficult if an agreement between two countries is required, due to the need to respect national regulations and autonomies, said Gama. But he added that it is a "natural and intelligent" way to maximise sustainable use of resources.

Eletrobras coordinates 117 Brazilian state-owned companies, and still controls a large part of electricity generation, transmission and distribution in South America’s giant.

The company was weakened during the wave of privatisation in the 1990s, but the government has strengthened it in the last few years, so that it can operate abroad, among other objectives.

Eletrobras has 42 projects in the pipeline in 16 countries, but "many are in the embryonic stage" and just 30 to 40 percent will actually pan out, Gama admitted.

Brazil has developed an integrated national grid connecting the power generators and distributors across the country, with the exception of a few isolated areas, like the Amazon jungle in the north, which is partly supplied by Venezuela. That makes it possible to save 20 percent in power generation, said Ventura Filho.

Those benefits will be extended throughout South America, where it is only natural to meet 65 to 70 percent of electricity demand by means of water resources, the Ministry of Mines and Energy official said.

Hydroelectricity has an advantage that is not frequently mentioned, he noted: investment is recovered during the period that the concession for the dam lasts, which is 30 years in the case of Brazil.

Then in the many remaining years of the dam’s useful life, operating and maintenance costs are very low, which keeps down energy costs for society for decades. There are dams that have already been operating for over a century, he pointed out.

But binational projects do not necessarily benefit both partners equally. Itaipú, the biggest hydropower dam in the region, has made Paraguay a country rich in hydroelectricity – which, however, hardly benefits the domestic market.

Even today, 28 years after the enormous hydropower complex came on-stream, it provides only 14 percent of Paraguay’s energy needs, said Carlos Colombo, head of the committee managing the power lines that are being built to transmit electricity from Itaipú to Greater Asunción along a 350-km power line to be completed in 2013.

The power line, which will cost 555 million dollars, financed by a Mercosur fund and by the Itaipú power plant, will mark the start of "a new era" in Paraguay, he said, because it will help fuel the country’s industrialisation, will improve the quality of life of the local population, and will further bolster economic expansion, from the already high 15 percent GDP growth in 2010.

The power line was not built earlier because "there was no state policy on this," Colombo told IPS. That has kept the landlocked country of 6.5 million from taking better advantage of its part of the power generated by the dam – half of Itaipú’s 14,000 MW capacity – to boost development. Instead, most of its share has been exported at a low price to Brazil.

(END/2012)

RIO DE JANEIRO, May 7 (IPS) – The Brazilian government of Dilma Rousseff is taking firm steps towards stronger relations with Africa, such as the creation of a special fund to finance development projects together with multilateral lenders like the World Bank.

South America’s giant is keen on establishing a strategic association with Africa, and the tool for doing that is its powerful national development bank, the National Bank for Economic and Social Development (BNDES), which will work in conjunction with the multilateral African Development Bank (AfDB).

"There is a 40-billion-dollar shortfall in financing for a spate of 50 projects, which means the African Development Bank will have to scale up its capital and its activities," said BNDES president Luciano Coutinho. He added that not only public bodies need to be involved in this cooperation, but also private banks in the capital markets.

The alliance was announced at an Apr. 3 seminar on "Investing in Africa: Opportunities, Challenges and Instruments for Economic Cooperation", organised by the BNDES in Rio de Janeiro, which drew delegates from development institutions, business leaders, and personalities like former Brazilian president Luiz Inácio Lula da Silva (2003-2011).

André Esteves, the president of the private Brazilian bank BTG Pactual, also announced the launch of a one-billion-dollar risk capital fund for investment in Africa.

"This will be the biggest private sector contribution for investment in that continent, and a show of the (Brazilian) business community’s affinity with the government strategy," he said.

Makhtar Diop, World Bank vice president for Africa, listed some of the enormous challenges in Africa: integrating the continent in terms of transportation, ports, railways, and telecommunications; managing natural resources like water; energy development; and the struggle for food security.

