Monday, 25 June, 2012

Page 02

Couple’s counselingfor the US & China

VIENNA

AGENCIES

IN an interview aired by Austriaradio on Saturday, Nowotny alsosupported the idea of having a lim-ited number of European countriesstart a financial transactions tax

and said there was no alternative to closerEuropean Union economic integration.

Nowotny, also head of Austria’s cen-tral bank, often says the euro is asmoothly functioning currency despite

debt woes at some of the 17 countries thatshare it.

Euro zone leaders have agreed to pro-vide up to 100 billion euros ($125 billion)to prop up Spain’s banking sector, whichan audit released on Thursday foundwould need up to 62 billion extra capitalto weather adverse circumstances.

Asked if the euro would survive ifSpain itself were frozen out of markets,Nowotny said: “We have to prevent thissituation. But even if Spain could not fi-nance itself it would not automatically

mean that it would exit the euro. There isno nervousness about the euro itself, justabout individual countries”.

He took a dig at International Mone-tary Fund managing director ChristineLagarde for suggesting on Thursday theeuro’s viability was at stake. “This is ex-actly an example of what I see as an inad-missible simplification,” he said.

Nowotny said there was no gettingaround greater EU economic integration ifthe bloc wanted to avoid splintering and aloss of power that would eventually de-

grade people’s quality of life and freedoms.He played down the prospects of next

week’s EU summit coming up with a de-tailed way forward, and said that in thelonger term it made sense to have a morecentralized fiscal policy and a sort of EU fi-nance minister. “I think it is sensible tohave someone who, let us assume as a Eu-ropean commissar, is placed to have con-crete influence on national budgets”, muchas the EU competition commissioner canintervene when needed, he said.

He supported the idea of a limited

number of European countries pressingahead with a tax on financial transactionsbecause some countries, such as Britain,will not join in for fear of harming its fi-nancial services industry. “It is senselessto wait a long time for everyone to goalong. It is probably reasonable to start atleast with a certain group. One countryalone cannot do it,” he said. He said thetax should have a simple model that ba-sically freed long-term transactions fromthe levy and focused on short-term and,thus, more speculative deals.

Euro in good shape despiteSpain’s woes: NowotnyThe euro will survive even if Spain were cut off from capital markets, European

Central Bank policymaker Ewald Nowotny said, adding the currency was in solid

shape despite financial problems in some member countries

Judge blocks Apple in

Google smartphone warNEW YORK

AGENCIES

A US judge ruled that Apple Inc cannot pursue an injunction againstGoogle’s Motorola Mobility unit, effectively ending a key case for theiPhone maker in the smartphone patent wars.The ruling came from Judge Richard Posner in Chicago federalcourt. He dismissed the litigation between Apple and MotorolaMobility with prejudice, meaning it can’t be refiled. The ruling is ablow for Apple, which had hoped a decisive ruling against Motorolawould help it gain an upper hand in the smartphone market againstAndroid. “Apple is complaining that Motorola’s phones as a wholeripped off the iPhone as a whole,” Posner wrote. “But Motorola’sdesire to sell products that compete with the iPhone is a separateharm -— and a perfectly legal one -— from any harm caused bypatent infringement.” Apple spokeswoman Kristin Huguet declinedto comment on the ruling. Motorola Mobility spokeswoman JenniferErickson said the company was pleased that Posner dismissedApple’s case. Both parties have the option to appeal Posner’s ruling.Motorola sued Apple in October 2010, a move that was widely seenas a pre-emptive strike against an imminent Apple lawsuit. Applefiled its own claims against Motorola the same month. Posner issueda series of pre-trial rulings that eliminated nearly all of Motorola’spatent claims against Apple from the prospective trial, whilemaintaining more of Apple’s claims against Motorola. That meantApple had more to gain in the trial, which had been set to start lastweek. However, Posner canceled the trial earlier this month. Applehad sought an injunction barring the sale of Motorola products usingApple’s patented technology. But in Friday’s ruling, Posner wrotethat neither party is entitled to an injunction. Since Motorola coulddesign around the minor technological features covered by Apple’spatents, an injunction would be an inappropriate windfall for Apple,Posner wrote. Posner also said that Apple had not clearlydemonstrated that Motorola phones caused a loss of consumergoodwill significant enough for an injunction. “To suggest that it hassuffered loss of market share, brand recognition, or customergoodwill as a result of Motorola’s alleged infringement of the patentclaims still in play in this case is wild conjecture,” Posner wrote. In abright spot for the iPhone maker, Posner also ruled that Motorolacould not seek an injunction based on the one patent in the case thatit was still asserting against Apple. Motorola had pledged to licensethat patent - which covers an aspect of wireless communication - onfair and reasonable terms to other companies in exchange for havingthe technology adopted as an industry standard. “How could it bepermitted to enjoin Apple from using an invention that it contendsApple must use if it wants to make a cell phone,” Posner wrote. At ahearing earlier this week, Apple had argued that it would be satisfiedwith an injunction forcing Motorola to remove Apple’s patented

