After a few weeks of impressive democratic developments in the Middle East , many are asking if the Iraq invasion validates the theory that war can make peace. If anything, the ‘march of democracy’ will bring a march of trade and a great article in a few international new papers reviews the old theory that free trade is the vanguard to peace. Joi Preciphs writes in his article "Free Trade: A harbinger of peace," questions the old theory that free trade would reduce conflict between nations and promote better standards of living across the globe. Specifically, many are now questioning whether this hypothesis is true and they suggest that current free trade institutions promote a race to the bottom and thus economic conflict among developing nations.

Long considered a "riddle wrapped in mystery inside an enigma," Russia continues to perplex outsiders (at least me!) with mixed reports today about the country’s progress towards an open economy.

On the one hand, the WTO website highlighted major progress in accession talks with Russia and the Moscow Times reports that Russia firmly believes it will join the trade organization by the end of 2005. After concluding two-day talks in Geneva, Russian officials believe that they could be admitted before December’s summit in Hong Kong. The induction is bolstered by trade accords reached in the past year with the EU, China, South Korea, and others. President Bush also said today in Brussels that he "supports WTO membership for Russia." Last month, Russian officials met with Robert Zoellick in the first of many meetings to establish a trade accord.

On the other hand, in the same Brussels speech, President Bush expressed dissatisfaction with Russia’s progress and called upon Russia to "renew [its] commitment to democracy and the rule of law." Furthermore, the President Vladimir Putin has been greatly critized for rolling back democratic reforms and cracking down on dissent. Most of all, many are angry over what seems to be a government takeover of Russia’s largest oil company, Yukos. The US fears a nationally controlled oil market in Russia could damage the international economy. Bush will meet with Putin next week and should use the trade talk leverage to fix the oil scandal. Check out this fascinating blog on the oft-confusing country.

Governor Doyle announced this week that Wisconsin’s exports grew over 10% this week spurred by growth in the industrial machinery, medical instruments and electrical machinery industries. Mexico replaced Japan as the second largest exporting market for Wisconsin businesses after recording a 35% increase in exports. The Governor will be leading a trade mission south of the border later this year.

Much like the race between the Empire State Building and the Chrysler building to build the largest building in the US in the late 1920s, two prominent businessmen are upping the ante to build the largest residential building in Canada. Donald Trump is in the process of constructing a 324-meter Trump International Hotel & Tower in downtown Toronto. A block away, local real estate developer, Harry Stinton is in the planning stages of his 320-meter Sapphire Hotel. Last November, the Donald reapplied for a height adjustment to add some more floors to his tower and outdo Stinton. This week, Stinton hinted at going back to the drawing to raise the height of his current plans. Will the Donald be outdone?? Will these reapplications slow construction? Are they worth it? Should be a fun competition to watch.

When existing contracts end, Halliburton will end its operations in Iran. While clearly under fire because of government contracts in Iraq, Halliburton came under more fire earlier this month after it was awarded another giant project to develop the world’s largest gas field, South Pars, in southern Iran. Halliburton has avoided US embargoes by basing its operations with Iran through the Cayman Islands. In addition to public disapproval, the company has been under pressure from its largest investors. The US attorney in Housten convened a grand jury in July last year to investigate Halliburton’s activities in Iran.

Earlier this week Egypt and Israel completed a long debated trade deal that will bolster economic ties between the two countries. The agreements established special economic zones in Egypt that will have duty free access to the US market if 35% of the product is a produced through Israeli-Egyptian cooperation. The deal has been in the works for years and hit snags because of its unpopularity in the oft coddled US textile industry. Israel hopes that the agreement could bring in $150 million to Israel in 2005 alone. While great in the short run for the countries’ textile industries, it will have an even greater impact towards peace in the region. Robert Zoellick, US Trade Rep, called the deal "the most significant agreement between Israel and Egypt in 20 years."

Trying to get your overseas customers entry into US? You’re going to have to wait. Congress has been unable to speed up the application process and US businesses will continue to suffer as a result. Kiplinger reports that US companies have suffered $30 billion in financial impact between July 2002 and March 2004 due to visa problems.

Trade shows have lost major support over the past few years from international participants. The Consumer Electronics Association, which sponsors the International Consumer Electronics Show, surveyed international members who missed this year’s show in Las Vegas. Of respondents, 59% indicated that they had encountered problems in the visa application process, and 18% cited these difficulties as the main reason they weren't able to attend.

The Santangelo Group produced a study on the effects of visa delays and came up with some startling results. According to the report, the cumulative cost of delays and denials in processing business visas between July 2002 and March 2004 was $30.7 billion in lost revenues for U.S. companies. The survey also found that 60% of companies surveyed reported they had suffered "material impact as a result of visa delays. Half the respondents reported that the problems had even worsened since 2002.

These statistics cannot factor in the number of foreigners who did not even bother to apply for a visa because of the new hassle involved. Business people from China, the US’ fastest growing export market, have reported the largest number of difficulties.

Companies suggestions for overcoming these losses include: publishing clearer and more concise visa instructions, ensure communication transparency among US agencies, add more resources for security review and extend visa duration to reduce the number of applications. The companies also urged for a "gold card" provision that gives companies with recurring long-established visitors favored status with the visa applications.

