World Economy: News

Bush: Now is not the time to renegotiate or cancel NAFTA
By BEN FELLER, Associated Press Writer 1 hour, 7 minutes ago
NEW ORLEANS - President Bush, replying to criticism from Democratic presidential candidates, said Tuesday that "now is not the time to renegotiate ... or walk away from" the North American Free Trade Agreement. He also denied the U.S. was in a recession, calling it a slowdown instead.
ADVERTISEMENT Bush also used a joint news conference with Mexican President Felipe Calderon and Canadian Prime Minister Stephen Harper to renew his call for Congress to pass a free-trade pact with Colombia. He said House Speaker Nancy Pelosi's refusal to schedule a vote could effectively kill it this year.
"It makes no sense to me to say that Colombian goods can come into our country duty-free, yet our goods can't go into Colombia duty-free," Bush said sternly. "And yet that's the case. An agreement with Colombia would level the playing field."
Asked about the state of the U.S. economy, Bush said: "We're not in a recession. We are in a slowdown."
"I'm obviously concerned for our consumers," the president said. He was asked whether the rising cost for gasoline will erode the potential positive impact of the $168 billion economic stimulus package passed by Congress, but did not specifically answer.
"No question that rising gasoline prices are like a tax on our working people," Bush said.
Some of Bush's strongest words came in defending NAFTA, which took effect in 1994.
The three-way trade pact has been criticized by both Democratic Sens. Hillary Rodham Clinton and Barack Obama, who have promised to try to renegotiate the agreement if elected president. Bush's comments came on the day of the critical Pennsylvania primary, in which trade — and the loss of manufacturing jobs in the United States — has been a top issue.
"Now is not the time to renegotiate NAFTA or walk away from NAFTA," Bush said. "Now is the time to make it work better for all our people, and now is the time to reduce trade barriers worldwide."
Bush was asked if he thought he was losing the free-trade debate in the court of public opinion because of the strong opposition to NAFTA from the two Democratic rivals.
"My biggest concern on trade is with Colombia. NAFTA exists," Bush said, saying the pact was mutually beneficial to the United States as well both of its North American neighbors.
Both Calderon and Harper echoed Bush's comments on standing by the agreement and not reopening it.
"We agreed that this is not the time to even think about amending it or canceling it. This is the time to strengthen and reinvigorate it," the Mexican president said.
"Jobs have grown in all three" countries as a result of NAFTA, Calderon said. "The benefits are visible."
Calderon said he was respectful of the domestic politics of the United States and that "it is not my role" to talk to any of the presidential candidates about NAFTA. But he made clear that he wants Clinton and Obama to keep their hands off NAFTA.
"To talk about taking a step backwards in terms of free trade, in the case of Mexico, would effectively provoke considerable damage on the economy," Calderon said. Further, he said, that "It would be a sudden loss of economic opportunities that would even lead to even greater migratory pressure against the United States."
Harper said NAFTA was "important for jobs and posterity on both sides of the border."
He said it would be a mistake to renegotiate the agreement, but that Canada would be willing to take part in revisiting the agreement if the other partners insisted.
The Canadian president also said the pact and other economic agreements help to keep energy flowing smoothly. "Canada is the biggest and most stable supplier of energy in the world," he said.
On the pending Colombian trade pact, Bush singled out Pelosi, saying if she doesn't schedule a vote on Colombia, she will have killed it.
"She's going to have to explain why the voices of false populism have been strengthened," Bush said, referring to leftist Latin American leaders like Venezuela's President Hugo Chavez.
Layoffs in U.S. manufacturing and the current economic slowdown have made NAFTA and other free-trade deals the subject of intense criticism in the Democratic-led Congress. Both Obama and Clinton want to renegotiate it to add labor and environmental protections.
"I'm concerned about protectionism in America. It is not in our interest to become a projectionist nation," Bush said.
Earlier, Bush shared green onion omelets, grits and sides of Canadian bacon with the neighboring leaders on the last day of a summit showing solidarity on cross-border trade.
They ate the family style breakfast at Dooky Chase's Restaurant which was flooded by four feet of water during Hurricane Katrina. The establishment, a gathering place for black musicians and politicians in the 1960s, is owned by Leah Chase, known as the "Queen of Creole Cuisine."