To boost the continent’s competitiveness in the global market and address the infrastructure deficit, Africa needs at least 68 billion dollars in investment up to 2020, according to the Programme for Infrastructure Development in Africa (PIDA).

The World Bank particularly supports PIDA, a joint initiative of the African Union Commission (AUC), the New Partnership for Africa's Development (NEPAD), and the AfDB.

"We are working together to grow the programme, which is a window of opportunities for the poorest countries," Diop said.

AfDB director Alex Rugamba explained to IPS that "PIDA covers the sectors of transport, energy, water resources and information and communication technologies (ICTs)."

"It was designed for a period of 30 years, because without infrastructure we will not be able to reach the goal for the continent of six percent economic growth," he added.

Rugamba said the programme must be given priority, in order to maintain steady growth over the next few decades. Forty billion dollars in investment will be needed in the energy sector alone, he added.

Brazil’s exports to Africa climbed from 2.4 billion dollars in 2002 to 12.2 billion dollars in 2011, while total trade – exports and imports – soared from 4.3 billion dollars to 27.6 billion dollars in the same period.

Diop and Rugamba both said that Brazil would play an important role in boosting investment in infrastructure in Africa.

"Brazil has experience in the process of harnessing water resources," said Diop. "It has been a pioneer in clean energy from this source, with large dams already operating and under construction, and it has an excellent track record in mining and oil production."

Africa is a new market, said Maria das Graças Foster, the CEO of Brazil’s oil giant Petrobras, who noted that the company is active in Angola, Namibia, Libya and Nigeria.

She pointed out that "important oil reserves have been found in Ghana and Uganda, while production now stands at 58,000 barrels a day in Nigeria, and at 2,000 barrels in Angola."

Murilo Ferreira, the CEO of Brazilian mining firm Vale, stressed that the company has 7.7 billion dollars in investments in nine African countries, in copper, coal, iron ore and nickel mines.

Ferreira also said 900 kilometres of railways and a deep-water port are being built in Mozambique.

"It’s a long-term vision, and we want to achieve environmentally sustainable and socially responsible ways of doing things," he said.

"We need to increase dialogue with local society, because we don’t want to come across as imperialists," he added. "We are willing to address the demands of each population (in the countries) where we are active, because we aren’t perfect, and sometimes we make mistakes. It’s necessary to be humble enough to admit one’s errors."

Former president Lula praised his country’s efforts in forging closer ties and cooperation with the economies of Africa. This is "a moment that requires audacity, to build a new Africa," he said.

"Peace, democracy, growth and distribution of wealth are Africa’s watchwords for the 21st century. This is a time for unity and solidarity. Today there is a wealth of opportunities to be exploited by Brazilians, other South Americans, and Africans."

Lula said "Africa cannot be looked at like it used to be seen, as a simple supplier of minerals and gas…We have to find African partners. We don’t want hegemony; we want strategic alliances."

(END/2012)

Valerie Amos / World Economic Forum/CC BY-SA 2.0

"I am particularly interested in how best to share Brazil’s experience in disaster preparedness and food security with other countries in the region and around the world," said U.N. Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator Amos.

Amos met Monday Apr. 2 with Foreign Minister Antonio Patriota, Defence Minister Celso Amorim, and Minister for National Integration Fernando Bezerra. She then flew to Rio de Janeiro to meet with other officials and with representatives of the private sector and NGOs, to discuss U.N. efforts in the country and opportunities for strengthening coordination in humanitarian aid.

Conor Foley, a consultant on humanitarian aid and human rights, stressed Brazil’s role in the world as an emerging economic power, and the growing influence it has achieved in international debates and aid programmes.

In Africa, for example, there are now more Brazilian than British diplomats, said the Irish expert who lives in Brasilia.

