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Background:              

Guam was ceded to the US by Spain in 1898. Captured by the Japanese in 1941, it was retaken by the US three years later. The military installation on the island is one of the most strategically important US bases in the Pacific. 



Location: Oceania, island in the North Pacific Ocean, about three-quarters of the way from Hawaii to the Philippines. Guam is the largest and southernmost island in the Marianas Archipelago.

Today Guam is an unincorporated, organized territory of the United States. The people of Guam have been U.S. citizens since 1950.

Guam’s economy is based on tourism and U.S. military spending (U.S. naval and air force bases occupy one-third of the land on Guam).

Courtesy- http://geography.about.com/library/cia/blcusgu.htm

Courtesy-  http://www.infoplease.com/country/guam.html

Mind-Mapping:


  • Identification in the map of all the places in the region (North Korea, South Korea, Guam etc).Ill effects these confrontations might cause in the region.

  • Indian view point of the growing tensions in the region, Indian interests in the region and with the countries involved. Example for US intrusionist tendencies in Asian conflicts.

Leading authors call for bill of digital rights

Over 500 leading authors across the world, including five Nobel laureates, signed an open letter challenging the global mass surveillance of Internet and telephone communications by the U.S. National Security Agency, describing the Agency’s snooping as a “theft” of data and a force undermining democratic principles.

Hailing from 81 different nations the authors, including Margaret Atwood, J.M. Coetzee, OrhanPamuk, and Günter Grass called on the U.N. to create an international “bill of digital rights” that would enshrine the protection of civil rights in the Internet age.

They argued that the capacity of intelligence agencies to spy on millions of people’s digital communications is turning everyone into potential suspects, with worrying implications for the way societies work.

They further demanded the right for people to determine “to what extent their personal data may be legally collected, stored and processed, and by whom; to obtain information on where their data is stored and how it is being used; to obtain the deletion of their data if it has been illegally collected and stored.”

(The signatories comprised 22 Indian authors including AmitavGhosh, Arundhati Roy, GirishKarnad, JeetThayil, MukulKesavan, RamchandraGuha, TishaniDoshi, SalilTripathi and Suketu Mehta.)

Just recently had the chief executives of ‘leading tech firms’ such as Apple, Google, Facebook, Twitter and Microsoft urged for sweeping changes to surveillance programmes to stop the erosion of public trust.

Relevance to India:

A principle likely to be relevant to India’s concerns about the NSA’s surveillance is the alliance’s (leading tech firms) argument that ‘Governments should not require service providers to locate infrastructure within a country’s borders or operate locally.’

India was also keen on having e-mail service providers located within its territory and under its control.

G8 aims to find dementia cure by 2025

At a summit of Health Ministers and experts in London, G8 members have decided to work together to find a cure or modifying therapy for dementia by 2025.

The G8 countries have agreed to significantly increase funding, develop a co-ordinated international research plan and encourage open access to research and information.

They also called on the World Health Organization (WHO) to recognize dementia as “an increasing threat to global health” and urged society to continue and to enhance global efforts to reduce stigma, exclusion and fear.

Dementia, which impairs cognitive ability, affects 36 million people around the world and the WHO expects this number to almost double every two decades as the population ages.

More about G8:

The Group of Eight (G8) is a forum for the governments of eight of the world’s largest national economies as nominal GDP with higher Human Development Index; not included are India at 9th, Brazil at 7th and China at 2nd.

The forum originated with a 1975 summit hosted by France that brought together representatives of six governments: France, the Federal Republic of Germany, Italy, Japan, the United Kingdom, and the United States; later Canada and Russia joined the group to make it G8.

Lately, both France and the United Kingdom have expressed a desire to expand the group to include five developing countries, referred to as the Outreach Five (O5) or the Plus Five: Brazil (7th country in the world by nominal GDP), People’s Republic of China (2nd country in the world by GDP), India (9th country in the world by GDP), Mexico, and South Africa. These countries have participated as guests in previous meetings, which are sometimes called G8+5.



Courtesy- Wikipedia & http://www.g8.utoronto.ca

For a good article on ‘Nationalism and free press’, refer the below link-

http://www.thehindu.com/todays-paper/tp-opinion/nationalism-and-free-press/article5438257.ece

ECONOMICS

WTO: A good start in Bali, but biggest battle lies ahead.

The WTO’s relevance was fading away, with countries forging bilateral trade pacts and powerful regional trade agreements, especially in the developed world.

But the recent trade agreement (also the ‘first-ever’ trade agreement) reached in Bali has been seen as a big-boost to multilateralism.

The agreement is designed to simplify customs procedures and lower trade barriers between countries. The International Chamber of Commerce has estimated that the Bali deal will cut trade costs by 10-15% even as it adds an estimated $1 trillion to global trade. How realistic these numbers are will only be proved in the years ahead, but there is little doubt that global trade will get a significant boost from the Bali agreement.

