Indonesia, 12 cross-region countries agree to keep supply chains open

Top diplomats from 13 countries of a cross-regional network, including Indonesia, Singapore and Canada, have agreed on key principles of keeping transportation links and supply chains open to cushion the impacts of COVID-19 on global trade and economy.

Facilitated by Canada, the informal network called the International Coordination Group on COVID-19 (ICGC) consists primarily of half of the G20 countries — Brazil, France, Germany, Italy, Mexico, South Korea, Turkey and the United Kingdom — with the addition of Morocco, Peru and Singapore. It was recently established to look for a shared commitment to “promote and protect free trade” and other selected measures to tackle COVID-19.

The fresh declaration was made by foreign ministries of ICGC in a Friday evening teleconference, after it was deliberated at a recent senior officials meeting.

Going forward, Indonesian Foreign Minister Retno LP Marsudi said, any future cooperation “must be action-oriented” which would bring tangible benefits to the general public worldwide.

The declaration, despite its nature as a non-legally binding political declaration, aims at bolstering international norms and actions in handling the COVID-19 pandemic and to manage its social economic impacts. It identified a number of areas for concrete collaborative actions, outlining commitments to maintain an open flow of trade and investment, facilitate repatriation of stranded travelers, and to look for efforts to restore the post-pandemic global economy.

“We will continue to promote and protect free trade,”  the ministers said in the declaration, as quoted from a press statement on Saturday. “[…] and we agree that emergency measures designed to tackle COVID-19, if deemed necessary, must be targeted, proportionate, transparent and temporary, and that they do not create unnecessary barriers to trade or disruption to global supply chains, and are consistent with WTO [World Trade Organization] rules.”

Singapore’s Foreign Minister Vivian Balakrishnan said on Facebook on Saturday that the ICGC ministers had reiterated the importance of maintaining global connectivity, “such as transport and supply chain links, which will help all our economies recover more quickly when the pandemic eventually subsides”.

The WTO had sounded the alarm on Wednesday that global trade could plummet by a third this year due to the coronavirus pandemic, warning the deepest recession “of our lifetimes” could be on the horizon.

North America and Asia would be hardest-hit and could see their exports plunge by 40 and 36 percent respectively, while Europe and South America could see declines of more than 30 percent, the WTO said. Keeping markets open to international trade and investment would help economies recover more quickly, we will see a much faster recovery than if each country goes it alone.

Following the declaration, the ICGC would now strongly advocate for other countries to take similar steps, with South Korea leading a conversation on best practices for emerging from the COVID-19 crisis.

“The COVID-19 pandemic is a global challenge. Maintaining strong coordination with our international partners is critical to mitigate the repercussions of the ongoing challenges we face,” Canada’s Foreign Minister François-Philippe Champagne said in a statement. “Keeping people, goods and services moving is key in both addressing these issues and ensuring the transition to a strong recovery.”

Source: Article by Dian Septiari, The Jakarta Post, 19 April 2020

German Customs dispute disrupts plywood imports from China

Laminated woodThe importance of tariff classification and its impact on statistical and economic data – German imports of hardwood plywood from China continue to be affected by a dispute between the German trade and customs officials. In the last three years, customs officials, particularly at the port of Bremerhaven, have been checking Chinese plywood to ensure that boards are cross-laminated rather than laid parallel to each other.

According to German customs, boards should be reclassified as Laminated Veneer Lumber (LVL) if not fully cross-laminated. This is frequently the case with lower-quality Chinese plywood manufactured using small veneer pieces for the cores. LVL incurs a higher rate of duty of 10% compared to 7% for plywood. Roughly 40% of Chinese hardwood plywood deliveries into Germany were reclassified in this way in 2012.

German import merchants and the timber trade federation GD Holz have held talks with German customs to try to more clearly define which products should be considered plywood and which LVL. According to GD Holz, these talks have been unproductive so far and customs continue to reclassify Chinese plywood. Several German importers have now filed lawsuits and results are still pending. At the same time, GD Holz report that since 2014, several importers have been reimbursed for some instances of excessive duty paid. However, customs has not revealed why reimbursements were offered in some cases but not in others.

The uncertainty created by the dispute in Germany may partly explain the recent rise in imports of Chinese hardwood plywood into ports in Belgium and Netherlands. German buyers may be avoiding excess duty by buying from stocks landed in these neighbouring European countries.