Congress has increased the number of business visas available for the 2005 fiscal year by 20,000. Though this will help, the impact will be nominal. Last year’s limit was met by the first day applications were made available.

Milwaukee based Fiserv, is closing in on a deal with an alliance of Australia’s largest banks. The Milwaukee Journal Sentinel reports that Fiserv is bidding to provide check clearing services to the alliance in a multi-year deal worth tens of millions of dollars. The Australian alliance will bring together three of the country’s four biggest banks with combined assets of $750 billion. Fiserv provides diverse services in financial institutions, but its strength lies in check processing and image staining that prevents check fraud.

Fiserv provides global financial services to clients in over 60 countries and commands nearly 50% of the US market share. Despite this, Fiserv’s rivals for the Australia deal, Electronic Data Systems Corp and Unisys Corp, have a much stronger global percentage of the market. Leslie Muma, Fiserv’s president and CEO, believes that the Australia deal could open the door to many more international markets such as South Africa, South America, and China. Fiserv just entered the Chinese market this past year and expects major growth in the region. Critics of the Australia deal note, however, that Australians use fewer checks on average than Americans and continually rely on credit cards and other payment methods.

With international counterfeiting costing US companies $200 billion to $250 billion a year, there is an extremely large market for protective technology. A small L.A. startup has developed possibly the best solution yet, using the most basic of materials. The startup, called Applied DNA Sciences, takes strands of DNA from plants and alters them to create unique chemical compounds that will identify a product. The compound acts somewhat like a chemical barcode that will identify whether a product is an authentic or a fraud. For example, a producer of an expensive Japanese sake has been inserting marking DNA into his wine. The consumer can test the bottle’s authenticity with a detection kit sold with the sake.

Just last week, Applied DNA signed a ‘strategic agreement’ with Holomex of Mexico, one of the world’s largest manufacturers of security holograms. The DNA and hologram technology can be inserted into DVDs during production to mark the genuineness of the DVD.

On June 21, 2005, a California court will hear oral arguments in Doe v. Unocal. For the first time, an American company will be put on trial for human rights abuses. Many eyes are on the trial as the economic and social implications of the court’s decision are wide spread. A finding for the Plaintiff could greatly deter international investment and trade in developing nations.

The oil giant is accused of being vicariously liable for the rape, torture, murder, and enslavement of villagers by the Burmese security forces that helped protect Unocal’s pipeline during the 1990s. The case rests on the Alien Tort Claims Act, a 1789 law that lay dormant in the books for the first 200 years of America’s history. The law provides that US district courts shall have original jurisdiction of any civil action by an alien for a tort committed in violation of the law of nations or a treaty of the US. During the 1980s, the law has been increasingly implemented to bring tort suits against foreigners—most famously in the Ferdinand Marcos trial.

The Unocal case is commanding widespread attention from human rights advocates as well as hundreds of corporations fearful that they may be held liable for wrongs committed by governments where they do business. The Plaintiffs accuse Unocal for using forced labor on the pipeline and being responsible for the Burmese destruction of villages done to pave the way for the pipeline. Unocal denies http://www.unocal.com/myanmar/ the allegations and says its investment in the isolated Asian nation is opening the country to the outside world. Other groups have attempted to raise similar cases during the past few years. A group of Nigerians is trying to sue Chevron for murders by the Nigerian government. Meanwhile, a group in Indonesia is suing Exxon Mobil.

Today’s Milwaukee Journal-Sentinel featured a story on Jim Winterle who turned his $10,000 into a $14 million, 40-employee shipping firm in little over five years. Finding a niche in international mail consolidation, Winterle left work at shipping giant DHL to start up International Delivery Solutions in Milwaukee in 1999. The company consolidates small shipments of products to take advantage of inexpensive bulk mail rates. The firm ships to nearly every country and analyzes local shipping options to achieve the lowest shipping cost. IDS has been listed for the past three years in Entrepreneur magazine’s "Hot 100" list of rapidly growing companies.

The New York Times published an interesting piece highlighting India’s outsourcing industry’s satisfaction with the re-election of George W. Bush. "Outsourcing" certainly had become a dirty word during the presidential campaign with Kerry accusing Bush of promoting "Benedict Arnold companies and CEO’s" to send jobs overseas. India’s software and back-office services industry posted $12.5 billion in export revenues from March 2003 to March 2004. Global demand for their services has continued to rise.

Congressman Mark Souder (Republican, IN) told Canadian Television that pending bills to decriminalize marijuana possession could slow down cross border trade. The Canadian federal government intends to reintroduce legislation that would decriminalize possession of 15 grams or less of marijuana. Souder stressed that this law would lead to increased searches at the border which damages trade. He worries that looser drug laws will also have an impact on security because he says illegal drug trade funds terrorists.

The WTO reports that global trade will grow by 8.5% during 2004 bolstered by strong output expansion in China, Latin America and Africa. Though high oil prices may restrict production and output in 2005, over the past year, vigorous expansion of markets and a strong recovery in Japan have improved overall trade numbers. Today, the WTO website posted parts of an annual report on International Trade Statistics on its website. The entire report will be available in November.

