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E-business is taking root just about everywhere—but some countries are pioneers, others laggards. Which are faring best in e-business, and what characterises their success? The answers can be found in the 2002 edition of the Economist Intelligence Unit's e-readiness rankings. ‘E-readiness’ is shorthand for the extent to which a country’s business environment is conducive to Internet-based commercial opportunities. It is a concept that spans a wide range of factors, from telephone penetration to online security to intellectual property protection.

‘Despite the dotcom bust, the Internet is still reshaping the way companies do business, and countries' e-readiness will be a vital feature of the global competitive landscape,’ says Daniel Franklin, Editorial Director of the Economist Intelligence Unit.

Covering the world's 60 largest markets, the rankings provide a useful guide for companies seeking to invest in technology-savvy countries, as well as governments looking to reap the benefits of the digital age. The US leads the pack, as it did in 2000 and 2001. However, due partially to changes in methodology, and mostly to developments in countries’ infrastructure, regulatory environment and economy, there have been significant shifts further down in the rankings. The Netherlands has moved into second place from tenth in 2001, for example, and northern Europe now claims most of the other top spots, thanks not only to sophisticated IT infrastructures and high mobile-phone penetration, but also to smart government policy and a good overall business environment. Asia, Latin America and Africa trail further behind, but a few standouts in each region have made significant gains: Venezuela, for instance, improved its ranking from 47th in 2001 to 37th in the current rankings.

Among the main conclusions suggested by the new rankings:

• Western economies take the lead. North America and Western Europe dominate the top ten places in our rankings, with Australia the lonely outsider. These countries score highest both because consumers and businesses have embraced the Internet, and because their economic and political stability and openness to foreign investment make them good bets for all kinds of business, particularly e-business.
• Other regions have pockets of promise. Outside of Western Europe and North America, e-business is less uniformly developed. Singapore and Hong Kong lead the pack in Asia, taking 11th and 13th place, respectively, while Vietnam and Pakistan languish at the bottom of the heap, in 56th and 57th place. The same is true of Latin American, where advanced Chile ranks 28th, while Ecuador stumbles into 50th place. In the Middle East and Africa, Israel alone ranks among the rankings’ top 30 countries.
• Bigger is not always better. The US may rule the roost, but many of the world’s largest economies, including Japan, Germany and France, are outpaced by smaller, more agile competitors, such as the Netherlands, Switzerland and Sweden. What sets these countries apart is the broad accessibility and affordability of the Internet, thanks to state-of-the-art IT infrastructure and high per capita income.
• Business culture is decisive. The US tops the rankings because of the degree to which the Internet has become embedded in commercial culture. Nowhere is so much business conducted over the Internet so routinely. This explains why the US scored highest in the category for e-business supporting services (the consulting and IT services and back-office solutions used to facilitate online business) as well as in the social and cultural category (which considers, among other things, the degree of innovation and entrepreneurship in business). It also explains why Singapore and Hong Kong rank as the most competitive telecoms markets in the world, and among the best equipped, yet don’t figure among the top ten countries. While high-grade infrastructure is important, more important is how people use it.
• Infrastructure is still evolving. Even top-ranked countries have not yet satisfied consumer demand for fast, cheap, secure and reliable Internet connectivity. High-speed, broadband services are not universally available and Internet-ready mobile phones are still in their infancy—even in mobile-crazed Scandinavia.
• Governments have wide influence. Internet business thrives when governments have a clear strategy—and money to spend—to develop IT infrastructure. But that’s not the only area for official involvement. Successful e-business depends on a strong legal framework that protects private property and encourages entrepreneurship. Increasingly, it also requires Internet-specific legislation. In the crucial category of legal and policy environment, Australia comes in first, followed by Sweden, Switzerland, Finland and the UK. Other countries—even those without a strong e-business culture, such as Mexico and Chile—are enacting smart Internet legislation, recognising that good laws promote industry growth.

This year, working in association with IBM’s Institute for Business Value, the Economist Intelligence Unit adjusted the rankings framework to take into account the shift away from the dotcom era’s emphasis on e-commerce to the new imperatives of corporate efficiency, security and global connectivity. The Economist Intelligence Unit was solely responsible for scoring the 60 countries.

