U.S. trade deficit for 2005 at record high of US$725.8bn
Washington, USA: The U.S. trade deficit jumped nearly 18 per cent in 2005, the US Commerce Department said Friday. The deficit is the country's fourth consecutive record high and comes on the back of an increase in consumer demand for imports, soaring energy prices and the strengthening of the dollar against other currencies.

The US$725.8bn trade gap is now almost exactly twice the deficit in 2001, driven by a 12 per cent jump in imports, which has been offset somewhat by a 10 per cent increase in exports, the Commerce Department reported in Washington. The nation last had a trade surplus, of US$12.4bn, in 1975.

The nation's deficit in trade for petroleum products accounted for 29 per cent of the total gap, up from 25 per cent in 2004. Imports of petroleum goods climbed 39 per cent, to US$251.6bn, after rising by 39 per cent in 2004. Excluding oil and other petroleum products, the trade deficit in any case would have grown 10 per cent, to US$537bn.

Analysts meanwhile expect even worse numbers to follow. They point out that a rise in oil prices for a particular month does not see the increase reflected in the trade deficit until the next month.

The U.S. deficit set another record last year, this one in its politically sensitive trade deficit with China, which had the largest trade deficit with the United States of any country, at $201.6 billion for the year, up 24.5 percent from 2004. The United States' second-biggest deficit was with Japan, at US$82.7bn, up 9.4 per cent, followed by Canada, a big supplier of oil and natural gas, at US$76.5bn, up 15.1 per cent.

The deficit with members of the Organization of Petroleum Exporting Countries increased by 29 per cent, to US$92.7bn.
Back to News Review index page  

Russia may end Gazprom's pipeline monopoly
Moscow, Russia: In a breakthrough initiative, Russia has said that it is prepared to allow independent gas producers equal access to its export pipelines. The announcement by the country's finance minister, Alexei Kudrin, effectively means the breaking up of the monopoly of the state-controlled energy giant Gazprom.

"In the future, access to export pipelines will be equal for all [companies] which win licences to develop new fields. I am not prepared to say when that will happen, but we are readying ourselves for it," Kudrin said.

Kudrin spoke after a meeting of Group of Eight finance ministers in Moscow, which focused heavily on energy security. However, the finance minister, refused to give any timeframe for the change. The meeting of the G8 finance ministers has come just weeks after Gazprom cut off gas to Ukraine in a pricing dispute, leading to sharp falls in supplies to Western Europe.

Before the G8 meeting, several European countries, led by France, had called for Russia to allow independent gas producers to sell gas directly to Europe, offering in return longer-term supply contracts and help with financing further pipelines.

Independent producers of gas in Russia have built up their share to about 15 per cent of the Russian production, but have no access to European markets, in the face of Gazprom's monopoly. Gazprom's monopoly has also held back development of some big gas fields such as Kovykta, which TNK-BP, the Anglo-Russian oil company, has a licence to develop.
Back to News Review index page  

Arcelor now seeking to deploy Japanese 'poison pill'
Tokyo, Japan: Arcelor, the French-run steel group, desperately trying to fend off an £5.8 billion hostile takeover bid from Mittal Steel, the world's biggest steel maker, may now seek to deploy a Japanese "poison pill". The company had earlier roped in the principality of Luxembourg into deploying a legislative "poison pill" by way off thwarting Mittal's hostile bid.

Reports are now crediting sources close to Nippon Steel of Japan as saying that a powerful clause in its 2001 technology tie-up agreement with Arcelor has the potential of dramatically reducing a would-be buyer's interest in the Luxembourg-based company.

The so-called Change of Control clause that is understood to be written into the partnership contract would give Nippon Steel the right to withdraw the patents for any technology that it shared with Arcelor if that company's ownership structure shifts in any way. Nippon provides Arcelor with the technology for a light, high-grade sheet steel of a sort used increasingly in the auto industry, and particularly so by Japanese carmakers.

With the big three American car manufacturers still in a deep rut, and with their Japanese rivals in the ascendant, any potential buyer of Arcelor can ill-afford to lose such customers. Reports quoting sources close to Japanese companies said the Japanese car majors are reluctant to become targets of a global consolidation drive.
Arcelor makes the Nippon Steel-designed sheets for European factories of the Japanese carmakers.

The hostile bid for Arcelor, the global No 2 steelmaker, with the reshaping of the industry that it implies, has badly shaken Japan, which is the world's biggest steel exporter and home to four of the world's top steelmakers.

Meanwhile, politicians in Luxembourg, Arcelor's registered home, are seeking a way to implement the European Union takeover directive that would allow the company to introduce traditional poison pills to stop any bid from Mittal succeeding without the board's approval.
Back to News Review index page