<a href=www.agweb.com>AgWeb.com 4/23/2003 by Julianne Johnston

According to the latest World Trade Organization (WTO) figures, merchandise trade grew by 2.5% in 2002, up from a 1% decline in 2001. WTO says the increase is driven by strong demand in the United States and the big Asian economies.

But trade growth, which was significantly above the 1.5% increase in total world output, was uneven and masked the sluggish trade performance in many regions including Latin America and Western Europe, adds the group.

WTO says considerable uncertainty clouds trade growth prospects for 2003. Early indications suggest that at less than 3%, growth in trade volume for 2003 will be little or no better than 2002. This is well below half the average rate of trade growth achieved in the 1990s (6.7%). The downside risks on predictions for 2003 are large, bearing in mind continued sluggishness in the world economy, the conflict in Iraq, and the possibility of the continuing spread of the Severe Acute Respiratory Syndrome (SARS).

“These trade figures reflect the growing economic and political uncertainty in the world today. This uncertainty is detrimental to economic growth and development and can give rise to greater instability across the globe. Governments must send a signal that they are prepared to address this problem. One very important contribution to this effort would be to accelerate work on the negotiations in the Doha Development Agenda,” said Director-General Supachai Panitchpakdi.

The WTO says trade recovery occurred amidst the weakness of the global economy, greatly reduced investment flows, major movements in exchange rates, dented business confidence, increased restrictions on international trade transactions to reduce risks from terrorism and rising geopolitical tensions.

Some details of developments in specific countries or groups of countries:

• Developing Asia’s merchandise trade grew by about 12.5% in volume terms, driving the entire continent’s exports and imports to grow by double digits. The region also saw diverging growth paths between Japan, still Asia’s largest economy, and China and India, the two most populous nations in the world. In value terms, China’s merchandise exports and imports increased by more than 20% while India’s also grew at double-digit rates. China has overtaken the UK to become the fifth largest trader in the world. Japan’s merchandise export growth was only 3% while imports contracted.

• Transition economies’ trade continued to show strong growth with merchandise trade expanding by about 10% lifted by strong domestic demand growth and by rising foreign direct investment (FDI) inflows into the region.

• Imports into the US grew by 3% driven by continuing consumer spending and an increasingly expansionary fiscal stance. But exports declined by nearly 4% partly reflecting reduced demand from some key trading partners whose economies were either hardly growing, such as Western Europe and Japan, or in outright contraction, as in Latin America. Lack of price competitiveness might have also played a major role as US exports decreased even to those regions whose imports grew strongly.

• Western Europe’s trade stagnated in volume terms with merchandise exports increasing by just 0.6% and imports declining by 0.5%.

• Latin America saw one of its worst years with the crises in Argentina, Venezuela and difficulties in Brazil in the run-up to the national elections. Latin America’s merchandise imports declined by over 5% in 2002 although merchandise exports rose by about 2% with the decline in intra-regional trade (especially intra-MERCOSUR trade) being balanced by increased shipment to other regions.

• LDC exports and imports rose last year although it does not change their overall situation as marginal participants in world trade.

• Oil exporting LDCs saw a strong increase in the dollar value of their shipments as they increased their production and volume of trade. Exports of the non-fuel commodity exporting countries continued to rise after marked gains in 2001. However, exporters of manufactured goods experienced stagnation.

Link to full WTO report www.wto.org

Story last updated at 7:11 a.m. Wednesday, April 23, 2003
Charleston.net-Chicago Tribune

HAVANA--Hoping to defuse a potentially dangerous confrontation, the leaders of Colombia and Venezuela are scheduled to meet today after weeks of bickering and the allegation that the Venezuelan air force bombed a Colombian border town last month.

The incident, which is being investigated by both governments, is only the latest in a series of actions that has angered officials from the two nations and threatens to widen Colombia's internal conflict.

Colombian officials accuse Venezuelan President Hugo Chavez of not doing enough to prevent Colombian rebels from carrying out hit-and-run attacks using bases inside Venezuela.

They also are angered by the recent bombing of the Colombian consulate in Venezuela and the sharp drop in bilateral trade during Venezuela's prolonged political crisis, a further blow to Colombia's fragile economy.

"It's a very difficult situation," said one top Colombian official. "We've tried to work things out. There has been lots of talk (from the Venezuelans) but no action."

Chavez and other officials deny that the air force attacked targets in Colombia or that Venezuela is supporting Colombia's largest rebel group, the 18,000-member Revolutionary Armed Forces of Colombia, or FARC.

