Hottest Stories in Global Finance
Savage, Shirley S., Global Finance
Following 13 years of negotiations, the United States and China agreed to a trade pact that will reduce Chinese tariffs and help open Chinese markets to foreign businesses, especially fmancial services and telecommunications. The deal, which still needs approval by the US Congress, will also smooth the way for China's entrance into the World Trade Organization. The trade agreement would give foreign banks a chance to enter a market estimated at $133 billion. It allows banks to do local currency business with Chinese companies within two years of China's entrance into the WTO. Banks will be able to do business with Chinese individuals within five years. It is a welcome victory for the WTO, which saw negotiations to rewrite the rules of world trade collapse in bitterness and discord in Seattle in December.
The European Union and Mexico settled on a free-trade pact after 16 months of negotiations. The accord is the first negotiated by the European Union with a Latin American partner. It covers industrial tariffs, investment, agricultural goods, and other trade areas. Mexico's exports to the union totaled $3.9 billion in 1998, while EU exports to Mexico added up to $11.7 billion. The agreement must be ratified by the Mexican Senate and accepted by the 15 EU members.The European Union and Mercosur nations Argentina, Brazil, Paraguay, and Uruguay will start trade talks in March.
Currency markets were roiled in early December as the yen rose while the euro sank.'The US dollar dropped to Y101 for the first time in four years. Rising short-term interest rates contributed to the sharp increase in the yen's value. in an effort to halt the currency's rise, the Bank of Japan indicated it would make more than sufficient funds available to the short-term money market. But earlier attempts by the government to stop the yen's rise had little effect. …