Rutgers Model United Nations 2 - IDIA
Rutgers Model United Nations 11 AD laws remain a significant concern for LDCs today, despite their preferential status within the WTO. The WTO provides special concessions on the amount of textiles, agricultural products, and raw materials such as coal can be exported to other nations at a reduced tariff rate. 33 However, the WTO lacks any comprehensive rules that govern the volume of trade accepted by developed nations, which results in continued discrimination against cheaper goods from LDCs. In the eyes of LDC's policy makers, the optimal outcome is the increased volume of trade for all commodities, without exception. As mentioned previously, ninety-seven per cent of all goods from LDCs are exempt from AD laws, tariffs, and import quotas. 34 The catch is that the remaining three per cent of goods, which are not exempt, are the most crucial and widely produced in LDCs. These exceptions include textiles, clothing, and agricultural products. Therefore, the LDCs are effectively barred from trading their most common goods and are forced to compete with the markets of developed nations. 35 Developing nations feel as though they are entitled to free access to all markets with all of their goods traded at internationally set prices. The current level of market protection discourages LDCs from making investments in their agricultural and manufacturing sectors as their products are automatically placed in a category of lower value by the current WTO structure. LDCs would like to see a productive compromise reached at the end of the Doha Round which would allow for increased Foreign Direct Investment (FDI) in the key sectors of their economy: agriculture, textiles, and mineral resource extraction. 36 LDCs welcome the implementation of the Enhanced Integrated Network (EIF) as a means to effectively distribute FDI funds to areas of highest priority. 33 "Regional Trade Agreements: Effects on Trade." World Bank Resources. Web. 27 Feb. 2011. . 34 Ibid. 35 "LDC-IV - Press Kit." UN News Center. UN. Web. 29 Feb. 2012. . 36 "Least Developed Countries (LDC)." UNIS. 9 May 2011. Web. 29 Feb. 2012. .
Rutgers Model United Nations 12 Despite the reluctance of developed nations to completely open up their markets, many LDCs are negotiating what is known as "aid for trade" programs. In these bilateral and multilateral agreements, LDCs receive humanitarian and technological assistance in return for their goods. 37 While this is a temporary solution, with little potential for promoting self-sufficiency in LDCs, it is nonetheless a viable one in the current state of affairs. Developed States On the other end of the world trade spectrum, developed nations are extremely cautious of trade liberalization, as their developed economies are very sensitive to global price fluctuations. Developed nations which have large agricultural and textile sectors, like the United States and Germany, for example, prefer to keep tariffs high and are known to use AD disputes a lot more than LDCs. 38 The Multi-Fibre Agreement (MFA) is a prime example of the protectionist alliances formed by developed nations to resist trade liberalization of certain goods. The MFA uses import quotas, rather than tariffs, to limit the exposure of developed markets to the handcrafted textiles exported from LDCs. 39 Ironically, labor-intensive manufacturing such as cotton weaving, which in turn leads to textile export, is one of the first steps that LDCs take when beginning to industrialize. This agreement demonstrates the overall policy of developed nations in regards to trade liberalization. While willing to reduce tariffs, AD disputes, and import quotas on goods that account for little or no trade volume in LDCs, developed nations continue to protect the most crucial sectors to LDC development. Developed nations are not entirely opposed to trade liberalization, however, as they look forward to extending FTAs to current LDCs. In a recent meeting of the 37 "Aid For Trade." WTO. 2012. Web. 29 Feb. 2012. . 38 “Global Trade Liberalization and the Developing Countries -- An IMF Issues Brief." Web. 22 Feb. 2012. . 39 Deardorff, Alan V. "Market Access for Developing Countries." Diss. University of Michigan, School of Public Policy, 2000. Research Seminar in International Economics. 14 Aug. 2000. Web. 29 Feb. 2012. .