Taipei Times, Friday, Jun 20, 2003,Page 12

°?Electronics AAFES to buy Chinese TVs The US military will buy 45,000 high-definition televisions from Xiamen Overseas Chinese Electronics Co, one of China's biggest appliance makers, China's state-owned Xinhua News Agency said, citing the Xiamen Daily newspaper. The Army and Air Force Exchange Service, a purchasing agency, will take delivery now of 5,000 of the sets, capable of delivering sharper pictures than conventional TVs, Xinhua said. Xiamen Overseas will deliver the balance within a year. The report didn't give a value for the contract. Chinese appliance makers including Xiamen Overseas, Sichuan Changhong Electric Co and Konka Group Co may be assessed anti-dumping tariffs by the US after the US International Trade Commission ruled on Tuesday that cheap Chinese and Malaysian sets are hurting American producers.

°? Policy Mercosur pledges effort South American leaders agreed Wednesday to keep working toward greater regional integration by strengthening their countries' political and economic ties through the Mercosur trade bloc. The presidents of the Mercosur trading nations issued a communique at the end of a two-day summit here and expressed support for the group, whose members have been battered by economic crises over the last year. The leaders voiced their commitment to "the strengthening of Mercosur, with the aim of sustainable development of its member countries and their competitive insertion into the global economy." Mercosur members Brazil, Argentina, Uruguay and Paraguay held their biannual meeting at a riverside resort in the Paraguayan capital. Chile and Bolivia are associate members and Venezuela's president Hugo Chavez attended as a guest.

°? Computers Microsoft defends actions Microsoft Corp and the Bush administration defended their antitrust settlement, and the world's largest software maker urged a US appeals court to reject Massachusetts's call for tighter restrictions on its business practices. Micro-soft, which negotiated the settlement after the appeals court ruled the company illegally protected its Windows monopoly, said the agreement was approved by a trial judge who "considered but rejected" more restrictions. "The relief that Massachusetts seeks is so extreme that its own economist would not support several key aspects of it," Microsoft said in a brief filed with the appeals court in Washington. The settlement requires Microsoft to give computer makers freedom to promote rival software on personal computers powered by the Windows operating system. Windows runs 95 percent of the world's PCs.

°? Airlines NZ warns air carriers New Zealand's consumer watchdog, the Commerce Commission, has warned airlines to stop hiding extra charges that can add up to 44 percent to the price of cheap advertised fares, a news-paper reported yesterday. It said burying extra charges such as levies, taxes and insurance in the small print of advertise-ments misrepresented the price of fares, The New Zealand Herald said. Director of fair trading Deborah Battell said the commission was concerned about inadequate disclosure in advertisements. "When businesses are advertising, they should be advertising the price people have to pay," she said.

June 19, 2003, 11:26PM By MICHAEL DAVIS Copyright 2003 Houston Chronicle

Unocal Corp. will soon decide if it will build a $500 million deep-water offshore port that would move crude oil through underwater pipelines to Texas refineries.

This could allow refiners to avoid transferring oil from supertankers to smaller ships to get it onshore, reducing the risk of spills in Galveston Bay or sensitive areas near shore.

But Unocal still has to convince refiners by showing the savings on fees.

"We've been working on the project for about two years," said Michael Wilems, vice president of the Unocal subsidiary doing the project, BOOTS LLC.

"We looked at the supertankers that were coming into the Gulf of Mexico and what we could do to relieve the cost, based on lightering fees and ports fees."

The facility would be similar to an existing one named the Louisiana Offshore Oil Port, or LOOP. Located 18 miles south of Grand Isle, La., LOOP receives oil from tankers and moves it onshore through a pipeline.

The proposed Unocal facility would have its own catchy acronym -- BOOTS -- which stands for Bulk Oil Offshore Transfer System.

Because Texas ports are not deep enough to accommodate supertankers, oil arriving from places like the Middle East and Venezuela must be lightered. Crude is transferred from the supertankers, holding up to 2 million barrels, to smaller ships that take the oil to the refineries.