While Chavez has expressed hopes that his meeting with Colombian President Alvaro Uribe will ease tensions, Venezuelan Vice President Jose Vicente Rangel has criticized Colombian officials for suggesting that his country is providing a haven to the rebels.

"If Colombian delinquents have come into this country, then this is more the result of negligence and complicity by the Colombian authorities, rather than by us Venezuelans," Rangel said.

Experts say the outcome of the presidential summit in the southeast Venezuelan city of Puerto Ordaz could have repercussions for the United States. Venezuela and to a lesser extent Colombia are major oil suppliers.

The United States also has poured more than $2 billion into an extensive antinarcotics and counterinsurgency program in Colombia, a close American ally and one of a handful of Latin American countries that supported the war in Iraq.

A broader conflict between Venezuela and Colombia could destabilize the region, experts say.

"The situation is very dangerous," said Michael Shifter, a senior fellow at the Inter-American Dialogue in Washington, D.C. "There is an enormous amount at stake."

Relations between the two nations have been up and down almost since Venezuela broke away from its neighbor more than a century ago. But the tension increased after Chavez was elected president in 1998 and began his self-styled populist revolution.

Some Colombian officials say the Chavez government has failed to act firmly against the FARC, a powerful rebel force that moves frequently across the sparsely populated 1,270-mile frontier of mountain, savanna and jungle.

When peace talks between the FARC and the Colombian government collapsed last year, Colombia's military began battling the rebels for control of the border region along with a third group, the powerful right-wing paramilitary force known as the United Self-Defense Forces of Colombia, AUC.

Experts say that FARC has used the Venezuelan side of the frontier as a rear base and for arms trafficking and other logistical support.

Rafael Nieto, a Colombian military analyst, said many captured FARC soldiers have been found with Venezuelan military-issue weapons, though it is unclear how the rebels acquired them.

The AUC, which often operates alongside the Colombian military, has moved across the frontier to pursue FARC rebels and fighters with a smaller Colombian leftist insurgency, the National Liberation Army, or ELN. Some Venezuelan ranchers reportedly are bankrolling paramilitary forces.

What is uncertain, experts say, is the extent to which the Venezuelan and Colombian governments can prevent either leftist or rightist insurgencies from crossing the border.

CNN Wednesday, April 23, 2003 Posted: 7:43 AM EDT (1143 GMT)

CARACAS, Venezuela (AP) -- Venezuela's president said he will sign an agreement with Colombia to build a gas pipeline connecting the two nations, part of efforts to reinforce ties at a time of tense bilateral relations.

President Hugo Chavez is to meet with Colombian President Alvaro Uribe on Wednesday in the southeastern Venezuelan city of Puerto Ordaz, located 310 miles from Caracas.

Chavez said Tuesday that he's committed to improving relations with Colombia despite allegations by authorities from the neighboring country that Venezuela has sheltered Colombian rebels.

"We sent our affection and our best intention to continue improving relations with the sister republic of Colombia," said Chavez.

The two leaders will also discuss trade issues sign an agreement in which Venezuela would supply border towns in rural Colombia with electricity.

Trade between the two nations topped $2 billion over the last two years but has suffered severely since January 22, when Venezuela halted foreign currency purchases to protect foreign reserves and guard against a slide in the bolivar.

Colombian businesses haven't been able to collect an estimated $350 million in debts from Venezuelan importers due to delays in establishing a new foreign exchange system.

According to the Colombian Venezuelan Chamber of Commerce and Integration, bilateral trade could fall by as much as 60 percent this year if such problems persist.

Border security will also be discussed at the meeting, which follows several weeks of tensions fueled by allegations in Colombia that Venezuela has provided a safe haven for Colombian rebel groups.

Chavez denies his government has ever aided Colombia's leftist insurgent groups, and he said groups in both countries are trying ruin the two neighbors' relationship. He expressed optimism the meeting would be a success despite efforts by his adversaries aimed at "sabotaging" it.

The presidential summit will be the second that Chavez and Uribe have held in less than six months. The last meeting took place on November 14 in Colombia's coastal city of Santa Marta.

Forbes.com-Reuters, 04.23.03, 6:06 AM ET

MILAN, April 23 (Reuters) - A $480 million project to develop Venezuela's Corocoro oilfield has been launched, one of the partners in the project, Italy's biggest oil and gas group Eni <ENI.MI>, said on Wednesday.

