Dubai accuses Djibouti of illegally seizing key Africa port

A Djibouti policeman stands guard during the opening ceremony of Dubai-based port operator DP World's Doraleh container terminal in Djibouti port February 7, 2009. (Reuters)
Updated 24 February 2018
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Dubai accuses Djibouti of illegally seizing key Africa port

DUBAI: Dubai has said it is seeking international arbitration against Djibouti after the Horn of Africa nation terminated its concession at a key port that is the main transit route to landlocked Ethiopia.
The emirate said the Djiboutian government’s termination Thursday of the 50-year concession it granted to Dubai-owned DP World to operate the Doraleh container terminal in 2006 was “illegal.”
Announcing its decision on Thursday, Djibouti’s transport ministry said that it was merely implementing a law adopted in November last year that “sets a legal framework allowing for the renegotiation, if necessary, of contracts already concluded dealing with the management or exploitation of strategic infrastructure.”
“In the current case, the contract of concession for Doraleh container terminal contains elements that are in flagrant contravention of state sovereignty and the higher interests of the nation,” it said.
But Dubai countered that the Djiboutian legislation flew in the face of international law, as repeatedly upheld by arbitration tribunals.
“The illegal seizure of the terminal is the culmination (of) the government’s campaign to force the DP World to renegotiate the terms of the concession,” the government said late Thursday.
“Those terms were found to be ‘fair and reasonable’ by a London Court of International Arbitration tribunal,” it added.
“DP World has commenced arbitration proceedings before the London Court of International Arbitration to protect their rights, or to secure damages and compensation for their breach or expropriation.”
The Dubai government said it found Djibouti’s conduct to be “particularly oppressive and cynical” as two separate tribunals had recently dismissed its allegations of corruption in the awarding of the concession.
The tiny nation of Djibouti has become a major strategic player because of its position on the Bab Al-Mandab strait, the key shipping lane to Europe from the Gulf and Asia beyond.
The United States, France, Italy, Spain, Saudi Arabia, Japan and China all have military bases in the country.
China’s base is immediately adjacent to the Doraleh terminal.
The port is also the terminus for a Chinese-built railway between Djibouti and the Ethiopian capital Addis Ababa which opened in 2016.
More than 90 percent of the trade of Africa’s second most populous nation passes through Djibouti.
DP World has secured a string of port concessions in Africa, including one for Berbera in breakaway Somaliland up the Red Sea coast from the Bab Al-Mandab.


Japan ships fewer cars to US as export growth slows

Updated 16 August 2018
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Japan ships fewer cars to US as export growth slows

  • Japan’s exports to the US fell 5.2 percent year-on-year in July, down for a second straight month
  • Shipments to Asia, which account for more than half of Japan’s overall exports, rose 8.0 percent

TOKYO: Japan’s export growth slowed more than expected in July as shipments to the US fell for a second straight month, with the automotive sector down sharply and global trade disputes casting doubts over foreign demand.
Ministry of Finance (MOF) data out on Thursday showed exports rose 3.9 percent year-on-year in July, far below a 6.3 percent increase expected by economists in a Reuters poll. The rise followed a 6.7 percent year-on-year gain in June.
Japan’s exports to the US fell 5.2 percent year-on-year in July, down for a second straight month, due to a 12.1 percent decline in car shipments.
“The drop in US-bound car exports was in reaction to brisk sales seen there a year ago, boosted by the solid US economy and declines in oil prices,” said an MOF official in charge of compiling the data.
“We cannot say whether it was affected by trade tensions with the US.” US President Donald Trump has made the threat of heavy tariffs a core part of his agenda, with an eye on the US auto sector’s trade deficit with countries such as Germany and Japan, raising speculation about restrictions on US-bound car exports.
Japanese carmakers have so far shown no sign of rushing to boost car shipments to the US, which would happen if they anticipated higher tariffs were to be imposed on their products in coming months.
“While caution is heightening over US trade policy, US car sales are levelling off, causing Japan’s car exports to the US to level off as well,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“If capital outflows from emerging economies accelerate on top of this, it would cause a marked slowdown in global economy, further weighing on Japan’s exports.” Imports from the US rose 11.0 percent in the year to July, led by crude oil, motors and liquefied petroleum gas.
As a result, Japan’s trade surplus with the US fell 22.1 percent year-on-year to ¥502.7 billion ($4.55 billion). Exports to China, Japan’s largest trading partner, rose 11.9 percent in July from a year ago.
Shipments to Asia, which account for more than half of Japan’s overall exports, rose 8.0 percent, led by semiconductor production equipment and electronics parts for China and sales of steel to Thailand.
Overall imports rose 14.6 percent in the year to July, roughly matching economists’ median estimate, resulting in a trade deficit of ¥231.2 billion, vastly exceeding the expected ¥50 billion.
Thursday’s trade figures came after gross domestic product (GDP) data last week showed Japan’s economy, the world’s third largest, rebounded in the second quarter from a January-March dip.
Analysts say global economic growth is likely to support Japan’s exports, but international trade conflicts are an ever-present risk to Japan’s export-reliant economy.
The impact on the broader economy from higher US tariffs on Japanese automotive exports would be significant, they say.
Japan’s economy grew at an annualized rate of 1.9 percent in the second quarter on the back of household and business spending, recovering from an earlier contraction.