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Rutgers Model United Nations 2 - IDIA

Rutgers Model United Nations 2 - IDIA

Rutgers

Rutgers Model United Nations 1 Policy Dilemma The concept of international trade is as old as society itself and has become one of the driving factors of the world economy. Within this intricate global trade network, few are experiencing as many challenges as Least Developed Countries (LDCs). The United Nations (UN) classifies an LDC as having "weak human and institutional capacities, low and unequally distributed income, and scarcity of domestic financial resources". 1 LDCs tend to rely on the exportation of raw materials, basic commodities, and simple manufactured goods which makes them extremely vulnerable to changes in global trading policies. While the Millennium Development Goals (MDGs) aimed to halve the population living in poverty by 2015, poverty remains rampant worldwide and is exacerbated by the rapidly growing population. Despite the proportion of impoverished people in LDCs decreasing from forty-six per cent to twenty-seven per cent in the last fifteen years, almost a third of the developing population remains under the international poverty line of USD $1.25 a day. 2 Despite this chilling statistic, various improvements in trade practices across the world can greatly benefit the currently disenfranchised persons of LDCs. As it stands today, the liberalization of international trade has resulted in a decline of poverty in LDCs by almost 120 million individuals from 1993 until 1998. 3 However, the rising world population exerts an ever-increasing strain on the fragile economies of LDCs, and offsets the benefits of previous trade liberalization. Trade liberalization is the removal or reduction of barriers on the free exchange of goods between nations. A free exchange of goods implies little or no government involvement in regulating the price and volume of imported or exported goods. Trade protection, simply put, is the implementation of direct tariffs or Non-Tariff Barriers to 1 "UN-OHRLLS :: Least Developed Countries - About LDCs." UN-OHRLLS. Web. 22 Feb. 2012. . 2 United Nations Millennium Development Goals." UN News Center. UN Department of Public Information, Sept. 2010. Web. 22 Feb. 2012. . 3 "Human Development Reports - United Nations Development Programme (UNDP)." Indices & Data. Web. 22 Feb. 2012. .

Rutgers Model United Nations 2 Trade (NTBTs) in order to secure the price of an item at a certain level to prevent it from outcompeting the domestic producers or other exporters. 4 Comparative advantage describes the ability of a nation to manufacture and export certain goods at a production cost that is lower than that of the importing country; it is achieved through factors such as cheaper labor, cheaper raw materials, and reduced or non-existent licensing costs. Trade protection as mentioned previously, exists in two forms: direct tariffs and indirect NTBTs. The NTBTs currently implemented by nations include Anti-Dumping (AD) legislation, import/export quotas, import licensing requirements, export subsidies, and countervailing duties (CVDs) among many others. 5 Both LDCs and developed nations engage in trade protection, however developed nations use it more often to combat the aforementioned comparative advantage that LDCs have. While industrialized nations tend to use protectionist strategies primarily in agricultural and textile imports, LDCs tend to have reversed protective tariffs on manufactured goods. For example, the European Commission (EC) currently spends roughly 2.7 billion Euros to subsidize the domestic growth of sugar while effectively undermining the import of cheaper tropical sugarcane. 6 Furthermore, average protection of agriculture in developed nations is nine times higher than manufacturing, which has a dramatic impact on the generally agriculture and textile based economies of LDCs. Rapid population growth has put the development of international trade on the immediate agendas of policymakers, forcing a plethora of scientists, economists, policy makers, worker unions, and Non-Governmental Organizations (NGOs) to collaborate on making the global trade network more efficient and profitable. There are several methods to streamlining trade in LDCs, among which is the ratification of Free Trade Agreements 4 Evans, Graham, and Jeffrey Newnham. "Chapter 2." The Penguin Dictionary of International Relations. London: Penguin, 1998. Print. 5 Yu, Zhihao, A model of Substitution of Non-Tariff Barriers for Tariffs; The Canadian Journal of Economics, Vol. 33, No. 4, 2000 6 “European Commission- Export Subsidies on Sugar Dispute." WTO. 19 May 2005. Web. 22 Feb. 2012. .

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