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July 11, 2011
Beginning July 1, 2011 the EU-South Korea Free Trade Agreement (FTA) will provisionally enter into force, meaning that it will apply immediately and fully enter into force once all Member States have ratified the agreement. A press release published by the European Union (EU) states, "South Korea and the EU will eliminate 98.7% of duties in trade value within 5 years from the entry into force of the FTA. By the end of the transitional periods, import tariffs will be eliminated on all industrial products, and most agricultural products, with a few exceptions, such as rice." The FTA also addresses other trade issues, such as intellectual property, procurement, competition policy and trade, and sustainable development. Negotiations for the EU-South Korea FTA began in 2007 and the final agreement was backed by the European Parliament in February, 2011. This is the first FTA between the EU and an Asian nation. The EU press release, along with links to the text of the agreement, can be accessed online at:
GSP and ATPA Extension Still Pending
However, on June 28, 2011 Senate Finance Committee Chairman Max Baucus announced that a "mock" markup of the draft implementing bills for the South Korea, Colombia, and Panama Free Trade Agreements would be held on June 30. These drafts also include amendments which would retroactively extend GSP and ATPA to July 13, 2013. The "mock" markup bill does not guarantee that the final versions will include these provisions, or that they will be passed by Congress and signed by the President. GSP expired December 31, 2010 and the ATPA expired on February 12, 2011. A Press Release regarding the "mock" markup bills is available online at: Drewry: Look to big carrier losses in 2011 as overcapacity rattles rates CARRIERS can expect "significant" losses this year as they can't make money from east-west trade routes because of rate volatility brought on by too much shipping capacity, according to London shipping consultants Drewry's latest
Quarterly Container Forecast Even a demand surge in the coming peak season will not be enough to affect a turnaround because rates have declined too far on the Asia-Europe and transpacific routes, the Drewry report said, adding that capacity withdrawals would not be enough to reverse the situation at this point. "Planned rate restoration programmes have been postponed and there is little hope of carriers imposing meaningful peak season surcharges," said the report. "Contrary to what happened in 2009, there is no common strategy or discipline among carriers to lay-up ships to redress the supply/demand balance," said Neil Dekker, the editor of the Container Forecaster. "The dilemma is that each carrier is aware that its top priority is to be cost-competitive, even if the collective impact of individual orders for lower unit-cost vessels is weakening the market." Freight rates are expected to decline 21 per cent on the main east-west trade lanes this year, even though volumes have remained strong, reports London's International Freighting Weekly. Other than increasing fuel costs, the expected losses would be due to carriers' "inability to run their business models profitably" by adding too much capacity to the market, said Drewry. "Ocean carriers have continued to launch new services in the key east-west trade lanes, many of them also upgraded to the latest 13,000 TEU giants. This has severely contributed to overcapacity, with average load factors in the head-haul transpacific and Asia to Europe routes remaining at only 80-85 per cent. "In this environment, freight rates have massively declined on the Asia to North Europe route, where in some cases, spot rates are not even covering quoted bunker surcharges of around US$750 per TEU.
The announcement can be accessed online at:
Tons News, for current and past issues of Tons News by E-mail request from tonsnews@tonslogistics.com or call (310) 338-0337. ________________________________________ Tons News is compiled from a number of public sources that, to the best of Tons knowledge, are true and correct. It is our intent to present only accurate information. However, in the event any information contained herein is erroneous, Tons accepts no liability or responsibility.
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