The six categories that feed into the rankings (and their weight in the model) are: connectivity and technology infrastructure (25%); business environment (20%), using the 70 indicators covered by the Economist Intelligence Unit’s for 60 countries; consumer and business adoption (20%); social and cultural infrastructure (15%); legal and policy environment (15%); and supporting e-services (5%).

www.riyadhdaily.com.sa

The European Union proposed Thursday calling in the World Health Organization to rescue a deal - blocked last month by the United States - on improving access to lifesaving drugs for poor countries. Blaming a ‘lack of trust’ between Washington and developing countries for the failure of talks last month at the World Trade Organization, EU Trade Commissioner Pascal Lamy said involving the WHO could restore good faith. ‘When there’s too much mistrust in the game then you have to call on a third party, and the WHO is a trusted party,’ he told reporters. The impasse over access to medicines _ which was supposed to be settled last year - could seriously jeopardize the new round of global trade liberalization talks launched in November 2001. Despite a series of tight deadlines early this year, developing countries are unlikely to agree on any other issues until the drug problem has been settled.

A draft agreement worked out last month at the WTO in Geneva would have allowed some developing countries to ignore patents and import cheap copies of drugs to treat diseases, including HIV/AIDS and malaria. But the United States wanted to limit its scope to epidemics of infectious diseases so that developing countries could not use it to gain cheap drugs for other conditions like asthma, diabetes or migraine headaches. Developing countries refused, arguing any list would be too restrictive and inflexible. The EU’s new proposal would start with a broad list of infectious diseases, but allow WTO members facing ‘any other public serious public health problems; to ask the WHO, a UN agency, for guidance on whether their situation was covered as well.

‘We are convinced that we will be able to break the deadlock and rapidly achieve a final agreement,’ Lamy said. Speaking to reporters in Washington, US Trade Representative Robert Zoellick praised Lamy for putting forward a new proposal to try to resolve the issue. But he said the administration wanted to gauge the reaction of other countries to the proposal before deciding whether to agree to expanding the list of diseases covered by the patent exemption. ‘Pascal (Lamy) has made a positive contribution. We will see whether it stirs any other countries to action,’ Zoellick said. Brazil and India, two developing countries that are also major exporter of generic drugs, and Kenya, which speaks for the African Group, had no immediate reaction.

After the talks broke down Dec. 20, Washington pledged to continue to work for a WTO solution while also announcing its own initiative: a pledge not to challenge any country that breaks WTO rules to export drugs to a country in need until a resolution is found. The interim US solution would cover infectious diseases including HIV/AIDS, malaria, tuberculosis, ebola, African trypanosomiasis, cholera, dengue, typhoid and typhus fevers. ‘We urge others to join us in this moratorium to help poor countries get access to emergency lifesaving drugs,’ US Trade Representative Robert Zoellick said last month.

Bankruptcy Court Imposes Temporary 13% Reduction www.washingtonpost.com

_____  Crisis in the Skies _____ Earning per share for 3d quarter and estimates for the 4th quarter.

Airline 3Q 4Q Estimate United -$8.82 -$12.06 US Airways -$3.30 -$3.20 Delta -$1.75 -$2.44 American -$3.05 -$3.70 Continental -$0.58 -$1.99 Northwest -$0.55 -$1.86 Southwest $0.06 $0.03

By Keith L. Alexander and Kirstin Downey Washington Post Staff Writers Saturday, January 11, 2003; Page E01

United Airlines won a major victory yesterday when a U.S. bankruptcy judge ordered its resistant machinists union to accept a temporary 13 percent pay cut, eliminating a key obstacle in the carrier's effort to secure $700 million in interim financing it needs to continue operating.

The machinists were alone among United's unions in rejecting wage reductions proposed by the carrier. The airline had agreements with its pilots, flight attendants, dispatchers and meteorologists.

The ruling by U.S. Bankruptcy Judge Eugene R. Wedoff ensures that United will be able to temporarily cut its labor costs by $70 million a month by Feb. 15, one condition set by banks for release of the interim financing. But United still must reduce other costs before it gets the money. United spokesman Joseph P. Hopkins said the ruling enables the airline to pursue cuts with its aircraft lessors and suppliers.

United, which is losing about $20 million a day, last month became the largest airline ever to file for bankruptcy reorganization.

Airline industry executives told a Senate committee Thursday that they don't foresee a return to profitability until 2004. The industry was expected to lose more than $9 billion last year, after losing $7.7 billion in 2001.

