Continued pressure from abroad. And meeting facetoface, president obama and House Speaker john boehner sit down for a oneonone over the weekend. There are just three weeks left before the u. S. Goes over the fiscal cliff. Italian shares are down nearly 3 this morning. For the most part, it is bank stocks leading the way down. Were now down about 2. 76 on the ftse mib. Bank stocks have been hit particularly hard this morning. Earlier, we saw shares down 5. 6 . Were seeing the same thing, whether its bmps hitting session lows down nearly 6 comes amid concerns about leadership and economic reform in italy following mario montes announcement that hell resign once the budget has been passed. This move is likely to bring the country forward to elections next year. The italian Prime Minister has offered no clue as to whether or not he will run and it comes after Sylvia Berlusconi declared over the weekend he would throw his hat in the ring for the job of premier. Carolyn ross is in italy following the details there. Can you walk us through the time frame here . When are we expected monte to step down . What happens next . Good morning to you, kelly. Here is the time frame for you. Over the next few weeks, were expecting the budget stability law to be passed. Neither of the Political Parties will want to be blamed for bringing down the stability of italy, so they will pass that over the next week. Once that is passed, mr. Mon at the said he would step down. That will happen likely around new years. And then the president will have to dissolve the parliament and between 45 and 70 days after the parliament is dissolved, new elections will take place and that probably takes us to february 2014. And, kelly, that is two months before the actual election day should have taken place previously. Now, thats two months earlier. We knew that mr. Monti, the technocrat Prime Minister was going to step down. His days were numbered, anyway. So this is just a change of the time frame. Its not a huge surprises in itself. The only surprise is the timing. Markets are selling down somewhat this morning. Banking stocks. But some of the economists we talked to here, they say, yes, we may see some volatility in the shortterm, specifically over the next two months of campaigning because a lot of horse trading will be taking place, a lot of statements will be made which may rattle the markets, but the crux of the matter is this. If you look at opinion polls right now, as a Democratic Party under berlusconi, he will likely win this election. Current opinion polls suggest that he will walk away with around 30 . Berlusconis party, antiausterity, antigerman, would only walk around with around 16 of the votes. So that 16 gap will be very, very difficult to be made up just over the next two months. So thats why many people say that the earlier election date is actually positive for the euro and for the continued reform push. Obviously, the market is concerned that the new government under bersoni would not continue to implement the austerity measures, but he has reassured the market and everyone in the world, i will continue with these reforms and honor the commitments by the eu. We will have a balanced budget in to 13. Kelly. Carolin, back with you later in the program. For now, were joined by bob parker on set, Senior Adviser at Credit Suisse. Bob, welcome. Thank you. What do you make of this . Is there any way that this is a positive in terms of perhaps opening the door towards mon at the monte serving in some sort of government . I am assuming were going to have a election probably in the second half of january. Were talking about a position of somewhere between 12 and 17 of the vote. So subsequently, i think fears that berlusconi may come back seem to be misplaced. I think if everyone looks at the last year and a half of what the monte government has achieved in italy, you have to be impressed. We have a strong budget climate surplus. The overall budget has come in dramatically. Weve had well fare reform, pension reform. Theres further work to be done on the competitiveness of italy. I cant tell you how much investors have been talking bullishly about italy. We know its the eurozones third biggest economy. Obviously what happens in italy is important. Theyve been saying if anything the problem is its membership in the eurozone which continues to hamper what it otherwise what markets would otherwise be rewarding for in terms of progress. I think if were going to get a surprise in 2013, i would argue its going to be italy. Whereas economies like spain good or bad surprise . No, a good surprise. Whereas economies like spain, greece, portugal are likely to stay in recession for the whole year, i would argue theres a high probability that italy will come out of recession towards the end of the second quarter. And that seems to be the real concern that is in the market today, whether the political upheaval, even the campaigning by berlusconi could undo some of that progress. I think the key point is will the Reform Programs that have been initiated by the monte government, will they stay intact . I think theres a reasonable chance, theyve had a more than reasonable chance that that is the case. Yes, its not surprising, we have the sell off today. Its inest knowledge that as the campaigning builds up, investors will be nervous. The move by investors back into italian bonds over the next few months, we could see some exits. But i think if we get a sensible election results, and i think we probably will, then the Reform Program will be intact and the new government will stick to the budget that is going to be passed in the next two weeks. Maybe a buying opportunity there. I wont quite put the words in your mouth. Sgling one shouldnt be that negative on italy. Okay on. Today sees the culmination of our trade link season with a series of special interviews and Ross Westgate joins us live now fromva. Ross, youre almost here with me. At least we get to be together on screen. Whats going on three weeks now. And we finally are working on the same day and ive gone away. Dont take it personally. Now, ross is at the wto