Ukraine Could Lose Half Of Its Economy Due To War, According To World Bank 

The World Bank released a report this weekend that stated Ukraine could lose almost half of its economy this year as a result of Russia’s invasion and the ongoing war between the two nations. 

The bank estimated that the “country’s GDP could decline by 45.1% this year, although the magnitude of the contraction will depend on the duration and intensity of the war.”

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Since Russia invaded, Ukraine’s infrastructure has endured excessive amounts of damage and destruction. Bridges, neighborhoods, and ports have been hit with multiple blockades, and farmland throughout the nation has become the setting for multiple battles. 

Before this conflict, Ukraine was a major exporter of wheat and sunflower oil, however, the growth of both has been interrupted by fighting. Farmers are also finding it difficult to access machinery and other essential products needed for farming that would typically arrive through Black Sea ports. 

“The magnitude of the humanitarian crisis unleashed by the war is staggering. The Russian invasion is delivering a massive blow to Ukraine’s economy and it has inflicted enormous damage to infrastructure,” Anna Bjerde, the World Bank’s vice president for the Europe and Central Asia region, said in a statement.

“Ukraine needs massive financial support immediately as it struggles to keep its economy going and the government running to support Ukrainian citizens who are suffering and coping with an extreme situation.”

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Ukraine Finance Minister Serhii Marchenko has stated that “the government is still functioning, despite the war.”

“About a third of the country’s economy is no longer functioning as the atrocities continue and millions of people flee as refugees into neighboring countries,” he explained. 

Marchenko added that as of late March, nearly 3 million Ukranians have lost their jobs; preliminary reports show the nation’s economy has already lost approximately $565 billion. 

To keep the economy afloat, the government has “leaned on war bonds, as well as less traditional avenues, such as fundraising in cryptocurrencies and the sale of non-fungible tokens (NFTs),” according to Marchenko.

“I think that the true figures of total economic loss would be clear only after the war,” he said.

“The [best] scenario is to end the war as quickly as possible.”

Doctors working on COVID-19 Treatment

India Loosens Export Restrictions For Potential Covid-19 Treatment

The Indian government recently announced that it would be relaxing it’s exporting policies on hydroxychloroquine (HC), which is the “controversial” drug that president Trump has mentioned in relation to combating the coronavirus.  The reason it’s seen as controversial is because scientists barely know anything about the drug, and there’s no evidence-based results on the effectiveness of HC against covid-19. 

Even though experts still know barely anything about HC’s safety, long-term effects, and toxicity levels, president Trump made it clear that if India did not cooperate with the US in easing exporting measures then there “would be retaliation.” In response, Indian Prime Minister Narendra Modi announced that he would indeed comply with the US’s request and lift the exporting restrictions on HC. 

“Extraordinary times require even closer cooperation between friends. Thank you India and the Indian people for the decision on HCQ. Will not be forgotten! Thank you Prime Minister@NarendraModi for your strong leadership in helping not just India, but humanity, in this fight,” Trump tweeted

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India in general holds a majority of the world’s HC production market, hence the urgent demand from the US. The country manufactures about 70% of the world’s supply, and the drug itself is mainly known as a key treatment for malaria, hence it’s heavy use in India where malaria is unfortunately a major issue. The pharmaceutical industry in India is worth over $19 billion, which is thanks to drugs like HC, and Paracetamol (more commonly known as Tylenol) being consistently exported around the world. 

Historically, India’s large pharmaceutical industry has been the top vaccine producer in the world, has provided resources for nearly 3,000 pharmaceutical companies, and has created a system that makes manufacturing costs in general 30% cheaper than in the US. For these reasons, and more, India has become the main focus when it comes to trying to find a way to combat the coronavirus. 

“Global players in the pharma industry cannot afford to ignore India. The country, many predict, will be the most populous in the world by 2050. India will make its mark as a growing market, potential competitor or partner in manufacturing and R&D, and as a location for clinical trials.” Global Consulting Firm, PriceWaterhouseCoopers, said

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India has already begun developing and experimenting with clinical trials and research that will hopefully lead to a breakthrough in relation to curing covid-19. It’s imperative that the US, and other countries around the world as well, are working alongside each other so that when we do find a real solid way to treat this virus, it will be completely accessible to all. 