American Airlines announced yesterday that it would cut 800 flight-attendant jobs and, on Thursday, Delta Air Lines said it would eliminate 4,000 jobs.

Airline executives and union leaders are closely watching labor relations at United, the world's second-largest airline, as they search for their own approaches to remaining competitive.

In his ruling yesterday, Wedoff agreed with United and its parent, UAL Corp., that changes to the International Association of Machinists' collective bargaining agreements were "essential, at the present time, to continue United Air Lines Inc.'s business and to avoid irreparable damage to the estate."

The union did not respond to Wedoff's order. It posted a memo on its Web site informing its 37,000 members of the pay cuts.

Some union members expressed strong reactions in interviews later in the day.

"I'm still banging my head on the desk," said Joseph Tiberi, a spokesman for the union.

The case lays bare the "politics of the tarmac," said Christopher Cameron, associate dean and professor of law at Southwestern University School of Law in Los Angeles, who has studied how judges handle bankruptcy cases.

Cameron, a former labor lawyer, said the mechanics often feel unappreciated and underpaid for the critical role they play keeping planes aloft. "Machinists see pilots as overpaid bus drivers and think they can give more because they have more to give," he said. "The mechanics' view of flight attendants is that they are overpaid waitresses. These are the politics of employee relations at the airlines, and you only see them come to the surface when airlines are in severe distress."

United's pilots agreed to a 29 percent pay cut, its flight attendants approved a 9 percent pay cut, and its flight dispatchers and meteorologists accepted a 13 percent reduction. Their pay cuts went into effect Jan. 1.

Before United's Chapter 11 bankruptcy filing, the airline's pilots earned an average $190,000 a year, mechanics $76,000, passenger service workers $42,000 and flight attendants $41,000, according to figures compiled by the Association of Flight Attendants.

Wedoff said that to be fair, the machinists' pay would be cut by 14 percent from yesterday through May 1. That would be equivalent to the 13 percent reduction retroactive to Jan. 1 that United was originally seeking.

The temporary wage reductions will remain in effect until the airline reaches new wage agreements with its unions on or before May 1.

"Now that we have received court approval to take the immediate steps necessary to stabilize our cost structure, we can devote our attention to working with our unions on the longer-term imperatives currently facing the company," United chairman and chief Executive Glenn F. Tilton said.

Hopkins said that even with yesterday's ruling it was too early to say whether United would reapply for a federal loan guarantee. Last month, the federal government denied the airline's application for $1.8 billion in guarantees.

United plans to emerge from bankruptcy by June 2004. It has already received $800 million in loans from its banks, including Bank One, J. P. Morgan Chase, Citigroup and CIT Group.

Also yesterday, United began eliminating and restructuring some of its unprofitable routes. The airline said it would stop its daily flights to New Zealand in March. United's alliance partner, Air New Zealand, will fly customers who have flights booked after March 27. United also said its nonstop service between Miami and Rio de Janeiro will be replaced with a flight that stops over in Sao Paulo, Brazil, beginning March 12. United's flights from Washington's Dulles International Airport to Sao Paulo will continue to fly on to Rio de Janeiro.

www.gopbi.com By Larry Lipman, Palm Beach Post Washington Bureau Saturday, January 11, 2003

WASHINGTON -- Hidden subsidies are artificially depressing the world price of sugar at a time when many nations want to eliminate sugar import restrictions, according to a report released Friday.

The report commissioned by the American Sugar Alliance -- which represents most of the nation's sugar producers -- examined the policies of 13 countries (including the European Union) that account for 75 percent of world sugar exports to determine the level of support given to their domestic sugar industries.

The report found wide-ranging direct and indirect government supports including ethanol production programs, debt relief, industry subsidies and market interventions. The study was compiled by LMC International, an Oxford, England-based economic consulting firm specializing in the sweetener industry.

For example, in Brazil, the world's largest sugar exporter at about 13 million tons annually, most of the country's sugar production is used to make ethanol and is subsidized by a government program that reduces the domestic cost of sugar by about $1 billion a year, the report said. In addition, the Brazilian government provides about $200 million in direct subsidies to the sugar industry.

In Thailand, the government has pressured banks to postpone or reschedule debt of about $1.1 billion, while providing about $310 million in credit and subsidies, LMC said.

Alliance officials gave the report to Allen Johnson, chief agricultural negotiator in the office of the U.S. Trade Representative, and to key members of Congress who suggested the study.

