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Issue: Improving the fair participation of African countries in protected markets Forum: Fourth Committee of the General Assembly (GA4) Position: President of the General Assembly & Deputy President Name: Efe Aydoğ & Eva Ulmann Introduction As the Second World War ended, movements of African nationalism and independence were widespread across the continent of Africa. Various local peoples demanded the end of imperialism, and numerous battles were fought against former imperialist and neo colonial powers. African and Asian economies were considered to be at the same level in the 1960s, with both regions newly gaining political independence over European imperial powers. However, many economists claim that their political independency was overshadowed by economic dependency on the then so-called “First World”, which consisted of European powers and the United States. While some Asian states blossomed with their economies through an increase in local trade, African countries did not see such a leap in their economies. Most African economies are dependant on agriculture, and the lack of industrial growth caused an underdevelopment in the continent. The underdevelopment fed economic failures, which later on lead to bloody conflicts. With the boom of globalisation in the 1990s, a movement of African Unity had emerged. The World Bank and the International Monetary Fund supported this movement, unlike the Pan-Africanism movement of the 1960s, as it supported the newly set up global economic system that made world economies interdependent. Between 1983 and 2000, more than 7 unions throughout the continent were set up, and local trade was encouraged and intercontinental trade was on the rise. However, corrupt governance, lack of Foreign Direct Investments (FDI) and sometimes too much FDIs that made African countries too dependent on large corporations broke nations apart. In this chair report, an analysis of the involvement of African states in protected markets of the globalized 21st century economies will be made. Haarlem Model United Nations 2016 Research Report A chart from the Economist shows GDPs per capital in African states Definition of Key Terms Protected markets Protected markets are markets for which certain legal and financial requirements are needed to enter, or markets which use taxes, tariff barriers, levies or state subsidies to prevent some economic parties from participating them. Protectionism Protectionism is used in economics to describe the economic policy which restrains trade between countries or states through methods such as but not limited to restrictive quotas, tariffs on imported goods and other governmental regulations. These measures are intended to regulate fair competition between imported goods and services and those produced within the country. This policy contrasts with the ideology of free trade, where governments try to Haarlem Model United Nations 2016 Research Report reduce the barriers to trade with foreign nations. Protectionism is said to have a largely negative impact on economic growth as well as on economic welfare in general, although this varies largely between different countries and depends considerably on the policy and macroeconomic environment. Economic domination Economic domination describes the position of a country which has raised its manufacturing power and its navigation to such a high degree of development that no other country can sustain or benefit from free competition with this country. Economic domination is generally achieved by means of protective duties or restrictions. General Overview From the passage of the Tariff of 1816 to World War II, protectionism was the policy of the United States, "switching to free trade only in 1945, when most of its industrial competitors had been wiped out" by the war. In the late 19th Century, Germany, too, used protectionist measures to grow its industry. After WWII, Japan followed that model. It has also been argued that Deng Xiaoping's post-Mao policies were inspired by List, as well as recent policies in India. Various policies have been used to achieve protectionist goals, including: From the passage of the Tariff of 1816 to World War II, protectionism was the policy of the United States, "switching to free trade only in 1945, when most of its industrial competitors had been wiped out" by the war. In the late 19th Century, Germany, too, used protectionist measures to grow its industry. After WWII, Japan followed that model. Various policies have been used to achieve protectionist goals, including: Tariffs Tariffs or taxes are typically imposed on goods that are imported. They vary with regard to different types of goods. The tariffs are supposed to support local producers by increasing the cost to importers and increasing the price of the goods in local markets. Thus, the quantity of imported goods will decrease; this is usually beneficial for local industries. Import quotas Haarlem Model United Nations 2016 Research Report Import quotas increase the market price of imported goods by reducing their quantity. Administrative barriers Countries sometimes try to use their administrative rules (e.g. environmental standards, regarding food safety, electrical safety, etcetera) to introduce barriers to imports. Anti-dumping legislation Anti-dumping laws prevent "dumping" of cheaper foreign goods that could cause local firms to close down. In practice however, anti-dumping laws are most commonly used to impose trade tariffs on foreign exporters. Direct subsidies Government subsidies, for example cheap loans or lump-sum payments, are sometimes given to local firms that cannot compete well against imports. These subsidies are supposed to help local firms adjust to the world markets. Export subsidies Governments often use export subsidies in order to support export. Exporters receive payment, in the form of a percentage or proportion of the value of the goods exported. Export subsidies help to increase the amount of