In a sense, the emergence of regional trade blocs which was seen as a threat to the WTO eventually proved to be its saviour as emerging economies such as India, Brazil, South Africa and Russia, realised the WTO was critical to their interests.

The unyielding stance of India on protecting its farm subsidies which are set to increase following the enactment of the Food Security Act did cause some friction amongst the member-countries and at one stage even seemed set to hold up an eventual agreement.

The ‘interim mechanism’ devised will allow India to continue with its agricultural support price programme undisturbed until a final solution is negotiated. A phase of difficult and tactful negotiations is ahead for India, as it seeks to get its farm subsidy programme into the WTO framework; support from other developing countries with similar programmes is crucial here. Indeed, from a larger perspective, the agreement at Bali is just the beginning. A lot of hard work lies ahead for the WTO, and the WTO chairman Mr. Azevedo too has acknowledged this.

Trade negotiators need to carry forward the positive momentum built up at Bali as they seek to push through the Doha Round agenda. This will not be easy though, as negotiators will have to contend with regional groupings such as the Trans-Pacific Partnership, which involves the U.S., Japan and ten other Pacific Rim countries, and the powerful trans-Atlantic alliance between the U.S. and the European Union, negotiations for which are now on. Bali may have infused life into the WTO but its biggest battles lie ahead.



Mind-mapping:

  • Which kind of relationship – Multilateral & Bilateral is better for the developing world and why?

  • Why are regional trade blocks seen as a threat to WTO? Do you agree?

  • What was the agenda of the Doha round of negotiations? Why was it stalled all these years? What were the demands of developed and the developing countries?

  • Relevance of WTO in the 21st century.

  • Why was India against the ‘peace clause’ that was mooted by the developed countries, especially U.S?

  • What impact it would have on developing countries? What kind of farm subsidies are provided in India and how does it violate WTO commitments? What kinds of subsidies are provided by developed nations and why does it now violate WTO rules?

  • Impact on Indian agriculture and farmers if the demands on subsidy cut are agreed.

The real winners at Bali

At the 9th Ministerial meeting (on December 6th, 2013) at Bali in Indonesia, trade Ministers, representing the 159 members of the World Trade Organization (WTO), managed to reach an agreement. The fact that an agreement was finally possible was seen as more significant than the issues on which a consensus was reached. This is because the WTO and the Doha round, in particular, was losing its relevance off-late.

Days before the Bali meet, discussions, among trade officials, were leading to nowhere. It was widely feared that the Bali ministerial would go the way of all its predecessors.

The Doha development round was launched way back in 2001, soon after the terrorist attack in the U.S. in a bold move to infuse confidence in world trade. There were number of negotiations that took place during the 12-long years yet it failed to produce a single agreement.

WTO’s relevance, especially Doha negotiations and the very basis of multilateral trade that the WTO has been propagating was being questioned. Thus, as member-countries started reposing faith in bilateral agreements among countries and regional pacts to reap short-term gains, world trade was getting divided, making the eventual move towards multilateral trade that much more difficult. India and other developing countries, even while actively pursuing the bilateral route and regional pacts, had every reason to worry over the long-term consequences of the drift away from multilateral trade.

In many ways, the Bali agreement was driven by a fear that the big emerging economies would be left out of two giant trade pacts in the offing. Specifically, the U.S. and the EU have launched negotiations to conclude a trans-atlantic trade agreement. Japan and ten other Pacific Rim countries are getting close to finalising a Trans-Pacific Partnership. India, Indonesia, Brazil and Russia were unlikely to figure in the above pacts. But with a revived WTO, now the emerging economies can have a voice in the global trade.



Role of the new WTO Secretary-General, Roberto Azevedo:

The role of the new WTO Secretary-General, Roberto Azevedo, has been very significant. Before the Bali meet, there were apprehensions that a career diplomat from Brazil, a developing country, would not quite fit the role. Neither the E.U. nor the U.S. had backed his candidature unequivocally. In these circumstances, Mr. Azevedo pulled off a deal, which, under WTO rules, requires unanimous support from all members.

A revived WTO is good for all countries. Its success in years to come will depend how the more intractable parts of the Doha round are taken care of.

Implications on India:

The Bali Declaration has major implications for India and other developing countries. Of the two main issues ‘food security’ and ‘trade facilitation’ on which the agreement was reached, the former concerns India and other developing countries, which need to subsidise food for the poor, while the latter is significant for developed and developing countries

The core discussions on agriculture centred on two viewpoints on the price benchmark for the valuation of food stocks that a country can legally hold. India wanted current prices to be the basis, but that was not acceptable to the U.S. and many others. Among other reasons, it would involve amending the Uruguay Round agreements. India, as an alternative, proposed an interim solution.