features within three months. ButPosner found that proposal

unworkable, in part because of thehardship in administering such an

order. “Because of thepotential costs to Motorola

and the federal judiciaryI could not responsibly

order injunctive relief infavor of Apple,” he wrotein his ruling. The case is

Apple Inc. and NeXTSoftware Inc. V.

Motorola Inc. andMotorola Mobility Inc., in

the U.S. District Court forthe Northern District of

Illinois, no. 11-08540.

NEW YORK

AGENCIES

In early trade, gold briefly crossed into nega-tive territory for 2012, extending Thursday’s2.5 percent drop. Investors were frustrated bythe Fed’s decision this week to lengthen its“Operation Twist” program aimed at loweringlong-term interest rates instead of a new out-right bond purchase program.

Inflation fears have helped fuel severalyears of strong gains for gold, but investors arestarting to worry about deflation after reportsthis week showed signs of slowing economicactivity around the world.

“There is zero inflation out there. Withgold being well received as a risk asset, theprice is deflated because of the rising dol-lar,” said Phillip Streible, senior com-modities broker at futuresbrokerage R.J. O’Brien.

Streible said in-vestors may rebuildgold positions afterthe latest price

pullback, and might rethink the flow of fundsinto U.S. Treasuries because they have reacheda “saturation point.”

Spot gold was up 0.2 percent at $1,568.70an ounce by 2:59 PM EDT (1859 GMT), just $5above the closing price of $1,563.80 for 2011.

The metal noted a 3.5 percent this week forits second-largest weekly decline of the year.

U.S. gold futures for August delivery set-tled up $1.40 at $1,566.90, with trading vol-ume at about 35 percent below its 30-dayaverage, preliminary Reuters data showed.

Silver was up 10 cents at $26.85 an ounce.The metal, widely used in industry, posted a6.5 percent drop for the week, its biggestweekly decline for the year.

Demand for physical gold in keyAsian markets remained lack-

luster.Indian gold buying has

been hurt by a bad mon-soon season and a recordlow in the rupee, which

pushed localg o l dp r i c e sto an

all-timeh i g h .

I n d i a ’ sg o v e r n -

ment’s deci-sion to double

import duty on goldto 4 percent also weighed heavily.

Gold imports to India, historically theworld’s largest buyer, fell by $6.2 billion in thefirst two months of the fiscal year that beganin April, compared with a year before, thecountry’s finance secretary said on Friday.

GOOD BUY AFTER PULLBACK?: Goldprices appeared underpinned a day afterMoody’s downgraded 15 of the credit ratingsof world’s biggest banks to reflect the risk oflosses from volatile capital markets. Worriesabout the euro-zone debt crisis also supportedgold.

LGT Capital Management analyst BayramDincer said investors will retain interest ingold as long as the metal can hold strong sup-port near $1,530 an ounce.

“We believe the slide in gold prices maycreate an attractive entry point for emergingmarkets buyers and long-term investors suchas the official sector and pension funds, whomay be looking to diversify away from the U.S.dollars and into a quality hard asset such asbullion,” HSBC said in a note.

Among platinum group metals, platinumwas down 0.3 percent at $1,426.65 an ounce,while palladium edged up 0.2 percent at$604.35 an ounce.

ISLAMABAD

INP

Islamabad Chamber of Commerce and Industry (ICCI) organized an in-teractive secession in collaboration with Ras Al Khaimah InvestmentAuthority (RAKIA) to explore investment opportunities, advantagesand facilities offered by RAKIA for local and foreign investors.

RAKIA could explore possibilities to expand bilateral trade withPakistan as private sector has been playing the leading role in flourish-ing real estate sector of the country, Vice President ICCI, Mr.ShahidZaman Shinwari said this, while exchanging views with a visiting dele-gation of RAKIA of the United Arab Emirates at Chamber House.

Vice President ICCI expressed hope that RAKIA would help set offa new growth trend in the region, marking the beginning of a revival ofthe real estate sector. During a presentation, the General Manager ofRAK Offshore of UAE, Mr.Peter Schuster highlighted the available in-vestment opportunities and advantages of investing in different areas

and said that his delegation was here to join hands with Pakistan in allsectors of the economy and was looking for joint ventures with corpo-rate companies. He said they wanted to make a long-term strategy planwith Pakistan for enhancing trade.