Environmentalists tend to favor moving oil onshore via pipelines as opposed to a tanker.

"Shipping petroleum products by a pipeline is often the safest route as long as the pipeline is monitored and any releases are immediately detected," said Chuck Wemple, executive director of the Galveston Bay Foundation.

"Pipelines aren't perfect, but as far as loss of life or damage to the environment, they are better than tankers or barges."

BOOTS would be a deep-water port 100 miles south of Beaumont, capable of offloading tankers at rates up to 1.2 million barrels per day.

The port would be capable of receiving vessels transporting crude oil from domestic Gulf of Mexico deep-water production fields.

The offshore port would be in a depth of 100 feet, deep enough it could berth a Very Large Crude Carrier class tanker, the largest that carries oil.

Before building it, Unocal has to prove the demand is there to justify the expense. It's doing that by asking for commitments from shippers to use the facility, in a process known as an open season.

Unocal said it has received expressions of interest for 500,000 barrels per day of the facility's capacity and is seeking further commitments for 700,000 barrels per day.

The open season ends July 3, and the company will make a decision in a few weeks, based on the commitments it receives, said Wilems.

The system could be in operation by 2007, assuming the company receives sufficient commitments and the necessary permits. Unocal plans to seek project financing.

Unocal has deep-water production that will be coming on line in a few years, Wilems said, and the port could be an alternative to shuttle tankers for that oil, although the economic feasibility is being judged on third-party users initially.

The offshore port would never replace the use of tankers to move oil into the area refineries.

Oil and petroleum products are the largest imports into the Port of Houston every year.

In 2001, about 670 million barrels of oil and petroleum products came into the port.

Valero Energy Corp., the nation's largest independent refiner, has not committed to using the facility, but the company would be interested if it could lower its transportation costs, a company spokeswoman said.

BOOTS and the LOOP would not be competing for customers because they serve different areas, Wilems said.

"We are addressing a completely separate market from the LOOP," said Wilems.

"We would be serving the Texas Gulf Coast, so there would be very little competition with the LOOP."

A spokeswoman for LOOP agreed that the facility would not be competing for its customers along the Louisiana coast.

The LOOP has a design capacity of 1.4 million barrels per day but usually handles 1 million barrels per day.

"It will be more complimentary to our operations," said Barb Hestermann, a spokeswoman for LOOP. "It's going to replace lightering."

The company estimates the facility would save users up to 60 cents per barrel in transportation costs.

"A new deep-water port and related pipelines will provide a more-efficient crude oil offloading facility that would result in reduced handling requirements, port calls and transit times, thus reducing costs and risks associated with the movement of crude to Gulf Coast refineries," said Joe Blount, president of Unocal's midstream and trade unit.

By Steve Schifferes BBC News Online, Washington

Brazilian President Luiz Inacio Lula da Silva is calling on President George W Bush in Washington at a time when US-Latin American relations are at a low ebb.

Lula has already stepped onto the international stage

During the Iraq crisis, the failure of usually reliable allies like Mexico and Chile to support the case for war deeply dented relations between the US and the nations south of its border.

Now, the leader of Latin America's largest economy, Brazil, has come to Washington to repair the damage.

Although Lula was also an opponent of the Iraq war, Brazil holds the key to the Latin American relationship, and President Lula is relishing his role as a bridge between other nations and the giant in the North.

It represents the best opporutnity in many months to get hemispheric relations back on track former Clinton chief of staff Mack McLarty

His agreement is also crucial for the United States if it wants to proceed with ambitious plans to create a Free Trade Area of the Americas by 2005, linking economies from Alaska to Argentina in a single economic zone.

The Brazilian president will be accompanied by no fewer than 10 cabinet ministers, in the biggest Brazil-US summit since World War II when President Frank D Roosevelt persuaded Brazil to join the war effort.