The financial aid provided by Brazil has increased threefold in the last seven years, and South America’s giant now supplies aid to 65 countries, Foley told IPS.

He said Brazil has also accumulated considerable experience in the design of humanitarian aid projects, and in dealing with floods and other natural disasters. In addition, it has a number of doctors who specialise in treating gunshot wounds.

Williams Gonçalves, an expert in international relations at the Rio de Janeiro State University, said Brazil has built up know-how in providing humanitarian aid in extreme situations, as it has demonstrated in Haiti.

"The work carried out by Brazilians in that Caribbean nation and in Africa has drawn everyone’s attention, and has given this country the credentials to provide high-quality, disinterested humanitarian aid," he told IPS.

In the area of food security, Brazil is currently supporting the development of agriculture through anti-poverty programmes in a number of African countries, based on its own experience in domestic programmes like the "Bolsa Familia" (Family Grant), implemented by the government of Luiz Inácio Lula da Silva (2003-2011) and continued by President Dilma Rousseff, both of whom belong to the left-wing Workers Party.

Foley pointed to Brazil’s "internal experience involving the implementation of large-scale cash transfer programmes and the more recent ‘pacification’ of the favelas (shantytowns) of Rio de Janeiro, which are also an example for the world."

To strengthen international humanitarian aid mechanisms, the Brazilian government proposed the creation of software to administer information and connect countries in need of aid with donors.

At the 5TH Regional Meeting on Enhancing International Humanitarian Partnerships, held Mar. 28-30 in Panama City, Brazil’s representatives proposed developing this virtual tool over the internet, to help manage large international emergency aid plans.

Gerard Gómez, the head of the regional office for Latin America and the Caribbean of the Office for Coordination of Humanitarian Affairs (OCHA), who accompanied Amos’ delegation, said the communication between what is needed and what is received is very important when international humanitarian aid is involved.

Gonçalves said the initiative is not "merely a suggestion" but a concrete contribution, taking into account the fact that "Brazil has stood out as an important actor in the field of aid and cooperation since the government of Lula."

"Different government agencies have been active abroad, which means Brazil’s technicians have accumulated experience in this field and are in a good position to propose new ways of operating and new approaches to problems in different areas," he said.

Syria on the immediate agenda

Syria is one of the top priorities in the U.N.’s humanitarian assistance efforts. Amos said around one million people in that country are in need of aid.

After expressing concern about getting medical treatment to the population and support to the children, she said the U.N.’s proposals have not been accepted by the Syrian government.

Although the Red Crescent has trained some 10,000 volunteers across the country to help in relief efforts, the big challenge, Amos said, is to be able to bring together more people to provide aid, and to engage in dialogue with the Syrian government in the nearest possible future.

The experts consulted by IPS agreed that Brazil could play an important role in helping to bring about a peaceful solution to the crisis in Syria.

"Brazil has strong experience in participating in U.N. peacekeeping missions, which gives credibility to its expressions in favour of dialogue between the parties in conflict, and it has demonstrated its skill in brokering agreements," said Gonçalves, who stressed this country’s defence of respect for national sovereignty.

The academic pointed out that "Brazil has already been acting in this scenario along with India and South Africa, implementing important humanitarian aid programmes."

"Since it does not have a colonial past, it is not a military power with expansionist ambitions, and it has a cultural tradition of inclusion and religious tolerance, this country has a positive image in that region," he said.

For those reasons, Foley concurs that Brazil, although it does not have a permanent seat on the U.N. Security Council, could make a diplomatic effort to make humanitarian interventions in Syria and in other parts of the world more coherent.

(END/2012)

The G20 is not representative of the WTO because the poorest countries have no say in setting the trade agenda. / Kim Cloete/IPS

"We will all attend the Cancun meeting to ensure that any agreement to hasten progress in further trade liberalisation is informed by the Doha Agenda," South Africa’s Minister of Trade Rob Davies told IPS.

