www.falkland-malvinas.com Mercosur Wednesday, 19 March

All Mercosur members and most of Latinamerican countries are against military action in action and in spite of US President George Bush 48 hours ultimatum to Iraq, the region still expects a diplomatic solution to the confrontation including the full disarmament of the Baghdad regime.

Colombia and Bolivia are the only two countries that support the US decision arguing that the diplomatic process can’t be kept indefinitely and because United Nations resolutions must be enforced. However they agree that all paths must be exhausted to avoid war.

Mexico and Chile, non permanent members of the Security Council reacted to the ultimatum demanding recognition of the letter and spirit of the UN chart and regretting that “we have been unable in the Security Council to find a solution”.

In a rare intervention British Primer Minister Tony Blair praised in Parliament Chilean president Ricardo Lagos constructive efforts to muster a consensus in the Security Council, that apparently was quiet close to be achieved.

In Buenos Aires Chief cabinet minister Alfredo Atanasof met with French Ambassador Paul Dijou and revealed “permanent contacts” with Mercosur and Rio Group members to subscribe a joint Latinamerican declaration in the coming 48 hours.

Brazilian president Luiz Inacio Lula da Silva talked to UN Secretary General Kofi Annan and other world leaders “trying to find a solution that could avoid the military conflict” said a presidential advisor in Brasilia.

Venezuela and Ecuador ratified their unconditional commitment to International Law and a peaceful solution to the Iraq conflict, adding that they only recognize Security Council resolutions.

Colombia in an official release supported the American-British-Spanish “Azores Declaration”, but Foreign Secretary Carolina Barco said that “Baghdad still has time to completely comply with UN Resolution 1441 demanding full disarmament”.

Bolivian Minister of Foreign Affairs Carlos Saavedra stressed that “dialogue can’t go on indefinitely otherwise no one will take the United Nations seriously”.

In Spain, the country’s main newspapers underlined the contrast between Mr. José Aznar who aligned the country behind Washington and London, and the Mexican and Chilean Presidents stances, resisting United States pressures, and even presenting a compromise solution.

www.falkland-malvinas.com Mercosur Wednesday, 19 March

Mercosur requested a considerable increase in the European Union access offer to agriculture markets during the ninth round of talks in the framework of the bi-regional association agreement currently being held in Brussels, Belgium. “We believe the EU offer is still insufficient and it does not satisfy our expectations”, said Rigoberto Gauto, Paraguay’s Economy and Integration Minister, who heads the team of Mercosur negotiators. “We expect a considerable EU opening involving those areas where we are most interested such as farming and agro-business. We know that agriculture is a sensitive issue for the EU but so is car manufacturing for Mercosur”, indicated Mr. Gauto whose country holds the customs union six month chair. Argentine negotiator Martín Redrado said that Mercosur didn’t come to Brussels to change Europe’s Common Agriculture Policy, CAP, “but we’re interested in market access and in those products most sensitive, we’re willing to discuss quotas, or a system that does not harm PAC or European farmers”. However Mr. Redrado pointed out that Europe “still has to sit down and negotiate that 10% where Mercosur is most competitive, and that so far they seem unwilling to address”. Mercosur is pressing EU for a greater transparency and simplification of quasi-trade barriers such as ad valorem tariffs and other bureaucratic procedures that impede, slow or discourage imports. The IXth round of negotiations is scheduled to end this Friday. The Mercosur-European Association agreement includes the creation of a free trade area.