US and British Central Banks pour billions into markets
S.L Central Bank Governor Ajit Nivard Cabraal Ajit Nivard Cabraa who returned to Colombo last week after attending the World Bank and IMF meetings said yesterday that both the Federal Reserve in the United States and the Bank of England are pumping in money into the system scuttling the previously held Article of Faith that "markets should be allowed to look after themselves."
Cabraal said that the Federal Reserve will be pumping US$ 160 billion to the US economy reeling under the sub-prime mortgage crisis while the Bank of England would be pumping an extra 50 billion pounds sterling into the banking system in the short-term.
He noted that these developments signaled departure from long-held economic beliefs in the face of new challenges.
The BBC reported on Friday that the Bank of England (Britain’s Central Bank) will pump in an extra 50 billion sterling pounds (63.4 billion Euros/99.9 billion dollars) into the banking system as early as this week.
Without citing sources, the broadcaster said the Bank of England would issue one-year bonds over three years and swap them for securitised mortgage assets the banks cannot sell due to the squeeze on the global credit markets, an AFP report from London said..
The idea is to encourage banks to lend to each other again and meet banks’ demands for longer term loans as well as kick start a slowing housing market, it added. The loans would not be included on the national debt, it reported.
"It will be the biggest ever special initiative by the British monetary authorities to supply liquidity to the British banking system," the BBC’s business editor Robert Peston wrote on the broadcaster’s website.
Royal Bank of Scotland was said earlier Friday to be set to raise between five and 12 billion pounds in a share issue to improve its finances.
The Daily Telegraph claimed the cash boost was required because of the need to combat subprime-related writedowns and high costs caused by the record-breaking takeover of ABN Amro.
The Financial Times said a rights issue was one of a number of options being considered and that bosses had not yet reached a decision.
Neither newspaper gave a named source.
RBS itself made no comment other than to note the speculation and say that its interim management report on trading performance and capital would be delivered next week.
The BBC said the Bank of England’s expected move could see more high street banks such as Barclays ask shareholders for extra cash.

UK voters lose confidence in Brown
By George Parker, Alex Barker and Chris Giles
Published: April 13 2008 21:51 Last updated: April 13 2008 21:51
EDITOR’S CHOICEEditorial Comment: Labour loses confidence vote - Apr-13Britons relaxed about credit crisis impact - Apr-13Treasury aims to ease bank tensions - Apr-14Bradford & Bingley denies rights issue - Apr-13Wolfgang Münchau: Eurozone pessimism is misplaced - Apr-13Italy and Spain start to feel the pinch - Apr-13Gordon Brown is less trusted to steer his country through the global financial crisis than any other major western European leader, according to an FT opinion poll, in a blow to his reputation for economic competence.
The prime minister has pinned his political hopes on persuading Britons he can lead the country through a period of turbulence to an economic recovery before an election next year or in 2010.
But a Financial Times/Harris poll suggests Britons no longer trust his government on the economy – 68 per cent of respondents said they were “not confident at all” in its ability to deal with the economic crisis.
The figure was 52 per cent in Germany, 51 per cent in the US, 50 per cent in France, 43 per cent in Italy and 36 per cent in Spain.
The survey found that Britons were by far the most pessimistic about their government’s economic credibility and were among the most likely to list “excessive taxes” as the biggest problem facing the economy.
People close to Mr Brown shrugged off the findings. The prime minister would be “happy to be judged” on his record of “stability and achievement” and the way he would “maintain stability”, they said.
Alistair Darling, chancellor, used the Group of Seven industrialised nations meeting in Washington at the weekend to urge lenders to ease borrowers’ problems. He plans to meet mortgage lenders to discuss ways to tackle the market within a fortnight.
Mr Brown plans to gauge views of bankers and City figures in a breakfast meeting tomorrow that comes ahead of a visit to the US this week that will be heavily focused on the downturn.
The severity of concerns about the credit crunch were underlined on Sunday after Bradford & Bingley, one of Britain’s biggest buy-to-let mortgage lenders, was forced to deny speculation that it was planning to raise hundreds of millions of pounds in a rights issue.
The FT/Harris poll confirms findings of other surveys that Mr Brown’s once impregnable position on the economy – developed during a decade as chancellor – has crumbled in the face of the global downturn and a series of recent setbacks.
Mr Brown’s problems come amid signs of growing indiscipline among Labour MPs. Senior ministers have publicly questioned the wisdom of his tax changes and Labour insiders say cabinet ministers are privately at odds over proposals to toughen terror laws.
Leaders of the G7 and IMF governing council meeting in Washington endorsed a 65-point plan to reform the global financial market. The leaders said they would implement the plan in a co-ordinated manner to a strict time­table. But there was no co-ordinated action plan for tackling the credit crisis.