The Doha Development Agenda (DDA) was launched by the WTO almost 11 years ago to correct the historical imbalances and asymmetries in the global trading system. It was designed to enable poorer countries to integrate into the system.

"This is a most dangerous move by the industrialised countries which are determined to undermine the independence and multilateral character of the WTO, where a large majority of countries are asking for developmental flexibilities for implementing liberal trade commitments," said a trade envoy, referring to the agenda for the meeting.

"The G20 is not representative of the WTO because the poorest countries and countries in Africa, except for South Africa, have no say in setting the trade agenda," the envoy said.

The G20 bloc of major and emerging economies is made up of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States, and the European Union.

Clearly, the rich countries have overwhelming influence in setting the agenda at the G20 meetings, the envoy said.

"The draft agenda for the meeting is basically asking trade ministers to agree on creating a super-body headed by the chiefs of the WTO and OECD (Organization for Economic Cooperation and Development) to oversee all the review and monitoring functions," the envoy argued.

Therefore, the presence of the BRICS ministers is so essential and important, lest the trade agenda be radically altered for the next 10 years, said sources familiar with the BRICS ministers meeting.

During their meeting in New Delhi last week, the BRICS ministers discussed the draft G20 agenda issued by Mexico, and not yet made publicly available, the South African trade minister said.

Significantly, the draft agenda is silent on the Doha trade talks.

It aims to take decisions on core trade issues without first discussing them at the WTO, which is now grappling with new approaches to accelerate the DDA talks.

"We strongly believe that the process has to be multilateral and the central focus has to be on the Doha single undertaking," said Davies, emphasising the importance of transparency and inclusiveness.

"Attempts to reshape the architecture without concluding the Doha talks are not correct," Davies said, suggesting that the BRICS countries are ready to take small steps to reinvigorate the Doha trade negotiations. The minister insisted that agriculture is at the heart of the DDA and that precious little is done to address the continued trade-distorting subsidies of the industrialised countries.

It is important to accord primacy to the Doha multilateral trade negotiations by discussing issues first at the WTO, Davies argued.

The draft agenda for what is going to be the first G20 trade ministerial meeting of its kind – beginning on Apr. 19 – sets the stage for preparing a "New Trade Narrative."

The five-page agenda obtained by IPS, which remains confidential, squarely addresses the trade interests of the rich countries, under subheadings such as "better understanding global value chains to better regulate trade" and "services, trade finance and trade facilitation are essential to oil global value chains."

Angel Gurria, secretary-general of the OECD, known as the rich-country think tank, and Pascal Lamy, the WTO director general, will provide the justification for pursuing this new agenda to the G20 trade ministers.

The heads of the OECD and the WTO have been working in tandem for some time now to change the manner in which global trade is measured and assessed in a neoliberal framework away from a development perspective, say analysts.

But developing countries and the least-developed countries have opposed the framework advanced by the OECD and WTO Secretariats on market-led trade reforms.

In addition, the G20 ministers will discuss "trade, growth, and jobs." The themes for discussion include "trade as a source of growth," "trade as a source of jobs," and "the imperative to keep markets open and to keep opening markets."

Up until now, trade negotiations, including the very setting of the trade agenda for any negotiations, have been based on a give-and-take framework. But for the first time, Mexico is asking ministers to move away "from this setting in which many trade discussions happen" to identify "the links between trade and job creation and (to improve) trade statistics that consider global chains and value addition."

Mexico also wants ministers to focus on "the major forces and challenges facing their economies, including protectionist pressures, and what alternative policies are there to deal with them, other than trade instruments."

"Reading the draft agenda, one gets the feeling that there is a hidden language, which shows basically the interest of developed countries and not of developing countries," said Isabel Mazzei, a former Oxfam International trade policy advisor.

Speaking in her private capacity to IPS, she asked: "What does it really mean ‘to change the trade narrative’- does it mean to ‘move the goal posts’?"