The Corocoro field in the country's Gulf of Paria West area is expected to reach output of 55,000 barrels per day of crude oil by 2005.

Eni said in a statement that the Corocoro field's development would allow it boost production by 14,500 bpd and strengthen its position in Venezuela where it also operates the Dacion oilfield in the eastern part of the country.

The partners in the venture are ConocoPhillips (nyse: COP - news - people) with a 32.5 percent stake, Venezuela's state oil firm Petroleos de Venezuela S.A. (PDVSA) with 35 percent, Eni with 26 percent and Taiwan's OPIC with 6.5 percent, Eni said.

Venezuela, world's No. 5 crude exporter, has been trying to revive an oil industry hit by a crippling anti-government general strike late last year and earlier this year.

Forbes.com-Reuters, 04.23.03, 6:02 AM ET By Robert Evans

GENEVA, April 23 (Reuters) - World goods trade, whose steady expansion over decades has been a motor of the global economy, looks headed at best for only minimal growth this year, the World Trade Organisation (WTO) said on Wednesday.

Even this could be thrown into doubt by fallout from the U.S.-led invasion of Iraq, the spread of the deadly SARS epidemic, and overall world economic gloom, according to the body's annual spring report.

"Considerable uncertainty clouds trade growth prospects for 2003," said the report. Initial signs suggested world trade volume would increase by less than three percent after an already poor 2.5 pct rise last year.

But even this would depend on a pickup in global production and consumer demand from April onwards -- a development that WTO Director-General Supachai Panitchpakdi suggested was far from certain in the present world political and economic climate.

"The downside risks on predictions for 2003 are large," the report declared.

The figures for 2002 marked a slight turnround from the disaster year of 2001 when trade declined, by one percent, for the first time in some 20 years -- after a record growth of 12 percent in the boom year of 2000.

The report said last year's upturn -- to a total value of $6.24 billion -- had been driven by strong demand in the United States and the bigger Asian economies, but was held back by a sluggish performance in Europe and Latin America.

GROWING UNCERTAINTY

Supachai, a former deputy prime minister and economy minister of Thailand, said the figures reflected "growing economic and political uncertainty in the world today" which could give rise to even greater global instability.

One way to tackle this, he suggested, would be for governments to speed up efforts to complete the deeply troubled Doha Round of liberalisation talks launched in November 2001 and due to end with a new world trade treaty by January 1, 2005.

The negotiations -- which the World Bank says could give a huge boost to the world economy if successful -- have already missed some important deadlines and many analysts say they are likely to drag on well into the second half of the decade.

The WTO report, written before the controversial U.S.- British invasion of Iraq last month which toppled President Saddam Hussein, suggested that the decision by the two powers to go it alone could have serious repercussions on trade politics.

It said the intervention -- launched without the approval of the United Nations and in the face of opposition from major powers like Germany, France and Russia -- could endanger the system of global governance through bodies like the WTO.

"The erosion of confidence in global institutions could encourage the creation of like-minded blocs" -- diplomatic phrasing for closed groupings of trading states -- "and inward- looking policies" -- or protectionism -- said the report.

International trade rules are currently set in multilateral negotiations involving all WTO member-countries, presently totalling 146. But many trade analysts fear the current trend to regional trade pacts could become a landslide.

Last week Rubens Ricupero, Supachai's counterpart at the head of the U.N.'s trade and development agency UNCTAD, said trade regionalism was potentially even more dangerous, especially for poorer countries, than protectionism.

CHINA, INDIA DOING WELL

For 2002, the WTO report said, goods trade by developing countries in Asia -- excluding Japan -- grew by about 12.5 percent, with China hitting 20 percent growth and India up 15 percent. Japan's growth was only three percent.

China, which joined the WTO at the end of 2001, at the same time overtook Britain last year to become the world's fifth largest single trader behind the United States, Germany, Japan and France. Britain was sixth and Canada seventh.

U.S. exports declined by nearly four percent, but imports surged by three percent, driven by consumer spending and tax cuts. Western Europe -- the 15-nation European Union and its four-nation EFTA partners including Switzerland -- saw goods imports down by 0.5 percent and exports up by 0.6 percent.

Latin America was badly affected by the crisis in Argentina, political instability in Venezuela and uncertainty in Brazil as it moved towards its autumn president election, the report said. The region's imports declined by five percent while exports rose by two percent.

There was a brighter picture for exchanges of commercial services, according to the WTO. The value of service trade -- covering area like banking, telecommunications, travel and tourism -- rose five percent to a total of $1.54 billion.