WTO overrules EU's ban on genetically modified crops
Brussels: The World Trade Organization ruled Tuesday that the European Union broke international trade rules when it barred the sale of genetically modified crops and foods for six years. Judges also condemned import bans imposed separately by France, Germany, Austria, Italy, Luxembourg and Greece.

The original complaint against the union was filed by the USA, Argentina and Canada, which together, are the world's largest producers of corn, soybeans, cotton, rapeseed (canola) and rice engineered to contain bacteria genes that can resist herbicides or insects.

The EU ended its moratorium in 2004 when it accepted a modified strain of sweet corn. But until then the ban cut off Europe as a market for some of the USA's largest crops. WTO rules require that governments base decisions on science, not politics. The three nations argued there was no scientific basis for the ban.

The ruling is unlikely to impact producers of modified crops greatly as European regulators have already begun moving on pending applications from U.S. companies to sell their products. In any case European consumer resistance also precludes the possibility of any hike in sales.
Back to News Review index page  

Luxembourg to introduce law to repel Mittal's bid on Arcelor
Paris: Increasingly thrashing around like a stranded fish, European steel maker Arcelor may now seek protection from its government patron and shareholder Luxembourg, which on Tuesday introduced legislation to help fend off unwanted takeovers.

The government sought to push through a law that would effectively allow Arcelor to set up defenses against the hostile US$23.7bn bid. Among other things, it would let the company adopt a so-called poison pill defense, which enables companies to move swiftly to exclude new shareholders intent on taking control, often by issuing floods of cheap shares to existing shareholders.

Luc Freiden, the minister of justice in Luxembourg, told a news conference. "Under the draft bill, Arcelor's board can undertake measures to react to the offer without asking for the consultation of a general assembly of shareholders."

Analysts said the government's action could really be a way to pressure Mittal to make further concessions guaranteeing that jobs and business stay in the tiny European state. Other experts from the European Commission have pointed out that the new law would hardly change anything as a certain leeway to use national laws for poison pill defenses already exists.

Meanwhile a French business lobby stepped forward on Tuesday to warn France against creating the "illusion" that it can control the outcome of the Mittal bid. Laurence Parisot, chairwoman of the employers' federation Medef, cautioned against "political statements that fuel the illusion that there is any kind of political influence over this type of issue."

With 6,500 employees, Arcelor, is the largest private employer in Luxembourg. The state of Luxembourg owns 5.6 percent of Arcelor, which was formed in a 2002 merger of Luxembourg, Belgian, French and Spanish steel makers.

European Union governments left member states the option to include or exclude poison pill defenses when they agreed on a new directive governing takeovers in 2004. Under the terms of the EU law, Luxembourg and all other EU member states are obliged to incorporate laws that conform by May 20, 2006.
Back to News Review index page  

BP announces record profits of US$19.3bn
London, UK: BP yesterday announced record profits of US$19.3bn, driven by the high oil price, but the 25 per cent increase fell short of City expectations and the world's second largest oil firm by market value saw its shares fall in response.

Weakness in the final quarter of 2005 left BP's refining and marketing business US$160mn in the red. The company blamed a combination of its Texas City refinery being closed, the US$500mn spent on boosting efficiency in Europe, and the changes to the way BP has to account for long-term North Sea contracts.

The results saw the group deliver record cash flow as well as record profits, slash its gearing to 17 per cent, and for the thirteenth successive year replace 100 per cent of its production with new proven reserves. Over the past three years BP has returned US$40bn to shareholders, a return that could rise to up to US$65bn in the next three years.

Experts say that the combination of the reserves replacement programme and the expected distribution to shareholders meant that the market consensus still remains overwhelmingly positive towards what is still seen as the pick of the oil majors.
Back to News Review index page  

Coca-Cola profits down 28 per cent
Atlanta, USA: Coca-Cola Co, the world's biggest soft-drink maker, has reported a 28 per cent drop in fourth-quarter profit. But excluding one-time items, earnings beat the analysts' average forecast by 2 cents a share, helped by higher-than-expected revenue.

Coca-Cola shares were up almost one per cent at US$41.32 on Tuesday morning on the New York Stock Exchange.

The Atlanta-based company, which rolled out a flurry of new products last year and plans to keep up the tempo in 2006, said operating income fell 6 per cent on the planned double-digit increase in marketing and new product development. Net earnings declined to US$864 million or 36 cents a share, from US$1.2bn or 50 cents a share, a year earlier.

The 2005 net profit included charges of 10 cents per share for repatriating foreign earnings and for a charge incurred by a bottler in which Coca-Cola invests.

Excluding those charges, earnings were 46 cents a share. Analysts on average had expected 44 cents, according to Reuters Estimates.

Revenue rose 7 per cent to US$5.55bn, reflecting a 4 per cent increase in gallon sales, a 3 per cent benefit from pricing and mix, and a 1 per cent benefit from structural changes.
Back to News Review index page