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Ports lockout raises recession risk for Asia
By Alex Frew McMillan
HONG KONG, China (CNN) -- Asia's export-driven recovery from recession is at risk if the port dispute in the United States continues, experts suggest. With the Pacific Maritime Association still locking out workers of the International Longshore and Warehouse Union, 29 ports on the West Coast of the United States remain closed. The ports have now been idle for five days, leaving almost 160 cargo ships just offshore. The last time the West Coast ports were closed was in 1971, in a shutdown that lasted 134 days. The strike is estimated to be halting the shipment of goods worth $1 billion a day. But the effects are far-reaching and come at a time much of Asia is just recovering from a severe downturn. "Asia is so dependent on U.S. trade that some economies could be pushed into recession," Morgan Stanley economist Andy Xie told CNN. Global consequences 'horrendous'Xie wrote in a report for clients that East Asia would enter a recession if the shutdown lasts for more than one month. "The consequences for the global economy are horrendous," he stated. For East Asia, excluding Japan, shipments to the United States amount to 10 percent of gross domestic product. The West Coast ports handle half of the U.S. trade with the Pacific Rim. The stoppage is particularly significant because it promises to disrupt shipments for the key Christmas period. "It's obviously negative," Pieter van der Schaft, Asia Pacific economist with Barclays Capital, told CNN. "Certainly for time sensitive goods for the Christmas season, toys, electronics -- low value added time-sensitive goods -- it would have a major impact." A stoppage of five to six weeks would disrupt $20 billion in imports to the United States, he estimated. The United States is still the No. 1 market for most Asian nations, though China recently surpassed it in the case of Taiwan. China and Korea affectedHong Kong and Singapore are the most trade-dependent economies in Asia. The damage in Hong Kong alone could total $100 million a day if the strike continues. The stoppage will disrupt shipments in bulky products. That would affect South Korea and China in particular, two of Asia's strongest performers. "This factor may diminish their economic outperformance in the fourth quarter," Xie wrote. U.S. retailers may have stocked up over the past two quarters to prepare for the ports closing. That suggests export performance will decelerate quicker than expected, Xie said. Some manufacturers are preparing to airlift goods and parts into the United States. Toyota Motor said Thursday it was considering such a move. War a greater threat"If there is a serious disruption to the West Coast, it will add onto an already softening U.S. outlook for Asia," Yiping Huang, greater China economist with Salomon Smith Barney, told CNN. But Huang said the prospect of war in Iraq is a greater threat to Asia's economies. That threatens to hit oil imports and would likely undermine corporate and consumer confidence. "We take that threat more seriously," Huang said. His bank cut its forecasts for Asian growth by 0.5 percent for 2003 due to tension in the Gulf, and Salomon says outright war would lead to another decline of 0.3 percent. Mediation continues in an effort to solve the ports dispute. The 10,500 workers represented by the Longshoremen fear that new technology will lead to job cuts. But operators say the technology, which includes computerized cargo tracking systems, is needed for the ports to stay efficient.
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