Trade deal with Ukraine delayed until 2015.

The European Union, Russia and Ukraine agreed on Friday to delay the implementation of an EU-Ukraine free trade pact until the end of next year, EU Trade Commissioner Karel De Gucht said.  Ukraine will continue to enjoy privileged access to the EU market until that date, he said, but it will not have to cut duties on imports from the EU in return.  The move appears to be at least partly a concession to Russia, which fears the EU-Ukraine agreement will harm its industry.

Russia has been urging the EU to refrain from implementing the free-trade pact with Ukraine until its concerns over the agreement are addressed.

The EU-Ukraine free trade pact is the centrepiece of a wide-ranging political and trade agreement which has been at the heart of Ukraine’s political crisis over the last year.  Moscow had threatened to introduce import tariffs on Ukrainian goods if Kiev went ahead with the planned trade agreement from Nov. 1.

Ukrainian President Petro Poroshenko had also asked the EU to consider allowing Kiev to delay reducing customs duty on EU exports coming into the Ukraine under the new pact, Interfax Ukraine news agency reported.  Allowing EU products more cheaply into the Ukraine market could initially create problems for the weak economy there.

“We will delay the provisional application of the (free trade agreement) until Dec. 31 of next year,” De Gucht told a news conference after talks with Russian Economy Minister Alexei Ulyukayev and Ukrainian Foreign Minister Pavlo Klimkin.

The EU will extend temporary tariff cuts it granted to Ukrainian products earlier this year until the end of next year, De Gucht said.  “The reason we are doing this .. is the very difficult economic situation in Ukraine.  This is part and parcel of a comprehensive peace process in Ukraine.”

The move also created a breathing space of 15 months in which Russia, Ukraine and the EU would continue talks to try to meet Russian concerns over the EU-Ukraine trade pact, he said.

Under the agreement, Russia and Ukraine will continue to apply preferential trade treatment to each other’s products under a free trade agreement among countries of the Moscow-dominated Commonwealth of Independent States.

Russian news agencies quoted Ulyukayev as saying earlier on Friday that Russia would introduce import tariffs on Ukrainian goods from Nov. 1 if Kiev went ahead with the trade pact with the EU.

Wu Jiao writes:  The top leaders of China, Russia and Mongolia launched a three-party summit at which President Xi Jinping proposed a three-way economic corridor featuring cross-border infrastructure and trade development.  Calling their development highly complementary, Xi called for an economic corridor linking Beijing’s proposed Silk Road economic belt, Russia’s Trans-Eurasia railway and Mongolia’s passage to grassland initiative.

They should also beef up interconnectivity by railway and road, facilitate customs clearance and study the construction of cross-border power grids, Xi said at the meeting on the sidelines of the Shanghai Cooperation Organization summit in Dushanbe, Tajikistan.
Mongolian President Tsakhiagiin Elbegdorj said the country hopes to boost infrastructure and cross-border transportation through strengthening cooperation with the other two.
Observers said the summit highlighted the countries’ eagerness for close ties to fuel their economies and firm up their strength in the region.

Cooperation will mean more security along China’s northern border and a broader market, which will be a key for China’s Silk Road economic belt plan, said analysts.

It will be difficult for Mongolia to revive its sluggish economy and improve its international status if it continues sticking to its third neighbor policy, said Chen.  Landlocked Mongolia has long upheld a third neighbor policy to strengthen cooperation with Western countries and international bodies.  The mineral-rich country is experiencing its weakest growth in four years. Foreign investment plummeted 70 percent in the first half.  Hopefully new cooperation will turn these figures around.

Tyler Durden writes: When it comes to funding, the most sophisticated market participants, hedge funds, have zero use for conventional cash exposure such as exchange margin, which is well below half a trillion, and instead obtain at least half of their funding needs in the shadow market via repo, to the tune of about $1 trillion (and likely more depending on one’s assumption about collateral reuse).  Why Margin Debt is Meaningless

Today, Margrethe Vestager (46), former Danish Minister of Economic Affairs and the Interior, and Deputy Prime Minister, has been appointed as EU Competition Commissioner. Vestager is a member of the Danish Social Liberal Party (SLP). She will succeed Spaniard Joaquín Almunia for a term of five years.

Vestager obtained a degree in economics from the University of Copenhagen in 1993. She has been active as head of section at the Ministry of Finance, special consultant at the Agency for Financial Management and Administrative Affairs and Head of Secretariat with the same agency.