Fed keeps rates unchanged United States Federal Reserve kept this Tuesday the basic interest rate unchanged at the 41 year low of 1,25%. But it also indicated it would heighten surveillance of the Iraq situation adding it was ready to cut rates if the war had an impact in the economy. Breaking with tradition and emphasizing the seriousness of the situation, the Federal Open Markets Committee, FOMC, failed to issue an assessment of the risks facing the United States economy. The Fed said it could not usefully characterize the current situation given the uncertainties that abound, stressing that it would withhold any economic risk assessment until after some of the “unusually large uncertainties facing it abate”. Seventeen of the twenty two major companies that trade directly with Fed bonds in Wall Street had anticipated that FOMC would decide to keep the basic rate unchanged at 1,25%. “Monetary policy actually is very flexible and the Fed is keeping all its options open, waiting to see how the conflict evolves”, commented Gary Thayer from A.G. Edwards and Sons Inc. The Fed’s message suggests that it is poised to cut rates without waiting for its regular monthly meeting if the war hits the economy hard. The funds rate is the interest banks charge each other on overnight loans and is the Federal Reserve main tool to influence economic activity. However Federal Reserve policymakers stressed that the underlying health of the US economy is strong and blamed the slowing down to higher energy prices and war fears. Last week the US Labour Department reported that unemployment had reached 5,8%. FOMC is scheduled to meet again next May 6th. Wall Street brokers believe the Fed could appeal to other instruments to reactivate the US and world economy such as purchasing back Treasury bonds and injecting liquidity to markets. Latinamerica condemns war and demands disarmament All Mercosur members and most of Latinamerican countries are against military action in action and in spite of US President George Bush 48 hours ultimatum to Iraq, the region still expects a diplomatic solution to the confrontation including the full disarmament of the Baghdad regime. Colombia and Bolivia are the only two countries that support the US decision arguing that the diplomatic process can’t be kept indefinitely and because United Nations resolutions must be enforced. However they agree that all paths must be exhausted to avoid war. Mexico and Chile, non permanent members of the Security Council reacted to the ultimatum demanding recognition of the letter and spirit of the UN chart and regretting that “we have been unable in the Security Council to find a solution”. In a rare intervention British Primer Minister Tony Blair praised in Parliament Chilean president Ricardo Lagos constructive efforts to muster a consensus in the Security Council, that apparently was quiet close to be achieved. In Buenos Aires Chief cabinet minister Alfredo Atanasof met with French Ambassador Paul Dijou and revealed “permanent contacts” with Mercosur and Rio Group members to subscribe a joint Latinamerican declaration in the coming 48 hours. Brazilian president Luiz Inacio Lula da Silva talked to UN Secretary General Kofi Annan and other world leaders “trying to find a solution that could avoid the military conflict” said a presidential advisor in Brasilia. Venezuela and Ecuador ratified their unconditional commitment to International Law and a peaceful solution to the Iraq conflict, adding that they only recognize Security Council resolutions. Colombia in an official release supported the American-British-Spanish “Azores Declaration”, but Foreign Secretary Carolina Barco said that “Baghdad still has time to completely comply with UN Resolution 1441 demanding full disarmament”. Bolivian Minister of Foreign Affairs Carlos Saavedra stressed that “dialogue can’t go on indefinitely otherwise no one will take the United Nations seriously”. In Spain, the country’s main newspapers underlined the contrast between Mr. José Aznar who aligned the country behind Washington and London, and the Mexican and Chilean Presidents stances, resisting United States pressures, and even presenting a compromise solution.  

Mercosur Wednesday, 19 March Latinamerica condemns war and demands disarmament

Mercosur Tuesday, 18 March IMF after tax and pension reforms

Mercosur Tuesday, 18 March Hot News

Mercosur Monday, 17 March Our Iraq position won't bring reprisals from U.S.

Mercosur Monday, 17 March Encouraging prospects in Argentina Atomization and an end to bipartisanism?

Mercosur Monday, 17 March Breaking News

news.ft.com By Frances Williams Published: March 19 2003 4:00 | Last Updated: March 19 2003 4:00

The World Trade Organisation yesterday set up a dispute panel to investigate Brazil's complaint that US cotton subsidies worth nearly $4bn (£2.54bn) a year are illegal under international trade rules.

Brazil says the subsidies are squeezing its exports in world markets and depressing world prices, costing Brazilian cotton farmers $640m last year in lost foreign earnings. India, Pakistan, China, Taiwan, Argentina and Venezuela, as well as Canada and the European Union, yesterday asked to be third parties in the case. www.wto.org Frances Williams, Geneva

www.taipeitimes.com STAFF WRITER WITH AGENCIES Wednesday, Mar 19, 2003,Page 11

Petrol firm considers backup Chinese Petroleum Corp may ship crude oil to Taiwan from countries including Venezuela should its supply from the Middle East be disrupted, state-run Central News Agency said, citing unidentified company officials.

Taiwan imports almost all its oil and plans to reduce its reliance on supplies from the Middle East because of concern an invasion of Iraq could disrupt shipments.

Teco opens motor factory Teco Electric & Machinery Co opened a motor factory in China's Wuxi yesterday. The US$70 million joint venture with Taiwan's China Steel Corp, and Japan's Nippon Steel Corp, Marubeni Itochu Steel Inc, and Sumitomo Corp aims to make back its investment this year, and earn a further US$300 million over the next five years, a statement from the company said yesterday.

Teco currently has another factory in Suzhou, China and other facilities in Australia, North America, Southeast Asia and Taiwan.

Aerospace agreement signed Australian avionics maker TMC teamed up with a Taiwan aeronautics company yesterday to open a research and development (R&D) center in Taiwan.

Under the agreement signed in Taipei, TMC -- the world's third-largest avionics maker -- and Taiwan's Falcon Aerospace Corp will invest NT$350 million (US$10.2 million) to develop, manufacture and market trunk mobile radios. Trunk mobile radios can transmit voice and data messages via radio waves. The radios are designed for companies with messengers and mobile service staff.

TMC is the second foreign avionics firm to open a R&D center in Taiwan this month.

Quanta to make Toshiba laptops Quanta Computer Inc, the world's biggest supplier of notebook computers, signed on Toshiba Corp as a customer, a local newspaper said, citing unidentified Quanta officials.

Quanta expects to become in May the third Taiwanese supplier to Toshiba, which already buys laptop computers from Compal Electronics Inc and Inventec Co the report said.

