23/04/2014 World Business Report

drug trafficker. Those are the latest headlines from BBC World

News. Now for the latest financial news, World Business Report. Baby

steps or giant strides? The US President and Japanese Prime

Minister try to iron out their differences over the ambitious

Trans`Pacific Partnership trade deal. Who should run the internet?

Amid growing calls to break US dominance over the world wide web,

Brazil hosts a conference to discuss the options. Welcome to World

Business Report. I'm Sally Bundock. Also in the programme, for a fourth

month, manufacturing in China has contracted. We will have the latest

detail on that for you. First of all, let's talk about trade. Trade

deals don't normally take centre`stage at summits among world

leaders. But what could turn out to be the world's largest ever free

trade deal is at the heart of US President Barack Obama's first state

visit to Japan. It's called the Trans`Pacific Partnership, or TPP,

and aims to bring closer trade ties between the US and most of the key

economies in the East. But there is one notable exception: China. And

the likes of President Obama and Japanese Prime Minister Shinzo Abe

are talking it up, saying it is poised to be the world's biggest,

and possibly its most ambitious free trade deal, by eliminating trade

barriers and harmonizing regulations. So 12 countries are

negotiating the TPP, and if successful, it will account for two

fifths of world trade. But it is a massive task, maybe even too big.

Japan would be a key member, but not everyone in the country is in

favour. Our Chief Business Correspondent Linda Yueh reports

from the agricultural heartland of Niigata.

Springtime, the promise of new beginnings. But, before you can

reap, you have to sew. `` sow. This 80`year`old man is preparing his

rice fields as he has for over half a century. Farmers like him have

been protected by the government. There is a 778% tax on imported

rice. He doesn't want to see that end. TRANSLATION: We can't compete

with countries like Australia or Canada who farm on a large scale. If

tariffs are abolished, people will tend to go for what is cheaper. I

think Japanese agriculture will be fatally wounded. He and his family

have been shielded for decades. It's a sore point for the America's

proposed free trade agreement. The Trans`Pacific Partnership, or TPP,

isn't just about trade. It is the key to Obama's rear orientation

towards Asia. `` re` orientation. But that doesn't make any difference

to these protesters. These are the most vocal critics of the TPP, or

Trans`Pacific Partnership. Japan and the US are major trading nations who

already trade a lot with each other, so of course there is benefit with

having more free trade. What is so special about this one? Is it more

about who is not at the table? Abe threw his hat in the ring because he

wants to prove to the United States he is a reliable alliance partner.

So I think that you can't look at TPP entirely through the economic

trade lens, you have to look at it from the angle of strategic

advantages and Japan's worries about China's regional hegemonic

ambitions. At a local festival, they celebrate the arrival of the new

season. President Obama wants to celebrate a new spring, a new era,

even a second opening of Japan. Prime Minister Abe is hoping for

trade to deliver progress. With so much at stake, both men will want to

show progress. But it will be baby steps. Well as you've been hearing,

China, Asia's biggest economy, is not a part of the Trans`Pacific

Partnership. And new data today reveals further weakness in its

manufacturing sector. Rico Hizon is in Singapore for us. Nice to see

you, Ricoh. So it is interesting to see this happening. And relatively

bad news about the factories. `` Rico. It was bad news, but there was

a slight gain due to improvement in domestic demand. Take a look at the

numbers. Output from factories rose in April from 48 the previous month.

The figures show the sector is still shrinking, but at a slower rate. A

reading below 50 signals contraction while anything above points to

growth. When you speak to economists, they say the numbers

could improve going forward as Beijing announces a series of

initiatives aimed at boosting growth. One is tax breaks for small

enterprises. The second is targeted infrastructure spending. The central

bank will also be cutting the amount which they must keep in reserve,

starting this Friday. The first time, they have eased monetary

policy for almost two years. All of these factors, put together, lead

many economists to expect improved numbers in coming months. But today,

the purchasing managers index is just a preliminary report. The final

reading will come out on May fifth. Who should run the internet? It's

the kind of question that nobody troubled much over, until the recent

revelations of mass surveillance and data monitoring by the US turned

digital security into a subject of intense international concern. Amid

growing calls to break US dominance over the internet, Brazil is hosting

an international gathering today and Thursday to discuss options. But if

the US doesn't run the net, what's the alternative? From Sao Paolo,

Katy Watson reports. Government officials, activists, and the

private sector will get together here to discuss the future of the

Internet. It was initiated after revelations the NSA were spying on

countries such as Brazil. A diplomatic visit was cancelled due

to allegations of spying. Conversations will be in light of

that. Many feel there is an overbearing dominance of countries

in the West, especially the US. The secretary here in Brazil said the

next users in the Internet will come from the south. So any discussion of

the future of the Internet needs to have more involvement from emerging

economies. This is just the start of conversations. What is discussed

this week will continue later this year in Istanbul at eight Forum. The

owner of KFC and Pizza Hut has reported an 18% jump in

first`quarter profits, helped by a rebound in sales in China. Sales at

outlets in China rose 9% from a year ago, with carefully up 11%. Good

news for KFC. There was a real concern about the quality of the

chickens they were using there. The health scare put the Chinese off

these brands for a period. Britain's top companies have been warned to

exercise caution on executive pay by Britain's Business Minister. As

companies prepare for their annual general meetings, Vince Cable has

written to all FTSE 100 companies to remind them that pressure on pay

awards must be kept up to assuage public anger. He says pay levels at

banks in particular had been ridiculous. David Moyes' troubled

reign at Manchester United came to an abrupt end about 24 hours ago,

when the Scot was sacked after a hugely disappointing 10`month spell

as manager. That decision follows the club's failure to qualify for

the European Champions League. The payments from that competition would

have amounted to tens of millions of dollars, and there will be other

indirect costs due to the failure to qualify. So what impact has this had

on the markets in New York? So let's have a look at financial markets. We

will be discussing David Moyes's departure in the papers. This is how

things have been going. Japan is up. Hong Kong is headed in the other

direction after the news about Chinese manufacturing. If we have a

look at the US markets, you can see how their day went. The tech heavy

NASDAQ market is up almost 1%. The dollar remained strong. That is all

we have time for now. We will look at the newspapers in a moment. Let's

talk about a story which was touched upon. The Business Secretary,