At the age of 21, she joined the central board and executive committee of the SLP and of the European Affairs Committee. Upon graduating, Vestager immediately became National Chairwoman of the Party, until she became Minister of Education and Ecclesiastical Affairs in 1998.

In her role of Minister of Economic Affairs, she brokered an agreement requiring banks’ investors and bondholders to suffer losses in case of failure (bail-in), thereby providing important input for Almunia’s policy on government bank rescues. In addition, the successes in negotiations on overhauling bank capital requirements and the adoption of a law to safeguard derivative markets, are attributed to her diplomatic efforts, when she was leading the discussions with her fellow European Economy and Finance Ministers.

In a key paragraph in the Mission Letter of President Juncker, Ms. Vestager is requested to focus on:  “Mobilising competition policy tools and market expertise so that they contribute, as appropriate, to our jobs and growth agenda, including in areas such as the digital single market, energy policy, financial services, industrial policy and the fight against tax evasion. In this context, it will be important to keep developing an economic as well as a legal approach to the assessment of competition issues and to further develop market monitoring in support of the broader activities of the Commission.”

The three parties in the Czech government have agreed that the country’s next European commissioner should be Věra Jourová, the current minister for regional development.

Věra Jourova is a politician, lawyer, vice-chairwoman of the ANO political movement. Since November 2013, Věra Jourová has served as a member of the Chamber of Deputies and in January 2014 she was appointed Minister of Regional Development.
Before entering the Ministry of Regional Development, she worked as a law clerk and consultant in the field of European funds, strategic planning and regional development. Earlier, while serving as Deputy Minister for Regional Development, Věra Jourova led the negotiation team for EU funds with the European Commission and the European Investment Bank. As a consultant, she provided advice not only in the Czech Republic but also in Russia, the Balkans and the Baltic countries. Věra Jourová was also active at the municipal level in the position of Head of the Department of Regional Development, where she was in charge of development and investment projects within the Vysočina region. Last but not least she held the post of secretary and spokeswoman of the municipal authority in the town of Třebíč.

She is clearly a banking and finance expert.

Braha Chellaney writes: In recent years, the People’s Liberation Army has been taking advantage of its rising political clout to provoke localized skirmishes and standoffs with India by breaching the two countries’ long and disputed Himalayan frontier. The PLA’s recent intensification of such border violations holds important implications for President Xi Jinping’s upcoming visit to India – and for the future of the bilateral relationship.
In fact, such provocations have often preceded visits to India by Chinese leaders. Indeed, it was just before President Hu Jintao’s 2006 visit that China resurrected its claim to India’s large northeastern state of Arunachal Pradesh.

By contrast, Indian prime ministers since Jawaharlal Nehru have traveled to China to express goodwill and deliver strategic gifts. Unsurprisingly, India has often ended up losing out in bilateral deals.

China’s annexation of Tibet, without securing (or even seeking) recognition of the then-existing Indo-Tibetan border. In fact, under the treaty, India forfeited all of the extraterritorial rights and privileges in Tibet that it had inherited from imperial Britain.
As agreed in the pact, India withdrew its “military escorts” from Tibet, and conceded to the Chinese government, at a “reasonable” price, the postal, telegraph, and public telephone services operated by the Indian government in the “Tibet region of China.” For its part, China repeatedly violated the eight-year pact, ultimately mounting the trans-Himalayan invasion of 1962.

In short, China used the Panchsheel Treaty to outwit and humiliate India. Yet, just this summer, Prime Minister Narendra Modi’s new government sent Vice President Hamid Ansari to Beijing to participate in the treaty’s 60th anniversary celebrations.
Ansari was accompanied by Commerce Minister Nirmala Sitharaman, who, during her stay, signed an agreement allowing China – without any quid pro quo – to establish industrial parks in India. This will exacerbate existing imbalances in the bilateral trade relationship – China currently exports to India three times more than it imports from the country, with most of these imports being raw materials –thereby exposing India to increased strategic pressure and serving China’s interest in preventing India’s rise as a peer competitor.

A reminder of that came at July’s BRICS summit of Brazil, Russia, India, China, and South Africa, when, yet again, China emerged ahead of India. The BRICS’ New Development Bank, it was announced, will be headquartered in Shanghai, not New Delhi; India’s consolation prize was that an Indian will serve as the Bank’s first president.

India must consider carefully the pretense of partnership with China that it is forming through trade and BRICS agreements – at least until a more balanced bilateral relationship emerges. After all, neither booming trade nor membership in the BRICS club offers protection from bullying.