RESOLUTION EC 221

FORUM: ECONOMIC COMMITTEE

QUESTION OF: Measures to counter the side effects of the trade war between China and USA

SUBMITTED BY: Holy See

CO-SUBMITTERS:Bahrain, Bosnia & Herzegovina, Central African Republic, Mexico, Sweden, Turkmenistan, Republic of Korea, Australia, Colombia, Spain, Qatar, Indonesia, Kuwait, Turkey.

STATUSPassed

Defining trade barriers as restrictions set by the government that have the effect of creating difficulties for imports or exports for a country, such as tariffs, import licenses, trade defense, or subsidies, 

 

Recognizing that free markets and open trades are essential for the prosperity of the nation and the advancements of industries and economy,

 

Deeply concerned that the trade barriers and tariffs create conflicts between countries and obstruct the process and goal of establishing a more free and fair trading atmosphere for both the MEDCs and LEDCs, 

 

Implores the member states to consider their actions when placing tariffs and introducing subsidies, especially the impact of those actions to the LEDCs, 

 

Reminding all nations of the trade war currently happening between the United States and China,

 

Stressing that it is illegal to apply tariffs to only one country without adequate explanation,

 

Noting that it is difficult for countries to trade resources in the same way in the coronavirus pandemic,

 

Recognizing that nations open to free trade have prospered significantly faster than closed economies and that globalization has increased the average living standards around the world and lifted many countries out of poverty,

 

Affirming that some sectors competing with imports could be hurt by foreign competition which would result in a decline in the industry and higher unemployment in the short term, but protectionism will be costly for the whole economy,

 

Acknowledging that concerns regarding unfair trade practices are legitimate but trade war is not the solution,

 