The U.S. sugar industry is concerned about two major forces on world trade: an increase in negotiations such as the Free Trade Area of the Americas and recent talks with Central America that may lower U.S. import barriers on sugar; and efforts by a group of 14 sugar-exporting nations to lower trade barriers in the United States, Europe and Japan in the current round of world trade talks.

The U.S. needs to address sugar policy on a worldwide basis rather than in bilateral negotiations, said Don Phillips, the alliance's trade consultant.

"If we give a piece of it to each country, we won't have any leverage on a global basis," said Dalton Yancey, executive vice president of the Florida Sugar Cane League Inc., a Washington lobbying group.

larryl@coxnews.com

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Stocks closed higher for a second straight week yesterday as investors shrugged off disappointing jobless numbers and growing political tensions in North Korea and Iraq.

The two-week rise follows a dismal December, the worst since 1931. Trading this week was volatile and heavy, as investors attempted to digest the potential impact of Bush's tax cut proposals, the possibility of a war in Iraq and North Korea, the threat of rising oil prices because of political unrest in Venezuela, and the latest economic news.

The Dow Jones industrial average closed at 8784.89, up 8.71 points, or 0.1 percent yesterday, and 2.1 percent higher for the week. The Nasdaq composite index closed at 1447.72, up 9.26 points, a gain of 0.6 percent yesterday and 4.4 percent for the week. The Standard & Poor's 500-stock index ended the day where it began, at 927.57, and rose 2.1 percent for the week.

Stocks dropped sharply at the opening after the Labor Department announced that employers eliminated more than 100,000 jobs last month, reducing payrolls to their lowest level since the recession began in early 2001. But then the markets began to recover, led by technology stocks, which rose after several analysts indicated that spending on technology may improve.

"I think the economic data this morning was disappointing but not alarming," said Robert Barbera, chief economist at ITG/Hoenig. He said the decline in payrolls could largely be attributed to the plunge in retail employment, and he noted that investors already knew Christmas sales were disappointing.

Other economists said the low level of hiring, in part, reflected productivity growth, which enabled companies to produce more goods and services without hiring more people.

The Bush administration's statement that it was ready to enter into direct talks with North Korea and to begin mediation to end the political turmoil in Venezuela helped calm jittery investors somewhat, according to analysts. Investors have also factored in the potential of geopolitical problems in many of their investments, analysts said.

"This same kind of news a few months back would have been very damaging. But today everyone is hunkered down and focused on risk," said James Paulsen, chief investment officer at Wells Capital Management. "The market's getting into a mood where good news puts it up a couple hundred points and bad news just makes it stay flat. That's a much better position sentiment-wise."

Cisco Systems rose 27 cents, to $15.22, after analysts said companies may start upgrading their networking systems. Nortel Networks, a phone equipment company, rose 20 cents, to $2.35. Intel rose 36 cents, to $17.42.

"Investors are optimistic about the first quarter," said Arthur Hogan, chief market analyst at Jefferies & Co. "They're pricing in future economic activity and corporate earnings and discounting news that's coming out today."

One sector down yesterday was health care, after UBS Warburg downgraded the industry. Community Health Systems, LifePoint Hospitals and Triad Hospitals all slid more than 7 percent Other Indicators

• The New York Stock Exchange composite index fell 0.54, to 5209.80; the American Stock Exchange index rose 0.81, to 833.44; and the Russell index of 2,000 small stocks rose 0.50, to 396.44.

• There were about as many advancing issues as there were declining stocks on the NYSE, where trading volume fell to 1.5 billion shares, from 1.57 billion on Thursday. On the Nasdaq, advancers outnumbered decliners by 6 to 5, and volume totaled 1.62 billion shares, down from 1.64 billion.

• The price of the Treasury's benchmark 10-year note rose $1.88 per $1,000 invested, and its yield fell to 4.14 percent, from 4.17 percent late Thursday.

• The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 119.21 yen, down from 119.40 yen late Thursday, and a euro bought $1.0572, up from $1.0487.

• Light, sweet crude oil for February delivery settled at $31.68 a barrel, down 31 cents, on the New York Mercantile Exchange.

• Gold for current delivery rose on the Commodity Exchange division of the New York Mercantile Exchange to $354.50 a troy ounce from $353.30 on Thursday.