The U.S. suggestion for a sunset clause of four years was not acceptable to India. A final deal was struck to have an interim agreement until a more permanent arrangement was worked out. So, obviously, many more rounds of discussions are on the cards.



SPECTRUM PRICING::

Government expects spectrum auction to meet target

The government is confident that spectrum auction in January, 2014 will be successful and meet the revenue target of Rs. 40,000 crore.

Significantly, post-2G scam, two auctions failed to attract companies and garner the projected revenues. For the January auction, the Dept. of Telecom has set a total revenue target of Rs. 40,874.5 crore, including auction amount, one-time spectrum charge and annual regular licence fee.

Telecom experts and mobile companies fear the higher spectrum price might hinder the government’s projected target.

The Telecom Regulatory Authority of India (TRAI) had recommended up to 60 % cut in the auction reserve price in the 900 MHz band in the Delhi, Mumbai and Kolkata circles. And it had suggested a 37 % cut in the reserve price in the 1800 MHz band.

Later, the Telecom Commission had suggested hiking the reserve price of pan-India spectrum by 15 and 25 % higher in important circles over what the TRAI had suggested. The Empowered Group of Ministers has approved the price recommended by the Commission.



EGoM approves M&A norms for telecom

The Empowered Group of Ministers (EGoM) on Telecom, has approved the ‘mergers and acquisitions’ (M&A) guidelines, besides clearing the sale of over 400 MHz of 2G spectrum (1800 MHz band ), a move that would help further growth and consolidation of the cellular phone market in the country.

The clearance of 400 MHz of 2G spectrum is valued at about Rs.36,000 crore, as per the reserve price recommended by the Telecom Commission, the Department of Telecommunications’ highest decision-making body.

The Telecom Commission had already approved the draft M&A guidelines, which says that the market share of a merged entity should not exceed 50% of the subscriber base.



Union Cabinet clears spectrum prices

The Union Cabinet has approved the reserved prices for spectrum sale as recommended by the Empowered Group of Ministers (EGoM) on telecom Rs.1,765 crore per MHz pan-India for 1800 MHz band and Rs.360 crore, Rs.328 crore and Rs.125 crore per MHz in metro service areas of Delhi, Mumbai and Kolkata, respectively, for 900 MHz band.

Notably, the spectrum prices were 26% lower than the base price in case of 1800 MHz band and 53% less in 900 MHz band than the previous auction prices. The government is hoping to garner over Rs.48,000 crore from the spectrum sale slated in January, 2014.

The decisions will result in further efficient utilisation of the scarce natural resource of spectrum facilitating expansion of telecom services in the country.

(The EGoM, headed by Finance Minister P. Chidambaram, had suggested the minimum price for the auction of spectrum in the 1800 MHz band at a 15 % higher rate than suggested by the Telecom Regulatory Authority of India (TRAI) at Rs.1,496 crore.)

GAS PRICING::

Revenue-sharing norm for oil sector as per recommendation of Rangarajan Committee & CAG

The Finance Ministry has asked the Petroleum and Natural Gas Ministry to formulate a proposal for inter-Ministerial consultations on the revenue sharing arrangement suggested by the Rangarajan Committee for the oil and gas sector.

In the 2013 Budget speech the Finance Minister had stated that oil and gas exploration contracts would be awarded on a revenue-sharing basis, shifting from the current profit-sharing one.

The Comptroller and Auditor General (CAG), in its report in 2012, had strongly pitched for shifting to a revenue-sharing formula, stating that the current production-sharing contracts (PSCs) provided for explorers to first recover all of their capital and operating expenditure before sharing profits with the government under a specific formula. However, gas producers have strongly opposed to the new formula. But the Finance Ministry is keen that the new formula should be adopted for the oil and gas blocks offering under New Exploration Licensing Policy (NELP) Round X, expected in 2014.

The CAG had, in its report, criticised the Petroleum Ministry and the Directorate-General of Hydrocarbons for having failed to protect the government’s financial interests, and had called for structural changes in the present PSCs for the management of hydrocarbon exploration and production, involving the private sector.

Under the revenue-sharing model, there is no element of cost-recovery, and the government and the operator will share revenues according to a pre-determined formula.



Double taxation Avoidance Agreement (DTAA)

What is Double Taxation?

Double taxation is the levying of tax by two or more jurisdictions on the same declared income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes). This double liability is often mitigated by tax treaties between countries.

What is Double Tax Avoidance Agreement (DTAA)?

DTAA also referred as Tax Treaty is a bilateral economic agreement between two nations that aims to avoid or eliminate double taxation of the same income in two countries.

