22/08/2012 World Business Report

And now crucial talks again for the Eurozone and Russia officially

joins the WTO. Sally is back with the latest financial news on World

Hello. A warm welcome. You're with World Business Report. Greece's

Prime Minister calls for more time with tough spending cuts and

reforms ahead of crucial talks on the EU IMF bailout. Russia becomes

the 156th member of the World Trade Organisation. We assess the impact

this will have on Russian business. I'm in Singapore. Japan's exports

slum ping the lowest in six months in July due to sagging exports in

Good to have you with us. As you've heard, Greek Prime Minister,

Antonis Samaras, embarks on a diplomatic battle today. He is

trying to keep Greece in the Eurozone by convincing his European

partners he needs more time to implement major spending cuts.

The shuttle diplomacy kicks off with meetings in Athens with the

Euro Group Chief and the European Commission Head.

He then goes to Germany on Friday, and speaks to Francois Hollande the

day after in Paris. Let's go to Athens.

We will speak to a Professor of Economics at Athens University.

Nice to see you, Janis. The talks begin today. Antonis Samaras has

been clear since he became Prime Minister that he will be asking for

more time. Do you believe he will get it? I very much fear he may get

it. This time it's not a resource for combating the spiral that the

Greek economy finds itself in. It's more like a small rope for gres to

hang itself with. The Greek state is regrettably deeply insolvent and

the economy is in freefall. It cannot be cured by more loans.

if he gets more time that he needs, in order to implement the spending

cuts, you don't believe that will help gross and if not, what do you

feel need to be done next? Well, more time now when the loan

agreements and policies implemented have quite clearly failed to arrest

the freefall of a big economy, is like an act of kicking the cow with

an impossible heel. The Eurozone must make a simple decision: either

to give gres a proper chance of exiting this death spiral, or dump

Greece now, because the state loses its assets and before it gets

deeper into the mire. You're saying that you don't believe it is right

for Greece to exit the Eurozone; you just believe the method in

keeping it within and getting it on track needs to be done differently?

Absolutely. If we are going to keep Greece in the Eurozone, I think it

imperative that the Eurozone is kept together. However much we

don't like the Eurozone, a collapse of it would be tremendously

damaging for the tkphrobl economy. We need to do three things for

Greece to stay in the Eurozone: we need to separate the banking crisis

from debt crisis by ensuring that capital is being injected to the

Greek banks and Europeans are taken out of the books of the national

debt. Secondly, we need a moratorium, or some linkage between

the rate of repayments of our loans to the European Union, the European

Central Bank and the IMF, linking them to the rate of growth or the

reduction in the rate. We need investment in this country. This

country is an economy in which the credits broke down and investment

is deeply negative at the moment. All right, well, thank you for your

thoughts. We will discuss this further in the

next 10, 15 minutes because it is our top story in the newspaper

review. We will have more analysis on how Antonis Samaras will get on

later in the next ten minutes. Let'slike at what is going on in

Russia. Today it becomes the 156th member of the World Trade

Organisation. Now, this may not instantly improve the business

climate in Russia, but many see it as a game change ner the long-term.

Foreign firms will find it easier to sell goods and services in

Russia as trade barriers come down. That is likely to benefit consumers.

But it will no doubt make it tougher for local companies. Car

company also be particularly exposed as import barriers are

phase phased out. Let's go to Moscow to speak to the BBC's Daniel

Sanford. It's been a long time coming. Tell us more about the

impact this will have, this membership? Well, let's start with

the car industry. I think Russia's car industry now accepts that it is

going to take a very, very heavy hit from this, and the Russian

Government have been preparing the way for that, allowing foreign

companies to start coming in and setsing up manufacturing plants in

Russia in the hopes that will pick up some of the manufacturing jobs

which will be lost when the Russian car industry takes what is expected

to be a serious hit from this. It will be also interesting

developments in the pharmaceutical sector. I think Russia's

pharmaceutical sector is undeveloped. As the barriers come

down there, there's some big opportunities for Western companies

in that area, and also there's some interesting easing of the

restrictions on financial institutions - banks, for example,

can start to come in under their own steam rather than having to set

up local companies. Insurance companies are able to come in. Tell

comes are also -- Telecoms are also important.

And as you say, there are winners and losers, but for Russia itself,

this is quite an important, symbolic, step, becoming a member

of the World Trade Organisation, in terms of its place in the global

playing field. Very important. It is the largest economy currently

outside the WTO. It has the biggest population in Europe - 140 million

people. It is a significant economic player. It is not as

significant as it would like to be. Historically Russia has tended to

go its own way. Clearly through the times of the Soviet Union they had

a different economic view of the world, but since then the Russians

felt they could use sharp elbows to get their way in negotiations in

business. I think they have concluded there is still

disagreement amongst the elite out there, that perhaps they need to

buy it into the World Trade System and go along with that. There's a

lot to be done in terms of sorting out bureaucracy, corruption and the

rule of law in Russia before international companies can feel

safe investing here. Thank you. Now some other business

stories: the miner BHP Biliton, is expected to report its first drop

in annual profits in three years due to rising costs and falling

commodities. BHP's woes the wrap up a torrid earning season for the

world's biggest miners as economic growth in China slows to its

weakest pace in a decade. Ahead the Head of the IMF will

arrive in Cairo for a one-day visit to reaffirm the fund support to

Egypt. There's been thought of rethinking $2 billion loaned last

year, but discussions have stalleded and Egypt may now ask for

closer to $5 billion. Japan's exports slumped by their

most in six months in July. This the fuelling fears of a fragile

economy in the world's largest economy, and that it could store.

Let's join our reporter in Singapore. This story has split the

markets. They are trading lower because of the news out of Japan.

Tell us about the tails. It is a very disappointing number of

sagging markets in Europe and Asia. It left Japan with a worse than

expected trade deficit. You have the ongoing Eurozone crisis and it

is taking its toll on the Asian economy. Japan's trade with the

world in July shows a shortfall of $6.5 billion US, the largest

deficit for the month. Overall exports slid by 8%. If we break it

down to regions, the EU plunged by 25 per cent in shipments to China,

falling by 11% and combined exports on the leading economies, such as

South Korea, Hong Kong, Taiwan and Singapore dropping by 14%. There

was one broigt spot. Europe-bound shipments which gained about 5%.

When you talk to analysts they're not optimistic about the numbers

going forward, forecasting the deficit trend will continue due to

increasing imports and higher prices. They are speculating the

results may encourage the Central Bank to take pre-emtive action

again, by October, to kickstart the economy.

Thank you. As I said, this has not helped markets. They are all there,

across the board, trading today. Keep an eye on the euro currency,

because we have been telling you about the fact that Antonis Samaras

begins his discussions with creditors to Greece.

The euro will be sensitive to any news flow coming from Athens.

This is the States. The SNP 500 is at the point it was before Lehmann