World Trade Organization - Harvard Model United Nations

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World Trade Organization supply side (the country that exports the goods, which in these cases are the low-income countries). The studies recommended improvements in customs and export agencies and other trade-related institutions. 15 When is Aid Effective? The Paris Declaration The Paris Declaration on Aid Effectiveness sets out the principles that nations should follow to maximize effectiveness of their aid. These include: 1) ownership – the donor country must respect the right and responsibility of the partner country to exercise authority over its own development policies and strategies; 2) alignment – donors will align their assistances as stated by the partner country’s own development agenda and will try to support the partner country’s own systems (regulatory, technological and others) rather than developing their own parallel system in the country; 3) mutual accountability – donors and partners must be committed to mutual accountability and transparency. Donors should provide transparent and timely information regarding their aid flows to the partner countries while partner countries must periodically assess the progress in the implementation of development strategies; 4) harmonization – donors and partner countries will establish common arrangements, simplify procedures for policy planning and implementation, and share information with each other (making it effective). These principles ensure that the partner countries take ownership of their own development strategies and that donor countries listen to and understand the specific needs of each partner country. Giving partner countries more say in how their reforms are undertaken will ensure greater success rate. Effectiveness of aid for trade Despite having clear principles that would theoretically maximize the effectiveness of aid for trade, it is hard to quantify the effects of aid for trade since there are no clear indicators of aid for trade’s direct effect on economic growth. Some donor countries use indicators like the increase in trade volume and “adoption and implementation of trade policies that positively impact the poor” that are often meaningless because the effects of those policies often cannot be achieved or measured within the donor aid for trade program’s life cycle. These indicators are further influenced by other factors such as other donor aid, domestic producers improving trade performance through private investments, and domestic government policies that help the poor. Thus, it is often hard to trace the growth of trade and the economy directly to a specific donor’s aid program. 16 Measuring effectiveness is complicated by the fact that it is difficult to measure the positive outcomes of these trade-related assistances. For some countries, simply changing the government’s mindset about why export-related infrastructure is important (when other alternatives like subsidies can quickly spur production and economic growth) can be a significant achievement. For others, changing approach to trade-related assistance such as focusing on revising tax and regulatory systems can also be an achievement. 17 Current Situation South America South America has experienced tremendous growth within the past decade, driven mostly by a boom in prices for the region’s commodities. Countries in South America were early in following trade liberalization recommendations by the GATT and WTO and many have already formed regional trade pacts such as the Andean Community (CAN) and MERCOSUR economic blocs. These economic blocs have facilitated regional cooperation in trade, promoted exports in various countries, and led to the creation of trade-related institutions in most of the countries. All these factors have led to an average of 20% increase in exports between 2001 and 2005. 18 South American countries’ main trade challenges include the large number of trade negotiations going on at same time. Due to the fast pace and large number of negotiation meetings, policymakers do not have enough time to properly analyze options and seek the most optimal solutions. The focus on forming trade agreements also takes attention away from government support for research & development and improvements in regulation for product standards. 19 Another important issue to be resolved is the lack of cohesion between different trade support institutions (TSI) throughout the region. The various national, local, sectoral, and technical TSIs often have insufficient coordination and duplicate functions among themselves. As a result, the TSIs can’t optimize the use of their resources in helping governments develop regulation in such areas as branding, certification, supply chains, and design. 20 8 Specialized General Assembly Agencies
World Trade Organization West & Central Africa West and Central Africa contains many land-locked, low-income, and economically stagnant countries that have struggled to integrate into the world trading system. Due to political instability, many countries have been recovering from decades of civil war and face severe challenges rebuilding institutions and governments. Economically, this region is among the poorest in the world. The region’s economy heavily depends on commodity exports, with 75% of all exports being oilrelated. The lack of diversification in exports makes the region especially vulnerable to volatile prices in oil. To make matters worse, a combination of weak physical and technological infrastructure, deadlocked bureaucracies, and weak private sectors prevent these countries from reaching their growth potentials. 21 The area faces low integration in the global economy. Most countries in the region do not yet have effective strategies for developing trade with developed nations and have minimal understanding and awareness of the WTO and the rules of the international trading system. Thus the challenge lies in how to raise awareness of the need for regional and global integration of these economies. Another challenge for the region is building productive trading capacity. Only a few state-owned large corporations in the mining sector and a few Small and Medium Enterprises (SMEs) dominate the economy. Extremely high taxes and stringent government regulations discourage entrepreneurship and innovation while lax regulations enable the export of low quality goods. North Africa Case Study: Bananas in the Caribbean The European Union (EU) introduced the Common Organization of the Market in Bananas in 1993 to change the tariff/quota regime for banana imports to a tariff only regime. This increased competition for traditional Caribbean exporters of banana from newer African, Caribbean, and Pacific (ACP) banana producers like Cameroon and the Ivory Coast. Due to this trade liberalization reform and reduction in trade barriers, banana exports from the Caribbean islands fell as much as 50%. In order to aid the 12 traditional ACP banana suppliers (which were Belize, Cameroon, Cape Verde, Côte d’Ivoire, Dominica, Grenada, Jamaica, Madagascar, Saint Lucia, Saint Vincent and the Grenadines, Somalia General Assembly and Suriname), the EU adopted the Special Framework of Assistance for Traditional ACP (SFA). The SFA provided financing programs to help countries develop production/ marketing strategies, obtain market intelligence, and create policies promoting the diversification of the products. Funding for diversification programs grew from about 12% of the total funding in 1999 to about 64% in 2004. Although the SFA was a well crafted agreement, it did not reach its potential due to poor allocation system. The allocation system should have helped smallscale banana farmers that would have dropped out of the banana market since the small scale of their production meant that they were especially sensitive to the drop in international prices that resulted from the elimination of the quota by the EU. 22 Numerous banana farmers in St. Vincent abandoned banana cultivation. Those who stayed in production were mainly fair trade producers. Case Study: One Village One Product Initiative One successful example of a program that stimulated the local economy and made it into an integral part of a country’s export is Japan’s “One Village, One Product” (OVOP) strategy. The objective of OVOP is to empower rural communities so that they can use their comparative advantages in local crops to expand, brand, and export them for economic growth. OVOP’s origins stem from the Oita Prefecture in Japan. Financing and agricultural recommendations by the national and local governments promoted the production of select goods with high added value, resulting in each village in Oita focusing on a single, competitive, staple product such as shiitake mushrooms and kabosu. In all, the program has created a total of 810 products ranging from vegetables to meat and fruits, generating a revenue of approximately $US 1.15 billion in 2004. 23 9
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