Trade between equals is important and both sides of a trading relationship should respect property rights and share rules of conduct. This is necessary in an age where intangible intellectual property is so important. Trade always has a political component. The highest form of free trade should be a privilege between defined equals or compatible parties. Free trade of goods and services need not be extended to ownership of property or equities. Free trade expanded to include equities and property should be between equals. Russia and China do not rise to that standard. The Euros have it right.
EU right to defend against sovereign funds-Juncker
Reuters Monday November 19 2007
BERLIN, Nov 19 (Reuters) - Luxembourg Prime Minister Jean-Claude Juncker was quoted on Monday as saying the European Union has the right to retaliate against sovereign wealth funds from countries under certain conditions.
"Countries that protect their own markets cannot expect to be allowed to make unimpeded investments in Europe," Juncker told Germany's Handelsblatt newspaper.
Juncker, who is also the Eurogroup president, said he did not view such moves as protectionism and argued that Europe had a right to take measures he described as "retaliatory action".
According to a draft law in Germany, foreign investors seeking to take large stakes in German firms can choose to inform the government of their plans ahead of time or risk a lengthy probe into their purchases.
The draft addresses Berlin's concerns about takeovers of firms by sovereign wealth funds and other outside investors. Chancellor Angela Merkel's government has been talking for months about introducing new legislation to shield German companies from cash-rich, state-owned funds, particularly from China, Russia and the Middle East.
Government-owned investment vehicles control around $2 trillion and are expected to grow rapidly to $12 trillion by 2015.
In one deal which sparked worries in Germany, China's state investment agency agreed in May to buy a non-voting stake of nearly 10 percent in U.S. private equity firm Blackstone Group , which holds shares in Deutsche Telekom .
(Writing by Erik Kirschbaum)