Notebook computer sellers have lifted orders and pared prices with Taiwanese suppliers after Hewlett-Packard Co started a round of price cuts in recent months, the report said.

TSMC to boost production Taiwan Semiconductor Manufacturing Co (TSMC), the world's biggest supplier of made-to-order chips, expects fourth-quarter factory use to rise to 85 percent, a local newspaper reported, citing unidentified employees.

The company used 61 percent of its production equipment in the fourth quarter last year after a slump in demand for chips started in the middle of last year.

Refco, Polaris to merge Refco Group Ltd, the world's largest privately held futures broker, and Polaris Securities will merge their Taiwan futures-trading operations into a single unit, Polaris said in a statement.

Polaris will own 57.5 percent of the venture, with Refco owning the remainder.

NT dollar declines The New Taiwan dollar yesterday traded lower against its US counterpart, declining NT$0.027 to close at NT$34.730 on the Taipei foreign exchange market.

Turnover was US$430 million.

www.forbes.com By Sinead Carew Reuters, 03.18.03, 9:14 PM ET

In NEW YORK story headlined "UPDATE 3-DirecTV Latin America files for U.S. bankruptcy" please read in third paragraph ... DirecTV's President and Chief Operating Officer Larry Chapman ... instead of ... President and Chief Executive Larry Chapman ... (corrects title, which was also incorrect in UPDATE 2) A corrected version follows.

NEW YORK, March 18 (Reuters) - DirecTV Latin America LLC said on Tuesday it filed for bankruptcy protection, as economic turmoil in Latin America forced the largest pay-television operator in the region to restructure its costs and debts.

DirecTV Latin America, which has been hammered by recessions and strife in Argentina, Venezuela and Brazil that have resulted in fewer subscribers, made the filing under Chapter 11 of U.S. Bankruptcy Code after it failed to renegotiate certain contracts to cut costs.

"We did so after concluding that our out-of-court restructuring negotiations were not going to result in an outcome that would allow us long-term viability," DirecTV's President and Chief Operating Officer Larry Chapman told reporters in a conference call.

One analyst saw the bankruptcy as a necessary move but said a loss of programming could affect subscriber numbers in the short term.

"The bottom line is that DirecTV Latin America's cost structure was unworkable and a restructuring in or out of court was necessary," Lehman Bros. analyst William Kidd said in a research note.

DirecTV Latin America said it would continue regular business throughout the restructuring process, which is expected to take six to 12 months.

The company, which is 75 percent owned by HughesElectronics Corp. (nyse: GMH - news - people), said the filing does not apply to Hughes or to DirecTV Latin America's operations in Latin America and the Caribbean. Latin American conglomerates Cisneros Group and Grupo Clarin are also stakeholders.

FINANCING BY HUGHES Hughes, which is owned by General Motors Corp. (nyse: GM - news - people), has agreed to provide $300 million in financing to allow the company to continue operating, while it navigates its way through bankruptcy proceedings.

The financing, called debtor-in-possession financing, is subject to bankruptcy court approval.

DirecTV Latin America also said Kevin McGrath, 49, has retired as chairman and it named Larry Chapman president and chief operating officer, effective immediately.

DirecTV Latin America said it would ask the bankruptcy court to reject contracts that are "uneconomic and not in (the company's) best long-term interests," including a contract to broadcast the 2006 World Cup and a deal with Walt Disney Co. (nyse: DIS - news - people) to carry the Disney Channel Latin America.

In reference to its talks with DirecTV Latin America, Disney said in a February filing with the Securities and Exchange Commission that an unfavorable outcome could reduce revenue for the Latin American Disney Channel and ESPN Services.

Eric Hollreiser, a spokesman for Disney's ABC Cable Networks Group, told Reuters on Tuesday that the companies had discussed changing their contract.

"Unfortunately, we were unable to reach a mutually beneficial arrangement," he said.

DirecTV Latin America executives also said the company hopes to use the bankruptcy process to address Grupo Clarin's option to sell its 4 percent stake in the company in November for $196 million.

NEGOTIATIONS CONTINUE The company has also been negotiating with its largest lender Hughes, French set-top-box supplier Thomson Consumer Electronics <TMS.PA>, music provider Music Choice and PanAmSat Corp. (nasdaq: SPOT - news - people), which is 81 percent owned by Hughes.

Executives also said the company would enter discussions with other programmers whose contracts are set to expire during the bankruptcy procedure.

In the United States, Disney and Hughes are embroiled in a dispute over Disney's ABC Family Channel, with DirecTV threatening to drop the channel rather pay the 35 percent price increase that Disney is demanding.

DirecTV Latin America executives said the DirecTV discussions were unrelated to its own discussions.

The filing was made in the U.S. Bankruptcy Court in Wilmington, Delaware.

Hughes stock closed down 11 cents at $10.21 on the New York Stock Exchange on Tuesday, while General Motors stock finished up 91 cents at $34.12 and Disney stock closed off 43 cents at $16.58. (Additional reporting by Adam Pasick and Peter Henderson)