  1. Urges Member Nations to promote a greater degree of trade liberalization and a reduction of world market trade barriers in order to reduce the third-party impacts of the trade war between the United States of America and the People’s Republic of China through the following measures:
    1. Working in tandem with the United Nations Conference for Trade and Development (UNCTAD) to mitigate tariff inflexion and percentage surges by:
      1. collaboration with the World Trade Organization (WTO) to identify deliberate instances of currency manipulation and domestic subsidization to maximise marginal profits
      2. monitoring the private benefits of tariffs and trade restriction violations on officials that hold high ranks in the government to   prevent regulatory capture through political lobbying
      3. provision of bond-indexed data to the UNCTAD to analyse the effects of protectionist measures of the USA and China on the markets of the trading partners of the nations
      4. utilizing this data to develop a tariff reduction formula under the Swiss Formula or the Kennedy Linear Cut Formula to achieve average tariff reduction targets in line with the goals of the Tokyo and Uruguay Trade Round
    2. enforcing the Most Favoured Nation status guarantee to nations through the General Agreement on Trade and Tariffs and via membership of the WTO through the following measures:
      1. approving the decisions made by the Appellate Body of the World Trade Organization regarding the implementation of retaliatory trade restrictions in response to accusations of protectionism
      2. acknowledging that decisions made by the World Intellectual Property Organization (WIPO) are made on a case-by-case basis and patents issued by the WIPO are classified in context of international trade by the Strasbourg Agreement
    3. comprehensive investigations into the impacts of protectionism by the USA and China on Less Developed Countries (LDCs) to protect the import of raw materials via:
      1. establishing guiding principles on the quantity of trade restrictions like quotas and tariffs that can be imposed on raw materials
      2. comparing the debt-to-GDP ratio of a nation with its balance of trade to establish a quantitative indicator for the impact of the protectionist policies on local exports;
  2. Recommends to Member Nations to commit to combatting all the various forms of protectionist measures and work towards the rectification of discriminatory measures that distort international trade through the following measures:
    1. organizing an annual conference for all Member Nations of the United Nations called the “United Nations Summit for Agricultural Subsidies”
    2. establishing the objectives such as:
      1. developing a comprehensive joint plan of action to negotiate reductions in the level of agricultural subsidies offered by developed nations, to mitigate spillover impacts of the trade war
      2. gaining increased commitments from member nations to exhibit freer market trade for agricultural goods and encouraging to other limited countries to exhibit a greater degree of preference erosion;
  3. Invites Member Nations to allow greater contributions from the World Trade Organizations to mitigate the impacts of the trade war through:
    1. creation of a permanent panel under the WTO to review any and all allegations of intellectual property theft in collaboration with the World Intellectual Property Organization (WIPO) with the following provisions:
      1. appointing 15 judges for terms of nine years in office, elected by the United Nations General Assembly with no more than one judge of a given nationality being appointed to the panel at a time
      2. immediately reporting any cases of potential intellectual property theft to the panel for a verdict to be made instead of enacting any form of retaliatory protection as in the case of the USA-China trade war
      3. mandating that decisions made by the panel provide two aspects: whether the accused party is deemed to be guilty and the economic persecution or rate exemption to be enacted if a party is deemed guilty
      4. expecting nations to adhere to the verdicts of the panel once made
      5. having the judge process selection of the Appellate Body be strictly  up to the WTO’s Dispute Settlement Body (DSB) by also expecting member states to respect the DSB’s selection of new judges;
    2. creating an indicator to establish the level of protectionist policies and trade barriers implemented by a nation which would be used to determine a certain value for which nations would be expected to target reduction in protectionism to be added to the 2030 Agenda in the Doha Agreements, based on the following parameters:
      1. Tariff rates to trading partners and average tariff percentage
      2. Level of subsidies offered to goods with volatile price and inelastic demand
      3. Preference erosion currently practiced
      4. Contribution to the MAST Team’s Non-Tariff Measure Taxonomical Classification System
    3. Maintaining the current objectives and mandate of the Appellate Body of the WTO through more nations signing the Marrakesh Agreement and promising greater contribution to the reduction of trade barriers;
  4. Emphasizes the need for a platform supervised by the United Nations, the government representatives and experts from the United States and China will get together to discuss the trade war to form a treaty which later will be proposed to the governments of both countries and will:
    1. set a certain reduced percentage of tariffs which both member states will have a say in and will not change in 10 years if both states reach a consensus in order to avoid trade deficits and secure the trading rights of both countries
    2. suggest a renovated property and intellectual right agreement where China and United States will also shape an action plan to create stronger litigation for intellectual property theft
    3. create mutual policies regarding the number of exports both countries purchase from each other and set a minimum limit for varying fields such as agriculture and energy
    4. suggest both states to leave the practice of forcing foreign businesses to share their technology in exchange for market access, if the both states consent to it
    5. grant the right to annul the treaty with the consent of the United Nations if the state of infringement of any party is perpetual;
  5. Encourages member states to pass stock market laws on ensuring that foreign companies in particular, wishing to go public on stock exchanges:
    1. declare any and all forms of ties with government including: 
      1. government ownership
      2. government contracts
    2. meet all privacy and security standards, both local and international, by:
      1. engage in no unlawful surveillance on civilian
      2. pose no national security threats;
  6. Further calls upon member states to delist or issue warnings to any publicly traded companies that do not meet the expectations above, by:
    1. issuing warnings from stock exchanges and legal authorities notifying the company and their shareholders in question of suspicions of the company not having met the guidelines above
  7. Reminds all contracting parties wishing to resolve disputes regarding foregien reserves and currency manipulation to consult fully with the International Monetary Fund (IMF) and in such consultations all member states involved must accept all numerical and statistical findings from the IMF in regards to foreign exchange problems.
  1. 8.Encourages the initiation of an intergovernmental non-profit organization with the help of the World Trade organization which will:
    1. a. Solely provide consultation and won’t be allowed to take binding decisions for the companies, 
    2. b. Be suitable for willing American companies in China and Chinese companies in the United States so that businesses will overcome the trade war with minimal damage where:

                     i.companies from the United States trying to sustain a business in China will be encouraged mainly to map out a long-term    plan of  action for cultivating products tailored for the Chinese market, 

                    ii.US-based companies to collaborate with local businesses in China in order to ascertain the market with injunction compelling investments from domestic businesses companies from China trying to sustain a business in the United States will be encouraged to build a strong business foundation also in their own country so that they would be less affected by global fluctuations