"The Doha Round is about development, agriculture, elimination of subsidies, policy space….and now it looks like this narrative is obsolete as there is no mention of agriculture or subsidy elimination," she said. "Many developing countries still have a big portion of their labour force coming from the agricultural and manufacturing sectors.

"Clearly the G20 draft agenda is a concerted attempt to bring the issues and concerns of rich countries from the back door," she concluded.

(END/2012)

Pipelines that transport grains from the Suape port in Northeast Brazil. In the background, Brazil's largest flour mill, owned by Bunge. / Mario Osava/IPS

In 2009, China displaced the United States as Brazil’s top trading partner. Just two years later, bilateral trade had climbed to 77 billion dollars a year, with an 11.5 billion dollar surplus in Brazil’s favour.

The director of the Brazil-China chamber of commerce and industry (CCIBC), Kevin Tang, said this was "a huge leap" from 2000, when trade between the two countries amounted to just 2.5 billion dollars.

The Asian giant has also begun to invest heavily in Brazil, as it has in Chile and other countries of Latin America as well.

A study by the Brazilian Trade and Investment Promotion Agency (APEX-Brasil) points to even higher levels of investment than the official statistics show.

According to Brazil’s central bank, foreign direct investment from China totalled three billion dollars between 2005 and 2011. But unofficial figures compiled by APEX-Brasil indicate that investment in productive sectors amounted to nearly 17 billion dollars between 2009 and 2011, counting funds channelled through Hong Kong and other indirect routes.

With respect to both imports and investment, China is driven by the same interest that has led it to increase its presence in other regions: with a population of 1.3 billion people – the world’s largest – it has a growing hunger for raw materials and is seeking to guarantee basic supplies while minimising dependence on imports from any single country.

The study by APEX-Brasil, "The Internationalisation of the Chinese Economy; the Scale of Direct Investment", says that Chinese investment, which "began to intensify in the post-global financial crisis period," has been concentrated in natural resource-intensive industries like oil and steel.

The global financial crisis that broke out in 2008 did not curtail that process. On the contrary, "it could be suggested that the crisis has created an opportunity to acquire depreciated assets," says the study, which was published this month.

Most of China’s investments in Brazil "are aimed at establishing export supplies to China of commodities of which we are large producers, such as soy, iron ore and oil," Rodrigo Branco, an economist at the Centre for Foreign Trade Studies Foundation (FUNCEX), told IPS.

China’s strategy to obtain the commodities it needs is four-pronged, Branco said. In the first place, it involves signing contracts and terms of commitment with Brazilian suppliers, to lock in specific quantities of exports within certain timeframes.

In second place is the creation of Chinese-Brazilian joint ventures to produce certain goods; third, the purchase of or merger with Brazilian firms by Chinese companies; and fourth, the acquisition of property and land, to produce mainly agricultural commodities.

"The chief focus of (China’s) investment in Brazil is still to obtain regular supplies of commodities, to cover growing demand," Branco said.

Besides raw materials, there are other areas of interest to China, such as the automobile industry. Chinese carmakers are building factories in Brazil to help supply this country’s fast-growing market for cars.

But "that is not the main focus of Chinese investment," the expert stressed.

The CCIBC’s Tang told the federal government-owned news agency Agência Brasil that Brazil’s exports to China are led by iron ore (45 percent of this country’s sales in 2011); soy (25 percent); oil (11 percent); and food.

Tang did not rule out growing Chinese interest in other sectors, like energy, where it has already started to invest. The aim in those areas is to improve conditions and lower export costs, Augusto José de Castro, vice president of Brazil’s Foreign Trade Association (AEB), told IPS.

De Castro also referred to the increase in loans to the region by China’s state banks, which have totalled 75 billion dollars since 2005, at a time when credit sources have been drying up because of the global financial crisis and due to more specific credit access difficulties faced by countries like Argentina, Venezuela and Ecuador.