Weekend talks between Japanese and American diplomats have ended without a compromise on the issue of beef imports. Colin Powell had met with Japanese PM, Junichiro Koizumi, and other high level officials in the hope that Japan would remove the 10 month old ban of beef. Worried after discovery of bovine spongiform encephalopathy in a handful of cows in Washington state, Japan closed its markets to US beef exports—which had been a 1.7 billion dollar market. Japan agreed to allow limited imports of cows younger that 20 months though the government is unsure whether age testing is ‘scientific’ enough. Powell remained optimistic, however, that a settlement would be reached shortly and the age limit would be removed by next summer.

The Milwaukee Journal Sentinel reports that a District Court judge in Green Bay has ruled against Yamaha Marine Group’s plan to increase prices on its outboard engines. The Japanese engine manufacturer currently provides Fond du Lac’s Mercury Marine Inc. with 75-, 90-, and 115-horsepower engines. Judge William Griesbach ordered Yamaha to honor its current contract agreement, opposing a 92% price increase that would have gone into effect on November 1st. Yamaha had planned to the increase to counter an August US Department of Commerce ruling that imposed a 22% import tax on Japanese-made outboards. Yamaha must honor the current contract at least until an International Court of Arbitration panel rules on the decision. By the time the Paris based panel hears the case, Mercury hopes to become self-sufficient so as not to depend on Yamaha.

Yesterday, the US Department of Commerce released discouraging trade deficit numbers from August. With oil imports reaching their highest level ever, the US trade deficit grew to $54 billion in August. Exports of goods and services in August rose only 0.1 percent, down from a 3 percent growth in July. In a Bloomberg News survey, forecasters had predicted a deficit of $51.4 billion.

The trade deficit with China alone grew to $15.4 billion in August and pressure continues to mount on the Bush administration to convince China to depeg its currency. Many had hoped for China to depeg after its invitation to the G7 meeting in September. At the current fixed rate, Chinese producers have an immense unfair advantage over American producers.

Congress’ $145 billion tax bill passed this week sets out a schedule to eliminate the Foreign Sales Corporation rule tax break that the WTO called illegal nearly four years ago. Last year, the WTO authorized the EU to impose sanctions on a wide range of US goods. These tariffs started at 5 percent in March have now reached 11% after monthly hikes. This month’s bill will phase out the export subsidy over the next three years. Pascal Lamy, the EU trade commissioner, has yet to lift the tariffs and the Financial Times reports that Lamy has tied removal of the tariffs to other conditions namely settlement of the Boeing-Airbus dispute.

The BBC reported that ferry companies and the European Commission are annoyed with UK customs officers who are seizing a large number of cars coming into the UK. Last week, a British High Court found that Customs and Excise had been too heavy handed in searching cars. In the case, brought by ferry company Hoverspeed and four vacationers, the court ruled that passengers canot be lawfully stopped by Customs unless the officers have ‘reasonable grounds’ for suspecting that the travelers have committed a crime. Under UK law, an individual can only bring back enough alcohol and cigarettes for his own consumption—even resale to friends and family is forbidden. Hoverspeed accused customs of driving people away from travelling across the channel.

Flanked by a delegation of businesspeople and entrepreneurs, Jacques Chirac concluded a five-day visit the EU’s fourth largest trading partner. Though a joint communiqué issued before he left hailed the trip as very important, others have termed the trip as ‘disappointing.’ Chirac did net about $5 billion in contracts between French and Chinese businesseses. Despite this, Chirac avoided the issue of Chinese human rights abuses, and he also failed to seal anticipated contracts for French high-speed rail technology and the sale of new Airbus jumbo jets. The Epoch Times sees the failed closure of these deals as major political losses for the French Prime Minister.

China has said in the past that it expects the EU to become its largest trading partner. Doing so, many believe, would change US policies. China, which like France holds veto power in the UN Security Council, would like to see the US act more through the UN rather than unilaterally. Furthermore, the US is the primary guarantor of the security of Taiwan, which the Chinese hope to bring into the Chinese fold.

The joint communiqué also proposed a meeting of the Group of 20 nations—including China, India, Russia, and developed countries. China will become the president of the G20 next year and would like to see the G20 overtake the G7’s importance in global economic issues.

More and more manufacturing jobs are shifting from Mexico to China as the Asian giant has taken advantage of cheaper gas, electricity, water, and employment wages. In 2002, China overtook Mexico as the second-largest importer of goods to the US trailing only Canada.

The increased competition has hit home in Mexico as the media highlighted the prominence of Chinese made fireworks and Mexican flags during this year’s Independence Day celebration. Having lost thousands of jobs to China, local companies and politicians are pushing a “Buy Mexican” campaign. Last month, President Vicente Fox’s governement signed agreements with China to fight piracy, aid small business relations, and ease travel between the two countries. This month, they will begin negotiating a pact to promote and protect investment in each other’s territory.

With exports to the US rising only 12 percent over the past 4 years (compared to 90 percent increase of Chinese exports to the US), Mexico needs to widen its export base. They have recently signed a free-trade pact with Japan.