headquarters in geneva. Tell us what youve got prepared there. As we know, every monday we do trade links and this is our trade links day today from the wto. Shortly, well be joined by director general of the wto. Theyve revised down their growth forecast and weve seen an increase in complaints. But interestingly enough, this is the first time this year that weve seen the number of trade openings outpace the number of trade restrictions. Theres a lot of interesting things going on and the were going to get into the value added of trade, as well. Yes, an ipad in china gets made and its value point 50. But its only about 20 of that that goes to china and the rest goes back to the u. S. Well get into the dynamics of trade, as well, and how we measure it. Well also be joined by the ilo director general, as well, guy rider. Well hear from the head of the world intellectual property organization. So its a big trade day here from geneva on Worldwide Exchange. Lots of great things to get into. And by the way, 157 members of the wto, shortly to be 158. Kazakhstan today should get the approval, all 157 ambassadors are here. They will get approval later this afternoon. So an ever expanding membership base. Kazakhstan being just the latest. Plenty more from ross straight ahead on the program. In the meantime, we want to check in our how markets are doing. So much attention on italy. In particular, you can see the message broadly speaking this morning is in negative, were seeing about a four to one outpacing decliners versus vapsers here. The stoxx 600 is down abo about. 37 . Lets take a look across the trade. The ftse down. 2 . The xetra dax is shedding about. 5 this morning. Ftse 100 is holding up better, down in the range of. 2 . This follows a strong report friday that had boosted markets. We were expecting to come into the session with a positive attitude and that should underscore the extent to which we are seeing weakness. Take a look at how investors are seeing the range there. Were seeing the rotation out of the periphery. Italian markets are just shy of 4. 8 . Spain, similarly seeing a bit of a selloff. Yields rising to 5. 63 . Yields are benefiting as a result. Quick look at forex, the euro dollar was weakening on the back of this news. Now were seeing it just a little bit higher above that 1. 29 level, 1. 2904 to be exact. Over here, were going to get into more in the program about the dollar yen. But this is restreeting a little bit. The aussie dollar is a bit weaker this morning. For more on that and asian markets, were joined now by li fi fishwen. Thank you, kelly. Most asian markets kicked off the week on a strong note. Ending higher but over 1 . Those gains hesed a little after the disappointing trade figures for november. And thats with unis in beijing coming up on this show. Shares in hong kong hovering around a tenmonth high. Canada said yes do a 10 billion takeover. Elsewhere, the nikkei finished just a touch hire. Expect revised Third Quarter gdp showing the economy is back in recession. Exporters lost ground after chinas trade data, but retailing gained momentum after nomura raised its price target. In south korea, gainers were offset by ship builders. The kospi finished flat. Indias sensex is on the move underperforming the region lower by. 2 . Back to you, kelly. Thank you very much for that. Stick around, because strayed ahead on the program, chinas new member trade data comes in far weaker than expected. Is it a one off or does this threaten the mainlands economic progress . Well have plenty more when we come back. I always wait until the last minute. Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express ecember 22nd for christmas delivery. The next of wto trade disputes has tripled in the past year in a sign that countries are becoming increasingly protectionist. Ross westgate has more for us on this story from geneva. Hi, ross. Hey, kelly, yes. 8 complaints in the year before and 25 complaints so far this year. But it doesnt necessarily mean protectionism is getting worse. Because weve actually had more opening traders and more practice put in place. Its great to come to your home. My pleasure. Welcome. Thank you so much for having us. Just explain what is going on in terms of here we are five years past the financial crisis. Youve just released the report a month ago. Weve got more complaints. And i would suggest to the average viewer that there are greater problems with respective trade. Is that necessarily the case . I think its a bit more complex than that. When you look at the trade opening measures, what weve seen recent sli a reasonably good picture. Although there has been more trade restrictive measures and trade opening measures, which is a signal that protectionist specials are there. We havent had a big tsunami. Theres been no outbreak of protectionism. So that is the good news, although were not out of the woods and in some countries are lets say more usual suspect than others. Now, youre right, weve had a growing number of disputes. But i think this is explained by government who reasonably successfully resist protectionist pressures have to show that there are things, again, unfair competitors. So it is a contradiction. Its the politics of that that they probably contained reasonably well protectionist specialists but because of social economic hardship, they have to show theyre tough with our competitors and they go more to the wto system which in a way is fine. We will adjudicate the dispute. Whether its eight, ten, 20 doesnt really change our mode of operation. And most of the complaints, more of the complaints are lodged against the United States. The United States is also lodging more complaints than anybody else. Is that because they happen to be the biggest economy in the world . No. Thats a statistical reality. The bigger the trade flow, the more frictions. The more frictions, the more sdmuts. There is nothing new in that and the best statistical case is china. Disputes with and by china have grown as the proportion of china in world trade has grown. Your latest, what you found in the world trade was 3. 7 in your april report. Volume of trade growth, 4. 