Archive for September, 2011

China lures WTO to brink of procurement deal: sources

Monday, September 26th, 2011 | Finance News

GENEVA (Reuters) – Forty-two countries are close to agreeing an upgrade of their Global Procurement Agreement (GPA), a reform that could unlock tens of billions of dollars of commercial opportunities, and many times more if China gets on board, trade sources said on Monday.

The GPA, a voluntary agreement within the World Trade Organization, opens a wide spectrum of public contracts in member countries to bidders from other members, improving competition and efficiency as well as providing massive new markets in areas such as infrastructure and transport.

By upgrading the existing 1996 agreement, its members hope to bring their rules into the internet age, deepen market access and offer special treatment for developing countries, which could persuade China to join -- as it has committed to do at some stage -- and bring in a vast new pool of contracts.

"We think the prospects of concluding the negotiation by the time of the ministerial meeting in December are pretty good," said a trade official involved in the GPA negotiations who declined to be named because the talks are confidential.

The European Union still had some disagreements with Japan and the United States and it was likely those issues needed a push from politicians rather than technical tweaks at the WTO in Geneva, another trade official said.

But he added that all three parties were looking at "creative" solutions and understood the importance of striking a deal by the end of this year.

"Things are positive," he said.


However, member governments have been warned that the window for a deal is rapidly closing. Last week, Nicholas Niggli, the chairman of the WTO committee on government procurement warned that agreement was needed urgently, since the stakes were huge and the time for a deal was now or never.

"The gains in market access will result in significant commercial opportunities for parties' companies, representing many tens of billions of dollars/euros annually," he told the committee, according to a text of his remarks which was circulated to member governments and later obtained by Reuters.

"It would be extremely short-sighted to jeopardize these benefits for the sake of a continued struggle amongst ourselves to eke out a few additional incremental gains at the margin," he told the committee, since other were lining up to join.

Gains from accessing those new markets would be many times greater than gains from upgrading the existing deal, he said.

China is expected to make a revised offer to join the club just before the ministerial meeting in December, which could extend its offer of market access to provinces and may even include some state-owned enterprises, trade officials said.

Other potential members include Ukraine, Vietnam and Russia, which has been asked to commit to joining the GPA as part of its negotiations to join the WTO, according to a trade official who had seen the draft agreement with Russia.

India is also exploring possible membership, a trade official said. And several Gulf Arab countries already have GPA-compatible rules, which means they could swiftly join.

If the GPA members reach agreement, it would rescue trade ministers from a potentially embarrassing WTO meeting in December, since the 153 members have failed to clinch a deal on the Doha round of talks aimed at further liberalizing trade.

One official said the GPA talks, which had also taken 10 years so far, stood a better chance of success than Doha because they involved "a coalition of the willing" rather than the full WTO membership.

(Reporting by Tom Miles)


Houston area added most construction jobs in last year

Monday, September 26th, 2011 | Finance News

WASHINGTON (Reuters) – The Houston area has added the most construction jobs in the last year while Southern California is the biggest loser in a stagnant jobs market, an industry association said on Monday.

The analysis by the Associated General Contractors of America comes as Texas Governor Rick Perry touts the state's job growth in seeking the 2012 Republican presidential nomination.

The metropolitan area of Houston-Sugar Land-Baytown, Texas, was the top U.S. construction jobs gainer from August 2010 to August 2011, adding 10,400 posts or a 6 percent rise, the association said in a statement.

Lake County-Kenosha County, north of Chicago straddling the Illinois-Wisconsin border, was the biggest percentage winner, adding 2,900 jobs for a 22 percent rise, it said in an analysis of federal employment numbers.

The largest losses were in California's Los Angeles-Long Beach-Glendale area, with a drop of 7,000 jobs, or 7 percent. Redding, California, was the worst percentage performer, losing 600 jobs in a 19 percent drop.

Construction employment rose in 146 of 337 metro areas. It dropped in 145 areas and stayed level in 46.

"Construction employment continues to be stuck in a pattern where there are just as many hot spots as there are slow spots," said Ken Simonson, the association's chief economist.

Association spokesman Brian Turmail said U.S. construction jobs overall rose by 4,000 to 5.524 million in a "stagnant" market.

Private sector spending on construction has grown by 5.5 percent since July 2010 while public sector demand fell by 8.8 percent, the association said.

(Reporting by Ian Simpson; Editing by Greg McCune)


EU eases cap-and-trade plan for airlines

Monday, September 26th, 2011 | Finance News

BRUSSELS – An EU program aimed at slowing climate change will allow airlines to emit 85 percent of their carbon dioxide limits for free in the hope they will use the money to modernize their fleets, an official said Monday.

The European Union's existing cap-and-trade system limits the carbon dioxide emissions of power plants and big factories in the bloc by issuing permits for each ton of carbon they can emit. Each company is allocated permits to emit a set amount of carbon dioxide. They can buy extra credits if they exceed that limit or sell credits if they emit less.

Next year, all airlines flying to and from Europe will be brought into the program, which is currently being challenged in court by some U.S. carriers.

Jos Delbeke, the EU's director general for climate action, said Monday that carriers will be allowed to emit 85 percent of their limit — or cap — for free for the first year to ease the economic impact on the industry. The cap is set at 97 percent of the average aviation emissions from 2004-2006.

For the 2013-2020 period, the cap will fall to 95 percent of that number, and the free allowances will decline to 82 percent.

Delbeke said airlines would be allowed to pass on to travelers the additional cost of those permits. He estimated the per ticket cost would be between euro2 and euro12 ($2.70 and $16.20).

The EU's climate action commissioner, Connie Hedegaard, said the free allowances would save the aviation industry more than euro20 billion ($27 billion) over the next decade.

"With these potential revenues, airlines could invest in modernizing their fleets, improving fuel efficiency and using non-fossil aviation fuel," she said.

The Air Transport Association of America, which represents the U.S. airlines, together with United/Continental and American Airlines, have taken the European Union to court, arguing that its imposition of emissions caps on non-European carriers breaches international law.

The U.S. demand for judicial review and the annulment of the EU decision was originally filed with a court in Britain, which then referred it to the European Court of Justice. The court is expected to deliver a preliminary ruling before the start of 2012.

"The EU emissions trading scheme, as it applies to aviation, has extraterritorial effect and is for that reason contrary to established principles of customary international law," said Derrick Wyatt, the Air Transport Association attorney who presented the oral arguments.

The EU's position is that when aircraft touch down or depart from European airports, it has the right to regulate them.

"As much as the EU prefers global action, we can't defend that the aviation sector is exempted from contributing because they can't agree internationally," Hedegaard said in a statement Monday. She said the EU would continue to fight for global regulation of airlines at the next U.N. climate conference to be held in Durban, South Africa, on Nov. 28-Dec. 9.


Don Melvin can be reached at