trade in a country. Exchange rate manipulation A government can raise the cost of imports, as well as lower the cost of exports by selling its own currency in the foreign exchange market. Thus, the value of its currency will be decreased, which will lead to an improvement in the trade balance of the country. On the long run, however, this will very likely lead to inflation in the country, which will do the exact opposite, which is to raise the cost of exports and reduce the cost of imports. Employment-based immigration restrictions, such as but not limited to labour certification requirements or numerical caps on work visas. Political campaigns advocating domestic consumption. These campaigns could be seen as extra-legal promotion of protectionism. Preferential governmental spending, when a government selectively distributes its money. An example of this is the Buy American Act, federal legislation that called upon the United States government to prefer U.S.-made products in its purchases. Haarlem Model United Nations 2016 Research Report In the modern trade environment, various other initiatives apart from tariffs have been called protectionist, including the imposition of restrictive procedures on imported goods. Even free trade agreements are often subject to protectionist provisions, such as but not limited to copyright, intellectual property and patent restrictions that are beneficial to large companies. Protectionism is frequently criticised as being disadvantageous to the people it is meant to help. A good alternative would be free trade, which allows countries to specialize in the production of products and services in which they have a relative advantage, thus creating more jobs than it destroys. According to economist Stephen Magee, the advantages of free trade outweigh the disadvantages by approximately 100 to 1. Free trade supports equal access to national resources for domestic and foreign participants alike. A high level of freedom and mobility between countries has been shown to lead to considerably greater development than, for example, aid programs. Additionally, the fact that workers in less developed countries accept low-paying jobs from corporations in developed countries demonstrates that their other prospects of employment are worse. The growth of manufacturing in developing countries, which results Haarlem Model United Nations 2016 Research Report from free trade, creates competition amongst producers, which could result to lifted wages and increased living conditions. Protectionism has also been called one of the major causes of war. Proponents espouse this theory by pointing to the continual warfare in the 17th and 18th centuries among European states whose governments were predominantly protectionist, the American Revolution, which seemed to have been influenced by British taxes and tariffs, as well as the protective policies which preceded both the first and the second World War. Frédéric Bastiat commented the following on this subject: ‘’When goods cannot cross borders, armies will.’’ Protectionist measures taken between 2008 and 2013, according to Global Trade Alert. After the end of World War II, most First World countries have implemented the policy to eliminate protectionism by means of free trade policies which were to be enforced by international treaties and organisations like the World Trade Organization. However, certain policies have been accused of being protectionist, including the Common Agricultural Policy in the European Union and agricultural subsidies and ‘’Buy American’’ provisions in the United States. In April 2009, heads of the G20 meeting in London pledged: ‘’We will not repeat the historic mistakes of protectionism of previous eras’’. The Global Trade Alert monitors adherence to this pledge, by providing up-to-date information and useful commentary. Even though many of these countries had already committed to such a policy before April 2009, the World Bank has reported 17 of these 20 states as having imposed measures that restrict trade since then. Haarlem Model United Nations 2016 Research Report The Organization for Economic Co-operation and Development (OECD) released a study report, named ‘’Policy Priorities for International Trade and Jobs’’, evaluating a study from the International Collaborative Initiative on Trade and Employment (ICITE), which shows that protectionist trade measures are likely to suppress growth and put further pressure on labour markets, instead of protecting or preserving jobs. It describes market openness as a significate element to boost growth and employment in today’s environment. Additionally, the report highlights the positive role of trade in raising incomes and average wages by analysing the intricate interactions between trade, globalisation and labour markets. Besides, it invalidates the alleged impact of imports on jobs, the major argument against freeing up trade, by explaining there is no relation between imports and unemployment. In fact, the opposite is true: both exports and imports are known to increase productivity growth while helping create higher paying jobs. Together with openness to trade, other policies should be implemented, such as a positive investment climate, macroeconomic policies, adequate social safety nets and flexible labour markets; all to be able to encounter the full benefits of trade. When accompanied by effective employment and education policies, trade liberalisation is bound to go hand in hand with better economic performance, in both developed and developing economies alike. Major Parties Involved Haarlem Model United Nations 2016 Research Report International Collaborative Initiative on Trade and Employment (ICITE) The purpose of the International Collaborative Initiative on Trade and Employment exists of seeking a better understanding of the way in which trade interacts with employment and developing conclusions relevant to this policy. The ICITE has the opinion that international investment and trade are important contributors to