"We are unfortunately highly dependent on China," de Castro said.

"China’s monthly trade deficit has increased," de Castro said at a recent conference organised by the Getulio Vargas Foundation. "This is a new development that no one expected. The Chinese can curb that deficit or stimulate their exports. And if that happens, they will displace exporter countries like Brazil."

He said the only way to turn the situation around is to negotiate with China to get it to import manufactured Brazilian goods, rather than just raw materials.

"It is clear that if we stay on the current track, integration with China will deepen Latin America’s dependence on the old agro-export structure," Adhemar Mineiro, an economist with the Inter-Union Department of Statistics and Socioeconomic Research (DIEESE), told IPS.

According to Mineiro, who is an adviser to the Trade Union Confederation of the Americas (TUCA), with the exception of a few differences, trade with China replicates the model of commercial relations with Europe and Japan: Brazil as an exporter of agricultural, mineral and energy commodities and an importer of manufactured and industrial goods.

"If the growth in ties with China continues to follow this pattern, it will mean even heavier dependence," he warned.

In general, the governments of Latin America should seek alternatives in order to avoid "accentuating the current pattern of economic relations with China," he said.

"In Latin America, the commodity export model has historically meant the concentration of income, wealth and power in a few hands, which runs counter to the search for ways to deepen democracy and improve the distribution of wealth in the region," Mineiro said.

The Economic Commission for Latin America and the Caribbean (ECLAC) issued a similar warning in 2010.

China’s presence is also felt in the gradual introduction of its currency, the yuan, by means of loans. This could have an influence on the regional economy, depending on the volume of business done in that currency, the economist said.

But "the issue is that it further reduces Brazil’s economic power in negotiating with the Chinese, at a time when various industrial sectors have faced difficulties in competition with Chinese products," such as footwear, textiles, clothing and electronic components, he said.

Branco warned about the future risk of fixing quantities of sales to China, given the possibility of changes in the external scenario that affect the volatility of prices.

"If that happens, there could be a change in interest in maintaining contracts and in the focus of investments, which would affect the multiplier effect of those investments on the Brazilian economy," he said.

The problem, the FUNCEX economist said, is that Chinese investments cannot be expected by themselves to shift the focus of exports to products with greater added value.

"If commodities are profitable, there will logically be an interest in investing in them, among both foreign investors and Brazilians," he said.

In order to grow its industrial exports, Brazil must improve internal conditions.

The APEX-Brasil report also notes that China’s strategic focus on countries rich in natural resources is the same in Latin America as in other developing regions, such as Africa and the Middle East.

Trade between Latin America and China grew from 12 billion dollars in 2000 to 188 billion dollars in 2011.

(END/2012)

Fishing boats in Cape Town harbour, South Africa, with Table Mountain as backdrop. Credit: Servaas van den Bosch/IPS

By Ravi Kanth Devarakonda

GENEVA, Mar 30 (IPS) – Brazil and South Africa have experienced a widespread contraction of their manufacturing industries, with the latter suffering massive unemployment as well, thanks to the rampant volatility and misalignment of dominant global currencies like the dollar, trade experts from the two countries say.

“Brazilian industry is at the receiving end of exchange rate appreciation and 2011 saw a negative growth in the manufacturing sector with textiles, leather, chemicals, rubber, and electrical industries, among others, having been adversely affected,” said Josue Gomes da Silva, the chief executive of the Brazilian company, Coteminas. He was speaking at a closed-door seminar at the World Trade Organization (WTO) on Mar. 27.

“Four hundred thousand small businesses closed down in South Africa over the last three years, resulting in unemployment of about 23 to 34 percent due to the unstable exchange rate that made South African exports uncompetitive,” said Stewart Robert Jennings, chief executive of South Africa’s PG Group.

“The South African Rand has strengthened during the last three to four years and is now the most volatile currency,” he said, suggesting that the Brazilian Real and Rand are at their highest appreciation values against the greenback.

