‘Something terribly wrong at WTO’
US ambassador said he was ‘perplexed’ by China’s assertion that it was a victim
The new US ambassador to the World Trade Organisation told the WTO’s membership yesterday that something had gone “terribly wrong” with judges at the world body and that China’s arguments showed Beijing was living in a fantasy.
Addressing the WTO’s General Council for the first time, Dennis Shea said the WTO’s rules had substantial value and the rules had “generally contributed” to global economic stability.
But he said there was a “steadily worsening rupture of trust” by the Appellate Body — the judges who form what is effectively the supreme court of world trade, and whose appointments the US has been blocking.
“Something has gone terribly wrong in this system when those charged with adjudicating the rules are so consistently disregarding those very rules,” Shea said.
The judges had interpreted the WTO agreements to reach judgements that the WTO’s member countries never agreed to and had expanded its own capacity to write new rules, he said.
US-China trade talks will resume next week after failing to reach agreement last week, the White House said on Monday.
Shea said he was “perplexed” by China’s assertion that it was a victim. “It is amazing to watch a country that is the world’s most protectionist, position itself as the self-proclaimed defender of the global trading system. The WTO must avoid falling down this rabbit hole into a fantasy world.”
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However, over 40 per cent of companies in the world say they would have to put their expansion plans on hold if they cannot attain funding. Research shows that most small and medium enterprises and start-ups turn to traditional sources of funding — bank loans — when they need a cash injection. For them, securing the right funds from the right sources is critical, but it seems getting credit from banks is only getting tougher.
The current economic climate for start-ups and SMEs in the UAE is extremely complicated. With a fall in demand, mainly due to consumer confidence, it seems the market size has shrunk. Post-recession, small business owners have skipped town. As a result, banks in the UAE are cutting credit lines after a spate of defaults. To add to this, the US economy is growing, forcing the Federal Reserve to increase interest rates.
This has had a knock-on effect, making borrowing for UAE banks more expensive, and as a result forcing them to push up interest rates for smaller businesses. In addition, it has been noted that SMEs with loans of lower denominations are being hit with interest rates that are higher than those offered on a regular basis.
The UAE Central Bank announced that it would raise interest rates by 25 basis points, paving the way for higher borrowing costs. Overall the annual gross new lending to SMEs this year was much higher than the previous year, with the largest increases to be found in the retail, food and beverages and real estate sectors. While banks have tightened the lending, several individual investors have stepped in to help fund borrowers that can’t find capital at the bank. Recently, Entrepreneurs Organisation (EO) hosted an initiative called Falcons Nest, where three EO accelerators pitched to three EO members and one external private equity investor. While the forum served as a strategic platform for EO accelerators to secure funding, it also prepared and trained accelerators on how to stand up and tell their businesses story in front of investors and strangers and helped them dive deep into their business with the questions that have been asked by the members.
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Whereas Falcons Nest provided an opportunity for the business to sell some of its shares as an investment, which as capital does not need to be paid back. It mandates the company to share part of its profits with its new business partners. Such alternative platforms tend to be more transparent and offers an opportunity for small businesses to try something new — to try something that is in sync with the times, their needs and aspirations.