5 . The longterm average you say is over 5. 4 in the last 20 years. So look, and a lot of this is down to problems, i guess, in europe, right . What is the outlook with what happens with Global Growth and what is happening . Unsurprisingly, the volume of growth of trade are strongly correlated to the volume of growth. So growth slows down. Trade slows down with a sort of multiple. Thats the main reason. There may be other marginal reasons like, for instance, difficulties in trade finance. Which is a sort of the aftermath of the financial crisis. But the reality is that the main export market of the senate, which is europe, is not doing well. The second export market is not doing that well. Not to talk about japan. So this has a slowdown effect which reverb rates on the growth of emerging countries. And i know when you see whats happening in italy, will this, the Political Developments in italy that cause more instability and less reform there, are you concerned that will have a further destabilization impact . No. I mean, i think it comes at a time where we are starting to see an exit, a crisis exist by europe. Whether this will stabilize, i hope not. I mean, i think the italians are reasonably rationale. And they know what monti brought to them in terms of reducing the italian overprice on the market. And thats you know, thats big money. So it comes at the moment where, you know, europe was probably start to go exit the crisis. Unfortunate, but the euro system i think now is stronger than it was a year ago. And weve seen a lot of change in the u. S. Election as well as talk about whoever won whether there would be increased trade tension wes china. We heard from tim cook last week and he was asked what would it take to make more products in the United States . But it wasnt necessarily price. It was about skills. But this comes down to and i mentioned this earlier, this comes down to this area of value added trade. You take one product, theoretically an ipad is made in china, but very well of the value of that goes back to china. How should we be viewing trade flows and who is getting what from individual items . The reality of trade today, we should say this is made in the world. Not made in japan, not made in germany, not made in china, not made in the u. S. Made in the world. 60 of trading manufacturers is in some the import content of exports at rate worldwide was 20 years ago, is 40 now and might be 60 20 years from now. So its a totally different world from the one many people have in mind where, you know, your country was producing country which my country was consuming and this was a sort of relationship, hands, export this, import that. In this world, the global value changes. You need to import in order to export and use your competitive advantage. So its a different pattern and i think this has consequences which most governments have, i think, not yet really realized, which is why weve launched this initiative together with the oecd to sort of measure trading at a value and we will probably be unveiling the first batch of trade in value added numbers mid january. Our statistical missions are working extremely hard. These guys wont have a great christmas break, but i think that will look very, very, very difference from what we have today. Just in terms of if we could talk about it, i suppose as youre saying, the important thing about that is its not them, its not us or you as a country, its everybody is involved in the making of a product. So it actually means we should all make sure that we could the supply chain is the greatest driver. Absolutely. And it probably will lead to paying less attention to bilateral balances, which mean very little as long as you import a lot of on things which you export. And take the example of this big herb of the u. S. china trade imbalance. If you measure the u. S. Measure trade imbalance in value, it is much smaller than what it is today. And thats a good note to finish on. We will talk to you. Ar r nonk touy y ermuch yit all r if we stay a little longer by the lake . And transparency. And thats why we like it. Thank you so much, pascal lamy. And that last point will be the interesting one Going Forward. You put that to the u. S. Congress and you say, look at the trade between u. S. And china in Value Added Services and there isnt much of an imbalance. It will be interesting how that changes the political landscape. Already weve seen the u. S. Talk about tim balances were seeing in germany, in switzerland and theyve indicated that china is taking steps. Youre right, theyre losing their favorite punching bag. Well be back with you, ross, in a bit. Hopefully the weather will improve behind you and the rain stops. It was actually heavy, nice, big fat snowflakes. As it has stopped snowing, theyve got slanted windows so it looks wet on the windows. Ross westgate interviewing pascal lamy there. As indicated, chinas growth has improved, maybe on track to pass beijings 7. 5 gdp target for the year. But the trade data highlights the vulnerability of risk from abroad. High, unus. Hi, kelly. Thats exactly right. A lot of people here have been talking about how the trade data highlights the fragility of the export numbers here. The exports came in at 9 growth. But that was supposed to be a slowdown. Tim port numbers came in at zero growth and a lot of people were expecting to see an easing of 2 growth. So the figures that came out really were underscoring peoples concerns, especially in the Manufacturing Sector about the health of the growth demand, specifically to europe as well as to the United States. So the shipments to the u. S. Looks pretty bag. They clocked negative growth. This is very rare. And the shipments to europe were even worse. We saw shipments to europe fall by 18 year on year. This is the worst performance that we saw in three years. So overall, peek are quite concerned about the fiscal cliff, theyre worried about whether or not the countries in those parts of the world will continue to by chinese aid goods. If you look at those figures in isolation would show a negative picture. However, if you look on the