For example, the Serum Institute of India (SII) has been working with Codagenix, an American based pharmaceutical company, on a potential covid-19 vaccine, and has recently announced that a viable and market-ready vaccine could be ready as early as 2022. This is just one example, however, of the multitude of companies working with one another to fight this virus. SII is the specific institution in India that’s known as the world’s largest vaccine manufacturer as well, and is a “prominent producer of many routinely used and effective vaccines across the globe, including for polio, tetanus, diphtheria, and measles, among many others.”

The Indian Pharmaceutical industry will likely play a major role in the effort to combat the coronavirus, as they have always been a key player in the realm of curing infectious diseases/viruses. It’s imperative that the United States maintains a civil relationship of communication, negotiation, and exchange with the entire world’s pharmaceutical industry so that we all can return to a life of normalcy sooner rather than later.

US & France Wine Tax

Import Tax Likened to “Prohibition” in Latest Trade War

The recent decision by President Donald Trump to increase tax on all European wine imports to 100% has sparked outrage across the industry, with many comparing it to Prohibition during the 1920s and 30s.

The new tariffs are a direct response to the European subsidies for Airbus and American importers are asking Washington to cancel the proposal after it was revealed it would impact around $2.4 billion worth of French products that also include cosmetics and cheese as well as wine.

Washington has challenged the French government’s new digital services tax claiming it is specifically aimed at American technology giants and the retaliating import tax increase is seen by many to potentially be the start of further international trade wars. Although the current trade war with China has seen a preliminary trade deal appearing to be finalized.

While America and France have confirmed a two week period to discuss a deal that would suit both nations — with French Finance Minister Bruno Le Maire and US Treasury Secretary Steven Mnuchin agreeing to further talks at the World Economic Forum towards the end of January — the European Union has vowed to back France.

A third of America’s wine industry is from imported wines and warnings have already been issued that the tariffs could devastate the $70 billion wine industry that in turn could affect businesses across the country including restaurants, bars, warehouses and even our own wineries, effectively placing thousands of American jobs at risk.

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The recent US Trade Representative (USTR) hearing in Washington saw industry insiders calling for certain products to be excluded from the tariffs, especially considering many businesses are already suffering difficulties thanks to the 25 percent tariffs that were imposed at the end of 2019 on specific German, French and Spanish wines. These tariffs were imposed as part of a different trade dispute regarding European subsidies to many large aircraft makers. The new tariffs proposed by Trump’s administration will cover more products such as sparkling wines.

And with small profit margins on the majority of wines being sold it is virtually impossible for restaurant owners and wine importers to absorb the tariffs meaning prices will have to be increased, hitting the American consumer’s pocket. The National Association of Wine Retailers has already announced they believe that the cost of some bottles of wine could double while others will disappear from our shelves completely as they will become too expensive to continue importing.

Vintage 59 is a small wine import business and partner Michael Daniels commented:

“Any increased tariff burden levied on wines or spirits from the EU… will force our customers to choose different products. Any significant sales losses, even during a short period, will require layoffs. Any extended period of losses could lead to our full-scale collapse.”

There are also major concerns that the tariffs could result in many European wine exporters opting to stay away from America on a more permanent basis which could have dire consequences in the long term as well as the short term.

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Passed in July 2019, the French digital tax saw a 3 percent tax imposed on all revenue generated from digital services and has affected corporations that have global revenues of over $1.1 billion and French revenues of nearly $28 million.

An investigation by the USTR claimed that American companies were discriminated against by the tax resulting in Washington threatening retaliatory tariffs on French imports. France disputed this and explained they were struggling to deal with the way in which they should tax technology corporations that conduct business in their country. Other European countries are now considering similar taxes, which could see further disputes with America.

Senior fellow and trade expert at the Peterson Institute for International Economics Gary Hufbauer has stated that the “thresholds and definitions of ‘taxable services’ ensure that US firms are the primary target.” This follows the Computer and Communications Industry Association imploring the US to react to the tax.
Benjamin Aneff is managing partner of Tribeca Wine Merchants and has likened the tariff to Prohibition commenting, “it is without hyperbole that I tell you that the proposed tariffs would be the greatest threat to the wine and spirits industry since Prohibition, in 1919.”

Trump has said that he believes the two countries will “work it out” however he has also disregarded concerns of wine drinkers saying we should replace French wines with products from wineries across America.

Yet even with the potential for higher sales for American wines Californian wineries have also criticized the tariffs, stating that if people cannot buy their favored wine they may choose to buy anything other than American products, in an act of protest to the government. And with many great wines from countries across the world, including South Africa, New Zealand or Chile, there is still a great range to choose from.