It could mark a new phase in the relations between the Western hemisphere's two biggest powers.

"Brazil represents the biggest regional opportunity for the US, but also the biggest challenge," writes former Clinton chief of staff Mack McLarty in the Washington Times.

"(The meeting) represents the best opporutnity in many months to get hemispheric relations back on track."

'Anchor of stability'

Lula, who began life as a firebrand trade union leader, has matured into a highly respected manager of the Brazilian economy who has won plaudits from the International Monetary Fund and the World Bank.

Lula's domestic reforms have provoked trade union protests

He has stabilised the currency and promised to tackle Brazil's large public sector deficit while targeting spending on the reduction of poverty and hunger.

"There is a recognition of mutual interest on the part of the US in Brazil's success. Brazil can be a very large anchor of stability," said former US ambassador to Brazil Anthony Harrington.

IMF managing director Horst Koehler says that Lula is doing an outstanding job in managing the economy and he is "deeply impressed."

The United States is the largest investor in Brazil, with 400 companies and investments of $30bn (£20bn), and Brazil exports some $15bn (£10bn) worth of goods to the US.

But Lula would like to ensure greater access for Brazil's huge agricultural sector to US markets before agreeing to any trade deals.

And Brazil would like to strengthen Latin America's own regional trade pacts, like Mercosur (which binds Argentina, Brazil, Paraguay and Uruguay), before proceeding to a pan-regional deal.

Meanwhile, the US is pressing ahead with bilateral deals, and recently concluded a free trade pact with Chile.

Brazil's ambitions

Under Lula, Brazil is trying to assert what it believes is its rightful place as the economic and political leader of Latin America after years of economic crisis and political turmoil.

He told the Brazilian Congress he was carrying out reforms to "transform our nation into a developed country that conquers the place it should have already occupied in this globalised world".

And, speaking at this week's Mercosur summit, he promised to work every minute to consolidate the dream of Latin American unity.

Lula is hoping that, by presenting a common front, Latin American countries can win concessions on trade from the US.

Meanwhile, American policymakers are increasingly looking to Brazil for help in resolving some of the most difficult hemispheric issues - including the confrontation between US companies and Venezuela's Hugo Chavez, and the drug-trafficking issues in the Andes states.

Brazil and the US "have built strong, open relationships in the last few years," says Brazil's ambassador to the US Ruben Barbosa.

Despite their ideological differences, George Bush and Lula are both strong leaders with a down-at-home philosophy and a penchant for getting things done.

Now the challenge is to see whether Brazil can become the vehicle to rehabilitate the strained relationship between the US and Latin America.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, June 19, 2003 By: Jose Gabriel Angarita

VenAmCham economist Jose Gabriel Angarita writes: Nearly five months after exchange controls were imposed by Venezuelan authorities, and in the midst of speculation on what system will replace them, there is still no clear definition of the actions that could be taken once they are lifted.

Finance Minister Tobias Nobrega announced to the media that he will shortly be revealing to the Venezuelan public the changes to be made in the foreign exchange system. But the proposals, which Minister Nobrega indicated were quite far along, have not even been submitted to the Central Bank of Venezuela (BCV), according to Board member Domingo Maza Zavala: "I can tell you, as a director of the BCV, that I have no knowledge that the Board has received any proposal from the government to alter the foreign exchange scheme."

One of the most powerful bases for endowing these announcements with credibility is the reputation of the policy makers during the period of restricted foreign exchange availability; they have transmitted signals of a coming relaxation of controls but have done nothing concrete about it. The exchange control system should have been conceived as a temporary expedient, which became unnecessary and inefficient once the resumption of oil exports normalized the inflow of foreign exchange.

The longer the foreign exchange market continues to be restricted, the higher will be the cost of its eventual liberalization, though that cost will depend on the arrangement that is adopted. However, relaxation of controls will be accompanied by a major devaluation of the exchange rate, perhaps to the levels at which CANTV ADRs are now trading (an average of 2,400 bolivares per US dollar); that is the reference exchange rate for the parallel market. Liberalization will also have an impact on interest rates and inflation.

