Democrat controlled U.S. Congress has finally passed legislation that would withdraw $14 billion in tax breaks and subsidies given to oil drillers. The money will now be used to develop alternative energy projects and conservation technologies. However, the Bush administration has criticized the bill on the ground that the bill will force the oil companies to pay higher tax and could increase country’s dependence on foreign oil. The bill will pull out $7.6 billion in tax breaks for oil companies, which was passed by the then Republican controlled Congress in 2004 and 2005. The bill is also aimed at adding $6.3 billion in royalties from companies that produce oil and gas from the federal waters of the Gulf of Mexico and off Alaska. One provision in the bill has been incorporated to correct the mistakes in drilling leases approved by the Interior Department in the late 1990s, which helped oil companies to escape billion of dollars in royalties for over a decade. The provision would necessitate oil companies to pay a ‘conservation fee’ in case if they refuse to change their leases. Otherwise, the bill has provision to bar the companies to acquire additional leases. This specific provision was opposed vehemently by the Bush administration and the industry. The Republicans on the other hand furiously criticized the bill saying it would lead to higher gasoline prices by penalizing domestic production and it create a ‘slush fund’ for alternative energy projects.
The US trade deficit widened to all time high to $763.6 billion last year. The trade deficit shot up by 6.5 percent last year to hit a new record high. The trade deficit increased for the fifth time in a straight successive year. Primarily, last year’s soaring global energy prices and the surge in Chinese imports contributed in reaching a record high in trade deficit. Last year, trade deficit with China alone was around $232.5 billion last year, marking the largest imbalance the US ever witnessed with one country. America has been accusing Beijing of manipulating its currency yuan to keep undervalued to maintain the price of Chinese export artificially down. Despite yuan is just allowed to trade only within a confined band against the dollar; however Chinese authorities refute the allegations. The US exports of goods and services last year rose by 12.8 percent to $1.44 trillion, whereas the imports increased by 10.5 percent to $2.2 trillion, according to figures released by the Commerce department. The trade deficit in December alone reached $61.2 billion against $58.1 billion in November and shocked the market as the figure was much higher than the market expectations. In the meanwhile, Nancy Pelosi, speaker of the House, has asked the President George W. Bush to submit a plan to Congress ‘within 90 days’ to tackle the record high deficits with China, Japan and the European Union. Experts are greatly disappointed by the unanticipated sluggish growth in last months’ exports and reduced their assessment of economic growth in the last quarter from 3.5 per cent to close to 2 per cent.
US lawmakers have introduced legislation aimed at overhauling the patent system by weeding out bad patents and restrict excessive litigation while preserving the rights of inventors. The legislation has also marked the biggest changes to the US patent system in over 50 years. The proposed legislation, which draws similarity from a bill introduced last year, is likely to renew longstanding difference of opinion on Capitol Hill between business groups. Firms in the technology and software industries support the legislation, while firms in the biotech and pharmaceutical industries are cool toward many of its reforms. Patent reform efforts have caught up in Congress for several years, but this time could be a chance of action over it, with Democrats sympathetic to patent reform now in control of Congress although by a slender margin. The fundamental subject behind patent reform is whether the existing system still encourages innovation, as it was intended to do, or whether amplified patent litigation and the large damage awards that can result are hindering new product development. According to the provisions of the proposed legislation, it would award patents to people who first file for the patents, instead of those first to invent. It further seeks to limit compensation patent holders can collect in infringement lawsuits, and in addition, it intends to create a new process for those questioning the validity of a patent to challenge it after it’s been granted. The US has the only first-to-invent patent system worldwide. Tech companies have condemned large patent infringement awards regarding damages in recent years, saying a court system that has allowed patent holders to get restrictions on projects with a small piece of infringing technology has damaged innovation. In May 2006, in an infringement case against eBay Inc., the US Supreme Court however overturned the long-held practice of issuing injunctions against infringing products in nearly all patent cases. Nevertheless many tech groups have for years called for more changes to the US patent system. On the other hand, drug and biotechnology companies have expressed concerns about the legislation, arguing it could threaten work to develop new treatments for diseases. In a sharp contrast with tech and drug companies, which often spend years and billions of dollars converting just a few patents into highly profitable products, want strong rights to turn back challenges and to ensure that violators pay hefty damages. The legislation also sought to make better patent quality by restructuring the review process at the Patent and Trademark Office after a patent is approved that would allow companies to challenge defective patents without having to go to court. However, opponent view argue that such ‘post-grant reviews,’ specifically if they are not classified to a brief period after a patent is issued, could destabilize patents by adding the ambiguity of possible challenges for years into the future.
In order to unfasten the booming Chinese markets for the American supplies, Bush officials are sternly negotiating with China for some profitable fresh agreements. Whereas China has declared its plan to United States of making an approximate $30 billion purchase. This economic dialogue between the biggest economies and fastest growing economies of world has questioned that such action will be able to calm down the fuming Congress over some trade deficit with China which last year fall to $232 billion. During an interview, Henry M. Paulson Jr, Treasury Secretary stated that, “Some people will look at this and say there is not enough progress,” Followed by, “The key question is, Do we have more progress than we would have had otherwise?” Mr. Paulson also stated that tensions are under control, although Chinese practices have been challenged at World Trade organization. New duties are also being threatened on imports. Well, talks mainly focuses on the long term issues and requesting China to go for market-based economic as well as monetary policies. In order to improve tense economic relationship, Mr. Paulson along with Ben S. Bernanke, the Federal Reserve Chairman and cabinet ministers went to Beijing. But, there were no significant results. In case, dialogues are unable to produce result then it would be quite difficult to control Congress. Mr. Paulson said, “I’ve explained to them that Congress legislates and there will be trade legislation in Congress,” he further added that, “I’ve also said that the Congress is, to a large extent, reflecting the views of the American people who don’t believe that the benefits of trade are shared evenly or fairly.” Recently, Central Bank of China has announced Yuan to fluctuate. US said by lowering the value of Yuan, China is lower the cost of export and higher cost of import. On retaliation, Congress is threatening with higher duties on Chinese goods. Via-nytimes