He said that Ras Al Khaimah is characterized by an attractive in-vestment environment and enjoys socio-economic stability, referringto the quality of infrastructure and the ease procedures for manpower.Mr.Peter also hailed the good economic performance of the emirate,which includes sizeable volumes of energy and oil as well as the privi-leged position of the emirate and the encouraging investment policies.

Responding to the questions, General Manager of RAK Offshore ofUAE said that the free trade zone is an area of a country where some nor-mal Trade such as Tariffs and quota shares are eliminated. He said thatRAKIA offers a highly attractive economic package to foreign investors,which include 100 per cent income and corporate tax exemptions, fullrepatriation of capital and profit, readily available labor, hassle-free li-censing procedures, excellent infrastructure and logistic support.

Gold posts 3.5 peRcent weeklydrop on deflation fear

ICCI joins hands with RAKIA team

Gold rebounded after the

last session’s sell-off, but

the precious metal was

virtually flat for the year to

date and posted a weekly

drop of nearly 4 percent on

deflation worries and a lack

of aggressive Federal

Reserve stimulus

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02Monday, 25 June, 2012

Indus Motor

embraces Euro II

standardsKARACHI: Indus Motor Company(IMC) is committed to producing saferand environment-friendly cars withminimum impact on the environment.Keeping in line with its environmentalcommitments, IMC has embraced EuroII emission standards in all Corollavariants. In this respect, IMCwelcomes the government’s decisionto implement Euro-II emissionstandards as the main aim of thispolicy is to decrease the amount ofhazardous vehicle exhaust emissions.To fully adopt Euro II emissionstandards, IMC has installed catalyticconvertor in its vehicles which isbasically a device that converts theengine exhaust gases into less harmfulsubstances. When used with low sulfurEuro II compliant fuel, the catalyticconverter will reduce the levels of CO2and HC+NOx emissions substantially.The revised prices of vehicles will beRs. 1,534,000 Corolla (XLi), Rs.1,669,000 Corolla (GLi), Rs. 1,824,000Corolla GLi (AT) , Rs. 1,654,000Corolla (2.0D), Rs. 1,899,000 CorollaAltis (MT) , Rs.1,994,000 Corolla Altis(MT/SR), Rs.1,994,000 Corolla Altis(AT), Rs. 2,084,000 Corolla Altis(AT/SR), Rs. 1,759,000 Hilux 4x2(STD), Rs. 1,799,000 Hilux 4x2 (UP-Spec), Rs. 1,779,000 Hilux 4x2 (Police),Rs. 2,874,000 Hilux 4x4 (Std MT),Rs.3,174,000 Vigo Champ (MT), Rs.3,374,000 Vigo Champ (AT).

McDonald’s

honours best

achieversKARACHI: McDonald’s Pakistan heldan impressive ceremony at CornichePark on June 8 here to honour the100% Achievers under its “Beat thePeak” Competition. Renownedtelevision and film actor Shabbir Janwas the Guest of Honour at therecognition ceremony. McDonald’srestaurants at Airport, Corniche,Najeeb Centre and Park Towers weredeclared as the 100% Achievers in April2012 in the competition. The ceremonywas held in honour of both crew andmanagement staff of the four winningrestaurants. Shabbir Jan awardedCertificates of Appreciation to all themembers of crew and managementstaff of the concerned restaurants.

CORPORATE CORNER

Business

YAO YANG

CHINA has undoubtedly benefited fromthe world system created and supportedby the United States. Indeed, RichardNixon’s journey to China in 1972 openedthe door for China’s return to the inter-

national community.Most of the next two decades were a honeymoon for

Sino-American relations. On the economic front, the USnot only granted China most-favored-nation trade sta-tus, but also tolerated China’s mercantilist approach tointernational trade and finance, notably its dual-trackexchange-rate regime. In the 1990’s, bilateral economicties continued to expand. American support for China’sintegration into the world system culminated with thecountry’s accession to the World Trade Organization in2001. Since then, China’s exports have grown five-fold.Of course, China’s inadequate intellectual-property pro-tection has damaged relations (a shortcoming that maybe harming Chinese firms more than US firms by deter-ring American – and other advanced country – compa-nies from deploying new technologies in China). And therole of China’s state-owned enterprises and official Chi-nese support for technological “national champions”(privileged companies that almost certainly use govern-ment money carelessly) has also hurt relations.