Da Silva and Jennings offered a detailed account of the creeping “deindustrialisation” in their respective countries at a closed-door seminar convened by the WTO’s Working Group on Trade, Debt, and Finance.

The two-day seminar, which concluded on Mar. 28, is an outcome of a sustained campaign by Brazil over the last year to persuade members of the WTO to discuss the role played by volatile exchange rates in international trade.

However, several industrialised countries, as well as China, were reluctant to address the issue of exchange rates at the WTO, saying it is part of the International Monetary Fund’s (IMF) agenda. “The seminar is an attempt to give shape to a reality, away from abstract concepts,” Brazil’s trade envoy Ambassador Roberto Azevedo told IPS.

While representatives from the private and public sectors and academia were invited to discuss the role exchange rates played in trade, journalists were barred from the seminar at the insistence of Canada and the United States.

Though there was no consensus on the factors influencing the misalignment of currencies, which imply that there is a gap between a country’s real exchange rate and its equilibrium level, there was general recognition that a problem exists and is playing an adverse role in different countries.

While currencies in big developing countries appreciated significantly over the last few years, in other countries, currencies depreciated or were maintained at a steady peg to the dollar despite favourable macro-economic fundamentals.

The Real is overvalued by 42 percent, while South Africa’s Rand has appreciated in double-digit percentage terms against the dollar. The Indian Rupee also initially appreciated by five percent against the dollar from 2008 to 2009. However, it has recently depreciated sharply due to the country’s burgeoning current account deficit.

Consequently, Brazil and South Africa witnessed a sharp drop in their exports of manufactured goods, while imports from other countries shot up alarmingly. “Brazil has dropped to 14th place in machinery and equipment exports, while imports doubled because of exchange rate overvaluation,” said da Silva.

Meanwhile, the policy flexibility of South Africa, Brazil and India, as reflected by the Wiggle Room Index constructed by The Economist, is not high. The three countries are ranked 65th, 79th and 82nd, respectively.

Against this backdrop, WTO director general Pascal Lamy issued a nuanced statement on Mar. 27 on the exchange rate volatility and its various effects on traders. He said international trade needs exchange rate stability.

“Trade measures cannot correct policy imbalances elsewhere, and be an answer to non-trade policy concerns…. Tit-for-tat measures would be a recipe for protectionist crossfire,” Lamy cautioned.

All these issues, Lamy said, “require a mix of cooperation in the macro-financial field and proper domestic policies which lie outside the remit of the WTO.”

The director general exhorted participants to make sure that the “WTO system does not crumble under the weight of excessive expectations.”

In contrast, a senior official of the U.S. administration, which is providing credit at close to zero percent to its banks and industry since the onset of the financial crisis in 2008, complained that China had kept the Yuan nearly unchanged despite a growing current account surplus and bulging foreign exchange reserves.

“A strong consensus now exists on the importance of promoting market-determined exchange rate systems, enhancing flexibility to reflect underlying economic fundamentals, avoiding persistent exchange rate misalignments and refraining from competitive currency devaluation,” said Mark Sobel, the U.S. Treasury Department’s deputy assistant secretary for international monetary and financial policy.

China responded saying that those countries adopting unconventional monetary policy have contributed to the currency volatility and misalignment by adding liquidity to financial markets.

“Exchange rate volatility was intensified by the monetary policy of major currency issuers – the U.S.,” Ruogu Li, president of China’s Exim Bank, told the participants.

“Both developed and developing members have fallen victim to major currency issuers,” the Chinese banker said, according to sources present at the meeting. “For every iPhone sold in the U.S., Chinese workers and companies get less than two percent, while the rest of the profits go to the American companies.”

The seminar has underscored the need to acknowledge the problem.

“If countries agree that misalignments are a given in the current international economic and trade processes, it is important to discuss the trade-related aspects of the problem at the WTO,” said Azevedo.

(END/2012)