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REWIND: International Business News #10

Posted on December 15th, 2010 | Author: admin

  • A transitory future may exist for the current tariffs being imposed on goods shipped between South Korea and the United States. The Chubb Group of Insurance (Warren, New Jersey) which provides property and casualty insurance, is eager to see the speedy implementation of the current trade agreement before Congress. Following 18 years of commercial activity with South Korea, The Chubb Group of Insurance view this as key in the course of increasing commerce between the U.S. and South Korea. Furthermore, it is predicted that a favourable outcome will have a ripple effect in other industries, namely, in the car manufacturing industry. Companies, large and small are seeing South Korea as a niche market, identifying the massive trade imbalance between exported and imported cars. Within the last few weeks, Obama has signed the trade agreement which incrementally seeks to eliminate almost all of the tariffs imposed on consumer and industrial goods.
  • Further developments were made regarding the free trade pact between the U.S. and South Korea, following a contentious ruling in Washington DC by the World Trade Organisation (WTO), which upheld the U.S. tax imposed on Chinese-made tires. These tariffs have been in force since China entered the WTO in 2001, to safeguard the U.S. market against a rise in imports. China has rallied back imposing numerous taxes on U.S. exported goods. The decision came amid the annual trade gathering between the two countries. The ruling is viewed as a very favorable result in light of the free trade agreement between the U.S and South Korea before Congress. The acceptance by the WTO was vital for US business and confidence.
  • No reprieve from the Securities Exchange Commission (SEC) as it filed complaints in the Federal District Court of Manhattan against recent investors in Wimm-Bill-Dann Foods (Russia) mere days before PepsiCo (U.S.) became a 66 percent (%) holder in the Russian beverage company. Significantly, this highlights the reach the SEC is maintaining over worldwide regulation. The spin-off from the SEC’s extensive supervision has clearly influenced the European Commission, who recently proposed mandatory prison terms on those indicted with insider trading, to protect and maintain market confidence. The large and suspicious share purchases in Wimm-Bill-Dann Foods, particularly on the eve of PepsiCo’s takeover, failed to go unnoticed by the watchful eye of the SEC.
  • Private equity firms are experiencing an increase in market activity despite the instability of the Initial Public Offerings market. This year to date private equity firms have sold 254 companies compared with last years figures which were significantly lower totaling 114. Turbulent market conditions have posed many problems for companies seeking to divest companies previously bought for sky-high prices. Most recently, General Nutrition Centers (GNC) a Pittsburgh, Pennsylvania based company has caught the attention of Blackstone Group (New York) in partnership with the Bright Food Group (China). It is projected the nutrition group could attract bids of up to $2 billion.
  • Lastly, 2011 will see the beginning of the Government’s plan to sell its substantial stake in American Insurance Group (A.I.G). It is rumoured up to one fifth of the Government’s current ownership in the group will be sold. These negotiations will kick start A.I.G’s $130 billion bailout repayment as a result of its infamous fall during the financial crisis. This is viewed as a positive start to the Government’s lengthy process of offloading it’s investment in private companies. Nonetheless, the stability of the stock market remains a vital factor in these plans materializing over the next few months.

Compiled and summarized by Muireann O’Keeffe.