In fact, China’s approach is akin to gambling againstthe odds. Successful hi-tech innovations are randomevents that follow the law of large numbers. When leftto the market, many firms and individuals try to inno-vate, so the overall probability of success can increasedramatically. The market allows the law of large num-bers to work, whereas concentrated government supportfor a few favored firms undermines it.

But neither of these flaws, nor the exchange rate, isat the root of today’s global imbalances. Consider the ex-change rate. The United Kingdom maintained a current-account surplus for the century before World War I, andthe US did the same for about 80 years before 1980. But

neither country, apparently, did so by manipulating itsexchange rate. Moreover, the economies that managedto narrow their external gaps with the US substantiallyafter World War II, notably Germany, Japan, SouthKorea, Singapore, and Taiwan, ran current-accountsurpluses throughout their rapid-growth periods. Thiscontradicts American economists’ conventional wis-dom that fast-growing countries should borrow todayagainst their larger future shares in the world economy.

One possible explanation is that the relationshipbetween GDP growth rates and a country’s current-ac-count position is not linear. Compared to countrieswith very slow growth rates, countries with reasonablyhigh growth rates should borrow. But when a country’sgrowth rate continues to increase, its saving rate wouldincrease faster than its investment rate, so it is morelikely to run a current-account surplus.

For “catch-up” countries, like China, rapid growthis often accompanied by brisk structural change thatmoves factors of production, especially labor, from low-productivity activities to economic sectors with muchhigher productivity. This adds to the surplus by increas-ing firms’ profitability. China’s exchange-rate policy isproblematic not because it promotes exports, but be-cause it has forced the country to accumulate a hugepile of wasteful foreign reserves. The Chinese govern-ment’s reluctance to allow faster exchange-rate appre-ciation may reflect its aversion to large, unforeseeablefluctuations, particularly given its determination tomake the renminbi an international reserve currency.

While China’s economy is hampered by structuraldifficulties, the US is not free of similar challenges.Frankly, I am always struck by US economists’ reluc-tance to discuss the structural problems that causedthe current crisis, and that hinder America’s recovery.Most seem to believe that the crisis result from badmonetary policy and lax financial-sector regulation;some even blame the savings accumulated by Asiancountries, especially China.

That may be true of the immediate causes of the

crisis. But its eruption was far more deeply rooted inthe American version of capitalism, which aims at highlevels of competition, innovation, returns, and com-pensation. While this model has, of course, helped theUS to become the world’s leading economy, it has alsodelivered severe structural problems.

For example, to sustain high innovation, the UShas maintained the most flexible labor market amongmature economies. But this does not come withoutcosts. Companies often lay off a whole department ofscientists to shift to a new product, destroying not onlyhuman capital, but also human lives. Moreover, flexiblelabor markets imply adversarial labor relations, partic-ularly when compared to northern European countries.These countries are less innovative than is the US, buttheir economies and societies may be more resilient.

Meanwhile, the jewel of American capitalism, thefinancial sector, caused the crisis and is underpinningthe US current-account deficit. Oil exporters aside,countries running current-account surpluses, such asChina, Germany, and Japan, have stronger manufac-turing sectors relative to their financial sectors, whilethe relationship is reversed for countries running ex-ternal deficits, such as the US and the United Kingdom.

Finally, America’s global hegemony has proven to bea curse as well as a blessing. The US dollar accounts for60% of world trade, and the US has the strongest militaryin the world, making it a safe haven for global investors.But, while large capital inflows reduce borrowing costs,they also tend to cause current-account deficits: lowercosts of capital boost asset prices, with the wealth effectthen prompting people to consume more than they earn.

The policies adopted or discussed by American pol-icymakers and scholars nowadays – quantitative eas-ing, fiscal-stimulus packages, government-deficitreduction – seek to cure only the symptoms of a deepermalaise. As a first step to recovery, the US must under-take serious financial-sector reforms. As Lenin pointedout, financial capitalism is the highest form of capital-ism – that is, it is the end of capitalism. Lenin may havegotten the underlying analysis wrong, but today weknow that his conclusion may have been right for an-other reason: financial capitalism forces a country intounsustainable indebtedness. Unfortunately, America’sfinancial reforms have been half-baked at best.

For three decades, “reform” was a word reservedfor the Chinese side of the Sino-American relationship.The US, one hopes, will grow to like the sound of it.

Courtesy: Project Syndicate

Couple’s counselingfor the US & China

Plum Quinqqi Dalang Motors Limited, Managing Director Wang Xi Hai andNational Sales Manager ,Imran Warraich distribute car keys to the buyers onthe opening ceremony of the Dalang 15-seater commercial van.

