Business Beyond the Reef

• Lest you think that all trade disputes are between the United States and China, Washington filed a case against the Philippines last week, protesting that the Philippines’ excise tax on distilled spirits discriminate against imports.  The Philippines levies a lower tax on spirits made from local products, such as sugar or palm, than it does if the same spirit is made from non-tropical products, such as wheat.  The Americans argue that the differential tax rates illegally protect local spirits producers, while Manila will say – with an innocent look – that foreign spirits made from sugar or palm get the same low rate, so there is no discrimination.  I expect the European Union and perhaps Japan will join the United States’ filing.
• Micronesians are trying out their muscles in Europe in what could prove a landmark case in the environmental business.  A Czech power company has applied for approval to renovate an old coal-fired power plant to extend its life, but the Federated States of Micronesia has filed a motion with the Czech review body to deny the power company’s request.  The Micronesian argument is that anything that will raise or extend the growth of greenhouse gasses is a danger to the very existence of some Micronesian islands.
• I was so excited about the new China-ASEAN free trade agreement that I totally missed the January 1 start of the Russia, Kazakhstan and Belarus customs union.  A customs union isn’t the same as an FTA, generally requiring that its members have identical customs duty structures as well as free trade.  The European Union is a customs union, and there are a few others, but I am skeptical that that the new one will work.  It just seems so lopsided, it is hard to imagine that Moscow isn’t calling all the shots.  I expect that Kazakhstan and Belarus will see a surge of Russian products, but that shoppers in their big neighbor won’t notice much.  Kyrgyzstan and Tajikistan are said to be considering joining.
• This is for my real estate friends, who are always looking for new sources of business.  Realtors in Scotland are reporting a surge in interested buyers from Georgia (no, not the one in the United States).  Russia, China and India, too.
• The United States is dropping in the freedom standings.  The Heritage Foundation and the Wall Street Journal have released their 2010 Index of Economic Freedom, which purports to measure things such as freedom to trade, invest, establish a business, own property and other good stuff.  The winners are Hong Kong and Singapore, so one reflects that the index has nothing to do with political freedom.  Still, it is disappointing that the United States has fallen to #7, reflecting tighter regulation of business during the recession backlash.  Who is last on the list?  Coming in at #179, drum roll, please – North Korea.
• I’m late on this, but it got so little notice that I didn’t notice it.  On December 28, President Obama signed a bill that extends the life of the Generalized System of Preferences for another year.  Now GSP expires December 21, 2010.  So we have to get the attention of the Congress again next fall.

Český Krumlov – Driving from Austria into the Czech Republic revealed a stark picture of recession for the first time on this journey. We crossed the border north of Linz bound for Český Krumlov. It wasn’t the proliferation of casinos on the Czech side of the border that caught our attention. This is an agricultural area with low population density, but we were surprised at the immediate difference between the well-groomed Austrian fields and the less-cared-for Czech farms. An even stronger image was the number of prostitutes waiting on the country roads we were driving. In the first five kilometers across the border we must have seen at least three dozen young women (girls, really) in provocative poses at bus stops, by dirt roads, or just by the highway. I’m not sure if this is a comment on the Czech economy, Austrian men, or both.

Cesky Krumlov

Our mood lightened considerably upon pulling into Český Krumlov, a UNESCO World Heritage site, that has been one of our favorite places for years. Truly worth the journey, Český Krumlov is largely unchanged since the 15^th century and boasts a superb castle with dynamite views.  One of our favorite things to buy in Český Krumlov is marvelous reproductions of Renaissance glassware – the sort with bubbles in the glass and rough places for greasy fingers to hold on to.

We left the Czech Republic through an extremely rural area before crossing into Bavaria. This crossing featured few people and no prostitutes.