World Trade Organisation rules tax benefits by U.S. illegal
Brussels, Belgium: The World Trade Organization ruled yesterday that tax breaks the United States gives to some of its largest companies, and exporters, such as Boeing, Microsoft and General Electric, are illegal. In response to the ruling the European Union has said that it would impose fresh trade sanctions in three months unless the tax breaks were abolished.

The ruling is the second in four years involving tax breaks that the United States granted to 6,000 exporters, initially under the Foreign Sales Corporation program and subsequently under the American Jobs Creation Act. The dispute dates back to the mid-1980's.

With its current ruling, the W.T.O. rejected an appeal by the United States of an earlier trade organization ruling that the American Jobs Creation Act of 2004 failed to bring the United States into compliance with the first ruling, which had held that tax breaks provided under the Foreign Sales Corporation arrangement amounted to unfair subsidies.

The initial ruling, made in 2002, allowed the European Union to impose US$4bn in sanctions on imports from the United States. The EU had lifted those sanctions when the American Jobs Creation Act was passed. But the W.T.O. subsequently ruled that the act perpetuated the illegal subsidies with a two-year phaseout of the tax breaks and a grandfather clause covering exporters that had sales contracts dated before Sept. 17, 2003.

In 2004 the European Union imposed only 5 per cent of the US$4bn worth of sanctions it was allowed to charge. This time trade officials said they plan to impose 14 per cent, or US$560mn, of the US$4bn in the form of additional customs duties on American imports.

European trade officials have consistently argued that Boeing is the single biggest beneficiary under the American Jobs Creation Act, allowing it to benefit by US$615mn over the next ten years, if nothing were done to repeal the law.
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Black Rock and Merrill Lynch in talks for stake acquisition
New York, USA: The Wall Street Journal and the The New York Times have reported that Merrill Lynch & Co. is now in talks to acquire a stake in Black Rock Inc., the No. 3 U.S. manager of bond funds. According to the Journal, Merrill is likely to announce an agreement to exchange its US$544bn money-management arm for a 49 per cent stake of New York-based Black Rock, in a couple of days.

On realization, the deal would form a fund-management company with about US$1trn in assets, combining Black Rock's focus on institutional investors with Merrill's position as the world's biggest brokerage for individuals.

Merrill and Black Rock spokespersons declined comment, as did PNC Financial Services, which owns 70 per cent of Black Rock.

Shares of Merrill rose 2 per cent to US$74.11 in early trades in New York Stock Exchange composite trading. PNC stock rose 4 per cent to US$66.93. Black Rock's jump marked the biggest one-day gain since April 2002.

A deal between the two firms would be the second largest in the asset management industry after Merrill's US$5.3bn takeover of Mercury Asset Management in 1997.

Black Rock has US$453bn in assets, including US$305bn in bonds. Merrill Lynch oversees US$544bn.
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Gazprom denies plans to relinquish gas export monopoly
Moscow, Russia: Gazprom said Monday that it had no plans to give up its monopoly on gas exports, contradicting Russian finance minister Alexei Kudrin's earlier statement that the government was prepared to allow independent gas producers access to gas export pipelines.

Kudrin's statement appeared to have come after renewed pressure from Europe for Russia to liberalize its stranglehold over gas trade amid fears over further disruptions to gas supplies.

The European countries were in for a considerable shock recently after a spat over gas pricing, between Russia and Ukraine, had resulted in disruption of gas supplies to Europe. Kudrin's statement had come after talks on energy security during this weekend's meeting of finance ministers from the Group of Eight countries.

Meanwhile a spokesman for the gas giant, Gazprom, said the company did not intend to surrender its monopoly on all pipelines to lucrative export markets any time soon. "This is not part of our plans," Gazprom spokesman Sergei Kupriyanov said by telephone Monday, when asked whether Gazprom was prepared to allow other producers to export to Europe directly.

European countries receive 25 per cent of their gas from Gazprom, mostly via Ukraine.

In early 2003, Putin had said that earlier plans to break up the gas giant's monopoly should be shelved because the company was too important as "a powerful political and economic lever of influence over the rest of the world."
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Mobile operators to offer global IM service
Barcelona, Spain: Fifteen operators, including China Mobile Communications, Orange, Telefónica Móviles, T-Mobile International, and Vodafone Group, have agreed to offer instant messaging (IM) across their networks as part of an initiative to make IM service globally available and interoperable.

The announcement was made by the GSM Association (GSMA), at a news conference during the 3GSM World Congress in Barcelona on Monday.

The group also hopes to cooperate with Internet-based IM service providers, such as America Online, Microsoft's MSN, and Yahoo, according to Arun Sarin, Vodafone's chief executive officer. "We want to extend this service and make it a bigger experience for users," he said.

In the first phase, the mobile operators aim to extend IM--a widely popular service among PC users in the fixed-line telecommunications market--to their combined customer base of 700 million users. Over the coming months, they expect other GSM operators to join the initiative, representing a potential global market of more than 2.2 billion people.

On the Internet, more than 300 million people around the world use IM, and around 12 billion messages are sent every day, according to the GSMA.

Unlike the free IM service available on fixed-line networks, however, the IM service planned by the GSM community will cost money, with the calling party picking up the tab.

A key requirement for providing an IM service to mobile phone users is interoperability, to ensure that messages can be sent across networks around the world, said Sanjiv Ahuja, CEO of European carrier Orange. Operators within the GSM community have agreed to IM interoperability standards, he said.

The operators expect to begin rolling out IM services over the next several months.
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