economic growth and development. The ICITE further aims to support the expansion of knowledge about the issues that go together with this subject, including the consideration of policy implications. In the future, the ICITE will create a register of data resources, support discussion among involved parties, as well as supply resources with information for both policy-makers and the public. Organisation for Economic Co-operation and Development (OECD) The object of the Organisation for Economic Co-operation and Development (OECD) is to encourage policies that are bound to increase the social and economic well-being of people from around the world. The OECD provides a forum where governments can collaborate, share their experiences and search for solutions to common problems. Additionally, the OECD compares and evaluates data, which include measured global flows of investment and trade, in order to predict future trends and set global standards from taxes to the safety of chemicals. Haarlem Model United Nations 2016 Research Report Timeline of Key Events 1816 Tariff of 1816 is passed 1959 Central Bank of West African States is formed 25 May 1963 Organization of African Unity is created 1976 African Economic Community formed 28 May 1975 ECOWAS (Western Africa) is established 18 October 1983 ECCAS (Central Africa) is established 17 February 1989 Arab Maghreb Union is set up 17 August 1992 SADC (Southern Africa) is established 5 November 1993 Common Market for Eastern and Southern Africa is established 1 January 1995 World Trade Organization is formed 25 November 1996 Intergovernmental Authority on Development is established 4 February 1998 Community of Sahel-Saharan States is created 9 September 1999 Sirte Declaration demanding cooperation on many levels including economic levels signed by African states 30 November 1999 EAC (Eastern Africa) is established 9 July 2002 Organization of African Unity disbanded, replaced with the African Union October 2008 African Free Trade Zone (AFTZ) announced December 2009 Resolution 64/236 issued by the UNGA May 2015 Proposals for the African Central Bank 2023 African Economic Community to implement single currency over member countries 2028 Projected completion date for the African Central Bank Haarlem Model United Nations 2016 Research Report Previous attempts to resolve the issue Hitherto, some organisations have been set up in order to tackle the issue of improving the fair participation of African countries in protected markets. These include the International Collaborative Initiative on Trade and Employment (ICITE), which aims to seek a better understanding of how trade interacts with employment, promote discussion on these problems and develop conclusions that are relevant to its policy, and the Organisation for Economic Co-operation and Development (OECD), which sets out to support policies that will ameliorate the social and economic well-being of people around the world. In December 2009, resolution 64/236 was published by the General Assembly, in which the GA decided to organize the United Nations Conference on Sustainable Development at the highest possible level in 2012. Possible Solutions An attempt towards a monetary union and a fiscal union is desired by the African Union. As West Africa is expected to have an economic boom just as South Asia had in the 1980s, the first step towards more involvement of African countries in free trade and protected markets lies in putting a mark to conflicts. Threats of terror caused by radical militants and insurgents need to be eradicated, and this requires an improvement in the control of central governments. International coalitions could support African governments’ fight against such threats. It is also seen that there are numerous African economic communities as shown in the diagram below. Strengthening unity with an economic alliance that contains all subcommunities is ought to be established. Haarlem Model United Nations 2016 Research Report International investment and trade are important contributors to economic growth and development. Research of the Organization for Economic Co-operation and Development (OECD) shows that further trade opening, by means of non-tariff barriers or reduction of tariffs, could stimulate job creation and thus entail worldwide economic benefits. A sustainable approach to such an opening of markets asks for policies that aim to help communities as well as workers adjust to the more competitive environment that will result from market opening. Evaluation of specific policy options is hard, given the complicated relationship between employment and trade. Even where this relationship is slightly clearer, perspectives on suitable policy responses might vary. Haarlem Model United Nations 2016 Research Report Appendix/Appendices - http://www.hmun.nl/ "Future We Want - Outcome Document .:. Sustainable Development Knowledge Platform." Future We Want - Outcome Document .:. Sustainable Development Knowledge Platform. N.p., n.d. Web. 01 Feb. 2016. https://sustainabledevelopment.un.org/futurewewant.html Bibliography "Trade-oriented Economy Boosts Growth, Employment." Trade-oriented Economy Boosts Growth, Employment. N.p., n.d. Web. 21 Jan. 2016. http://english.cri.cn/6826/2012/05/24/191s701737.htm "Protectionism." Wikipedia. Wikimedia Foundation, n.d. Web. 21 Jan. 2016. https://en.wikipedia.org/wiki/Protectionism "Open Market." Wikipedia. Wikimedia Foundation, n.d. Web. 21 Jan. 2016. https://en.wikipedia.org/wiki/Open_market "About the OECD." - OECD. N.p., n.d. Web. 30 Jan. 2016. http://www.oecd.org/about/ "International Collaborative Initiative on Trade and Employment (ICITE)." TADICITE OECD. N.p., n.d. Web. 30 Jan. 2016. http://www.oecd.org/site/tadicite/ "Future We Want - Outcome Document .:. Sustainable Development Knowledge Platform." Future We Want - Outcome Document .:. Sustainable Development Knowledge Platform. N.p., n.d. Web. 01 Feb. 2016. https://sustainabledevelopment.un.org/futurewewant.html Haarlem Model United Nations 2016 Research Report