KARACHI: Junior Chamber International’s President Farasat Ali Khan andYouth Parliament’s Rizwan Jaffery, aymen Saleem along with Dr. AzharAhmed sign a memorandum during a ceremony at a local hotel.

KARACHI: Faisal Tanoli, Manager Corporate Services at Ufone receives the‘Best GSM Award’ on behalf of Ufone at the recent PIFFA awards.

HINA SARfARAz

INTERNET has once more becomean eyesore for governments that arebeing threatened by dissidents and

newly emerging “net-activism” and/ormore recently “hack-activism” which hastaken to streets globally. A proposal hasbeen tabled by Russia and China at theUnited Nations regulatory body; the “In-ternational Telecommunication Union”to negotiate on a proposal that would ul-timately lead to regulating the internet;which has so far been a decentralizednetwork for free flow of information andcommunication. A treaty is to be nego-tiated in a meeting of 193 nations inDubai; this December at the 2012 WorldConference on International Telecom-munications (WCIT-12). Such an out-landish proposal is not only problematicfor the cause of “political freedoms” butalso that would defeat the very nature ofconnectivity, interoperability of the net-works functions and so a consumer inPakistan may only have partial access toinformation that the state authorises,controls and manipulates; resembling anautocracy or a tyrannical democracy.

A recent incident of such a naturewas observed in Thailand where the“webmaster” was held accountable forhosting libel on her website against themonarch, which is in violation of inter-national legal principles; where the au-

thor should be held liable as the actualoffender rather than the host of the net-work. Moreover, if regulatory bodiessuch as ITU are given authority to regu-late internet - it may not remain thesame, since various regimes will try tocustomize and tailor it to their own spe-cific and at times horrendous ends. Forinstance, the Pakistan Telecom Author-ity: a regulatory authority which oper-ates under the auspices of the Ministry ofInformation and Technology in Pakistanbanned a micro-blogging website - Twit-ter last month that reeled no positivebenefits for which the service wasblocked, albeit for a few unfruitful hours.

Political freedoms are pinnedagainst socio-economic benefits whichare the effectual victims of free-speechor freedom of expression on the inter-net, if the regimes choose to regulate theuse of the various services online. Thelosers here are the users at home oracross the digital divide or in commerce:the innovators in the internet commercevirtualization world, also known ascloud computing. One can foresee aneconomic cost imposed on customer forservices rendered such as “drip pricing”to compensate to meet the requirementsand standards of the regulatory body.

Even though the ITU will not be ableto control the governance of the systems,it will layout the rules, regulations andstandards to which the telecom and serv-

ice providers would be subjected to; andeventually the consumer will have to payfor the cost. On a positive note if restric-tive trade practices along with restrictiveapproach to network accessibility is dis-couraged we can witness a bridging of thegap of the digital divide and the regimeswithin the ITU that find a multi-stake-holder approach more friendly may swaytowards less control and more open stan-dards come the December negotiations.On the contrary if that doesn’t happen wemay see that the under-served areasand/or the tyrannical democracies mayrestrict their web users access to mini-mum results and usage of customized lo-cation based services, for instance a userin Thailand may not be able to search forcertain “terms” on “google.”

Russia, China, Tajisktan and Uzbek-istan have proposed through the UnitedNation General Assembly to lay out an “In-ternational code of conduct” that wouldformulate a guide for countries to establishnorms and rules for internet oversight.Meanwhile, some Arab states are lookingto seeking to gain compensation for theflow of internet traffic which shall be ahuge blow to free flow of information.

Moreover, privacy and freedom ofexpression remain bone of contentionagainst cyber-security at a micro-scale,sedition and national security at amacro-level, for the purposes of law en-forcement. The European Union and

some Arab states seek to protect privacyof its citizens bearing all costs. This De-cember will determine: whether the1988 treaty negotiations are lethal to afree internet where permission-less in-novation fostered global economicgrowth and granted political freedoms,or, will wisdom prevail over the inter-government negotiations and, finally,will the non-binding regulations prolif-erate and assure growth and freedomsover the internet – our global village!

The writer is a researcher and consult-ant in the field of information commu-nication technology and anti-trust law

Regimes chase to rule the Internet

KARACHI: Executive Officer of CBC Mr. Muhammad Hayat Mahr brief to DG ML&C MajorGeneral Tahir Masood on visited of CBC. DG ML&C Karachi region Mrs. Zeenat Ahmed,President CBC Brig. Anis Ahmed station Commander Karachi and DHA administrator AmirRaza Qureshi also present at the moment.

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