Whatever the follow-on arrangement is, there is no way to prevent a demand repressed for five months, which has put pressure on interest rates and led to a growth of deposits from the public in the financial system, from moving massively to the foreign exchange market ... unless the authorities continue certain restrictions with the aim of gradually reducing them or continuing to dole out foreign exchange in discretionary fashion. Hence, the prospects are not encouraging. The damage is already done and there is no sign of a willingness among the authorities to speed up the liberalization process, despite all the pressure being applied by the different economic sectors and even the international community.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, June 19, 2003 By: Mark Weisbrot

Center for Economic and Policy Research co-director Mark Weisbrot writes: The United States has always had a bad reputation for the way it treats its neighbors south of the border, but Washington's treatment of Venezuela has been an embarrassment even by the low standards of diplomacy that it maintains for the region.

The Bush administration endorsed a military coup against the democratically-elected government of Hugo Chavez last year. That's about as bad as you can get, although it may have been worse: There were numerous meetings between Bush administration officials and coup leaders in the months preceding the coup.

Opposition groups also received increased funding -- some of it still unaccounted for -- from the US government prior to the coup.

The major media in the US have mostly joined our government in its hostility to Venezuela. In an editorial that was as scandalous as the exploits of reporter Jayson Blair, the New York Times also endorsed the military coup. The editorial board issued a half-hearted retraction a few days later. But there were few American journalists who bothered to ask how the most influential newspaper in the world's most influential democracy could have made the mistake of endorsing a military coup against a democratically-elected government.

Chavez's major crime seems to be that he was elected mainly by Venezuela's poor, who previously had little voice in the corrupt political system that had ruled the country for four decades. It appears that our (USA) government, as well as most of our foreign policy establishment, respects democracy only when "the right people" win elections.

We have gone down this road before. Our government spent billions of dollars and financed the killing of thousands of people -- mostly innocents -- trying to overthrow the government of Nicaragua in the 1980s. That government was democratically elected in 1984, but it made no difference to Washington. The result of American efforts is a still devastated country -- 13 years after the war ended -- with most Nicaraguans actually worse off than they were 40 years ago. The impact on our own democracy was harmful as well, as it led to the Iran-Contra scandal.

Unfortunately some of the same people who were implicated in that scandal are determining US policy in Venezuela today, viewing their mission through the same distorted ideological lens. Chief among them is Otto Reich, who is currently serving as White House special envoy for Western Hemisphere Initiatives, and expresses unrelenting antagonism toward Venezuela.

• Last month Washington cut off credits from the US Export-Import Bank to Venezuela, for reasons that appear to be political rather than economic.

Venezuela is a constitutional democracy, with complete freedom of the press, speech, assembly and association. The major media are controlled by the opposition, and their TV news broadcasts are so partisan that most people here would not recognize them as journalism. The opposition also has about 48% of the seats in the national congress, and controls most of the country's wealth.

If the reader has the impression that Venezuela is not a democracy, it is mainly because our own media regularly repeat opposition charges -- that the government is "authoritarian" or "Castro-communist" -- often without rebuttal. But as any visitor to Venezuela can see, it is one of the least repressive societies in the region.

Venezuela is our third largest trading partner in Latin America, and has continued to be a reliable energy supplier -- except during the past winter when the opposition led an oil and business strike, in another attempt to topple the government.

There is no legitimate reason for Washington's unfriendliness, as both Americans and Venezuelans have much to benefit from better relations between the two countries.

Mark Weisbrot is co-director of the Center for Economic and Policy Research, 1621 Connecticut Ave NW, Suite 500, Washington, DC 20009-1052 -- telephone +1 (202) 293-5380 x228; telefax +1 (202) 588-1356 -- Email: weisbrot@cepr.net