DTAA provides that business profits will be taxable in the source country if the activities of an enterprise constitute a permanent establishment (PE)

Advantages:

Deals with the black money menace

Provides solutions to avoid double taxation of same income

The agreements generally provide for other matters of common interest of the two countries such as exchange of information, mutual assistance procedure for resolution of disputes and for mutual assistance in effecting recovery of taxes

It will provide tax stability to the residents of both the countries and will facilitate mutual economic

Example:

A large number of foreign institutional investors who trade on the Indian stock markets operate from Mauritius and the second being Singapore. According to the tax treaty between India and Mauritius, capital gains arising from the sale of shares are taxable in the country of residence of the shareholder and not in the country of residence of the company whose shares have been sold. Therefore, a company resident in Mauritius selling shares of an Indian company will not pay tax in India. Since there is no capital gains tax in Mauritius, the gain will escape tax altogether.

Courtesy- Economic Times, Wikipedia, http://www.goodreturns.in/classroom/2013/07/what-is-double-taxation-avoidance-agreementdtaa-193501.html

CIL gets clearance for CBM gas exploration

The Union Cabinet has given its approval to allow Coal India Ltd. (CIL) to carry out exploration of coal bed methane (CBM) gas in its existing mines, a move that will unlock nearly 100 million tonnes of medium grade coking coal and about one trillion cubic feet (tcf) of gas.

The existing rules prohibit mining firms from extracting CBM during mining as the policy does not allow for simultaneous extraction of CBM and coal. CBM exploration and production is allowed only in pure coal-seam gas bearing blocks, which are auctioned. Since 2001, 33 CBM blocks have been awarded in four auction rounds. According to the Directorate General of Hydrocarbons (DGH), India has CBM reserves of about 4.6 trillion cubic metres.

At present, three CBM blocks are producing around 0.15 million standard cubic metres per day (mscmd). This is likely to touch 7.4 mscmd by 2013.

CIL holds at least 20% of the estimated 60 billion tonnes of coal resources in India. It has coal mines in eight States, which are estimated to have CBM reserves of 3.5-4 trillion cubic feet. It was felt that many of the acreage of CIL were gaseous and unsafe mines, where mining of coal would be possible only after the extraction of CBM.

Extracting methane gas ahead of coal mining from seams will allow CIL help unlock very significant quantities of coal reserves in areas of Jharkhand, West Bengal.



Mind-Mapping:

  • Potential of coal bed methane in overcoming the energy deficit India is facing. Some externalities while extracting CBM like its effect on environment, health etc.

  • Identification on map of CBM resources in India. (prelims point of view)

Higher gas price for RIL gets Cabinet nod

The Cabinet Committee on Economic Affairs (CCEA) has approved giving Reliance Industries Ltd. (RIL) a higher price for natural gas from April 2013, subject to the company furnishing $135 million bank guarantee every quarter.

According to the proposal approved by the Cabinet, the bank guarantee will be encashed if it is proved that RIL hoarded gas or deliberately suppressed production at the Dhirubhai-1 and 3 main gas fields in its eastern offshore KG-D6 block. The bank guarantee will cover the difference between the current gas price of $4.2 per million British thermal unit (mBtu) and the new rate which will come into effect from April 1, 2013.

The Oil Ministry had initially proposed to deny the new gas prices (starting from  April, 2014) till such time that RIL either made up for the shortfall in output during the past three years, or it is proved that the company was not responsible for production falling below targets. In fact, this had held up the notification of the new gas pricing formula that would be applicable to all producers in the public and private sectors for all forms of gas produced. The Petroleum Ministry has proposed that till the hoarding issue is resolved through arbitration and validation by independent international experts, RIL would have to keep furnishing the bank guarantee.

Recently, the Finance Ministry had advocated some changes in the approved formula by excluding liquefied natural gas (LNG) purchases from the spot market, which, it said, was highly volatile. Prices of natural gas would be revised every quarter based on the average of the past four quarters, with a gap of one quarter. However, there was no word on the point raised by the Finance Ministry recently seeking a cap on the gas prices.

Facts & Figures:

Gas production from the D1&D3 fields has fallen to less than 10 million metric standard cubic metres per day (mmscmd) from the peak of 54 mmscmd in March, 2010. Production has been lower than the target since the latter half of fiscal 2010-11, and it should currently have been 80 mmscmd, as per the 2006 investment plan. Output from the MA oil and gas field in the KG-D6 block, too, has fallen over 62%.

Mind-Mapping:


  • Availability of natural gas in India. Composition of natural gas.

  • Comparative analysis of environment impact of using natural gas, coal, LPG etc.

  • Types of natural gases. Pricing mechanism of natural gas and similar fuels in India. Its upstream and downstream impact on various industries and end users etc.

Higher gas price will help raise domestic production

The decision to almost double the natural gas price from April, 2013 would encourage investments in exploration and production (since a lot of money on technology and research to access the hydrocarbon) and in turn reduce the country’s dependence on imports.





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