The reclassification process has led to inconsistencies in the statistical data on German hardwood plywood imports. Data derived from Eurostat indicates that German imports fell by 18.3% to 34,700 cu.m in the first five months of 2015. This followed a decline of 5.5% to 103,000 cu.m for the whole year 2014.

However, the Eurostat data deviates from figures published by the German Federal Statistical Office (Destatis) which indicate a 62% increase in German hardwood plywood imports from China in the first quarter of 2015. On enquiry, Destatis note that they have adjusted their data downwards for 2014 to take account of plywood reclassified as LVL.

However Destatis have not yet made the same adjustment to the 2015 data. As a result, Destatis data on deliveries to Germany appear to surge this year. Overall, once all adjustments are made, Destatis reckon German imports of Chinese hardwood plywood in the first five months of 2015 were probably around the same as last year.

Containers conveying Mozambican MiGs stuck in Germany

MiG-21_Fishbed_400x300Three MiG-21 fighter jets destined for Mozambique are stuck in Germany due to a lack of necessary permits. They are part of a batch of eight being shipped from Romania. Romanian company Aerostar is overhauling six MiG-21bis and two MiG-21UM trainer aircraft for the Mozambique Air Force and is also providing training for Mozambican MiG-21 pilots. Three MiG-21s were seen flying at Aerostar’s Bacau facility last year.

On Sunday Germany’s Der Spiegel reported that three MiG-21s were transported from the Romanian capital Bucharest by train in six containers and were to have been subsequently shipped to Mozambique from the Germany port of Bremerhaven. However, although the aircraft were declared according to procedure, their transport was done without the necessary permits and they were stopped. Der Spiegel reported that Germany’s public prosecutor will investigate the possible breach of arms control laws. The publication noted that Aerostar was found guilty of a similar incident in 2008. In 2012 German customs officials confiscated MiG-29 engines for Algeria and Tu-142 engines for India over the lack of necessary permits.

The Mozambique Air Force is slowly rejuvenating, considering that until recently it was almost entirely inoperable, suffering poor serviceability since independence from Portugal in 1975 and the collapse of the Soviet Union and its financial support in the early 1990s. The arrival of the MiG-21s will give the Air Force a jet capability not had in years, as its existing MiG-21s have fallen into disrepair and are grounded.

In addition to the MiG-21s, Mozambique has apparently bought two Aerostar Festival side-by-side light aircraft and will get an overhauled Aero Vodochody L-39ZO jet trainer. Late last year it emerged that Mozambique’s Air Force would also receive two second hand Antonov An-26B transport aircraft after they have been refurbished in the Ukraine. Source: Defence Web

India to Become World’s Largest Infrastructure Goods Importer by 2030

HSBCAccording to the recently released HSBC Trade Forecast Report, by 2020 India is expected to surge past the United States as the world’s biggest importer of infrastructure goods – a position it is expected to hold until at least 2030. This is a result of the country’s increased demand for materials for infrastructure projects (i.e., metals, minerals, buildings and transport equipment) as it invests more in the building of its civil infrastructure.

The report, which focuses primarily on infrastructure, notes that as Asian economies grow they will take an increasing share of infrastructure-related imports over the next two decades. Currently, the U.S. tops the list of countries importing infrastructure goods, followed by India, Hong Kong, China and Germany. By 2030, India will sit up the top of this list, followed by the U.S., China, Hong Kong and Korea.

Sandeep Uppal, HSBC India Managing Director and Head of Commercial Banking, noted that the “rising middle classes across Asia’s rapidly emerging markets, especially in India and China, will drive significant infrastructure demand in the region.”

“Aspirations of the new middle class and rapid urbanization will force India to upgrade its civil infrastructure, thus pushing up demand for overseas infrastructure related goods,” she added.

To continue with the rising trends, the report further states that Asia as a whole is predicted to see the most rapid growth in merchandise trade between 2020-2030 – led by India, China and Vietnam – at estimated annual export growth rates of more than 10 percent.

For comparison, the export rates of European countries, such as the UK, France and Germany, are forecasted to grow at about 4-5 percent annually on average over this 10-year period. Meanwhile, average export growth in the U.S. is estimated to top off at around 6 percent annually during the same period.

What this means is that by 2030 infrastructure-related goods will be the most commonly traded type of goods, increasing in market share from the current rate of 45 percent of total goods exported to upwards of 54 percent. Source: India Briefing