Economics Essay Example for Free

Economics Essay Part I Introduction The Doha Development Rounds of the World Trade Organization were negotiations aimed at lowering trade barriers and facilitating healthier economic ties around the world. The rounds began with a ministerial-level meeting in 2001 which was held in Doha, Qatar. This was followed by several other rounds held in locations such as Mexico and Hong Kong with related negotiations held in other locations including Paris, Switzerland, and Geneva. In 2006, the progress of the talks were put at a standstill created by a divide which placed the developed nations such as the United States, the European Union, and Japan on one side and the major developing nations such as India, China, Brazil, and South Africa on the other. The divide was mainly over conflicting interests with regard to several pending issues. Four of those issues namely agriculture, textile and clothing, drugs, and market access for developing and least developed countries are discussed in this paper. Since the first round of the WTO talks, agriculture has taken the center stage. In fact, many critics claim that the standstill of the talks were mainly due to developed and developing nations inability to find acceptable common ground in the issue of agriculture’s three â€Å"pillars†. These were identified as market access, export subsidies, and domestic support. A prevailing argument in the matter is the issue of the necessary level of cuts in tariffs and domestic support on agriculture to allow developing nations to enter the global market. Currently, high regulatory tariffs in the first world hedge out 3rd world agricultural products such as grain and corn from successfully penetrating the market. What makes it worse is that the United States and the European Union both provide very high subsidies for their farmers. Five years since Qatar, the talks in Hong Kong led to a deal that set the deadline for eliminating all agricultural subsidies for exports by 2013. The Hong Kong talks also required developed countries to accept goods from the world’s poorest nations into their respective markets. This marked a milestone for the United Nations, which had been striving for such an achievement for several years. However, the following talks at Geneva failed to achieve a consensus for genuine policies on reducing farming subsidies and lowering agriculture tariffs (Effland et. al. , 2006). Textile and Clothing Discussions regarding the treatment of textiles and apparel in the Doha talks were a particular point of contention during the 2006 round. Originally, discussions on this area were included within the overall Non-Agricultural Market Access (NAMA) negotiations. However, developments in the talks led many analysts to suspect that the developing countries were asking far more than they were willing to give. There were also the unconfirmed reports of a hidden Chinese agenda to monopolize the world textile and clothing market with their outrageously cheap products. These led countries like Turkey to call for the sectoral separation of textile and clothing from the NAMA. However, none of the bigger players like the U. S. and the E. U. seemed to be supportive of such a move. The E. U. was against sectoring out textile and clothing from talks on NAMA while the U. S. erely acknowledged the need for â€Å"special treatment† without actually supporting Turkey’s call. The proponents of the sectoring of talks on textiles and clothing claimed that the developing countries were asking for unregulated access to 1st world markets without agreeing to the same. Some organizations such as the American Manufacturing Trade Action Coalition (AMTAC) accused countries such as India and Brazil of supporting ill-balanced tariff reductions that could severely hurt the manufacturing sector of the United States. Another issue that was raised was the prevalence of counterfeit 1st world brands manufactured in the 3rd world. Some private lobbyists contested that before countries like the U. S. would agree to such grave reductions in tariffs in the textile and clothing area, the developed nations’ governments should first demand for a 3rd World crackdown on counterfeit brand manufacturing. The 2006 talks were stalled before any relevant progress could be noted in this area (Barrie, 2006). Drug patents and distribution International debates on healthcare have always disputed the manufacturing and distribution of drugs for treating the world’s most serious diseases like malaria, HIV and AIDS. Although these medicines are easily available in the developed world, they are extremely expensive compared to the meager earnings of those in the developing world. Patent holding companies of these medicines usually charge high prices for their products primarily to cover development costs. Thus although the 1st world has the means to manage vast epidemics of say HIV in countries like Africa, the legal system on patents prevent them from doing so. A previous solution thought about for this issue was the issuance of compulsory license grants to the 3rd world. This would effectively allow them to manufacture the drugs on their own. However, since such countries usually lack the technology and resources to manufacture specialized drugs, the solution did not seem to be effective. The first Doha round had already recognized this problem and had begun on working for a solution. It released a declaration which asked for allowing compulsory licenses for the manufacture of patented drugs to be issued in developed countries provided the drugs manufactured were only to be sold to certain countries, primarily the UN’s list of least developed nations. The Hong Kong talks and the subsequent Geneva talks saw some of the participating entities heeding the declaration with concrete action. Canada had implemented the declaration by year end of 2005 while the European Commissions official journal published Regulation 816/2006 in 2006 which enforced the Doha declaration in the European Union (Gruenberg, 2007). Market access for developing and least developed countries Allowing the developing and least developed nations of the world to have better market access to 1st world economies had always been the overall thrust of the Doha talks. Trade barriers such as tariffs were contended fiercely throughout the talks. Many scheduled cuts on tariffs have been made since 2001. However by the end of 2005, the Hong Kong ministerial declaration acknowledged there should be discrimination of cuts with regards to sensitive products. Hence, countries were allowed a percentage of their original tariff lines on sensitive products. However, the Hong Kong declaration also made concessions to developing countries. Since the tariff cuts were differentially treated, the poorer countries would be subject to lower cuts and longer transition periods for implementation. The provisions on special products were also applied to the 3rd world, thereby protecting their own special products that played major roles in food and livelihood security. While the 2006 round was fruitful in providing some measure of protection for the 3rd world, it has stumbled over the means and modalities by which the tariffs were supposed to be cut especially in the context of the 1st world.  Although there were some commitments made by the end of April in 2006, these failed to materialize. A deadline set by July of that same year was also not met (Effland et. al. , 2006). Part II China a. ) The Peoples Republic of China currently has a per capita GDP of $ 7,593 (80th in the world). Since the 1980s, Chinas economic policies have undergone various reforms to make it more open to trade. The reforms have resulted to Chinas new found openness to global trade. Its main trading partners are the U. S. 21. 4%, Hong Kong 16. %, Japan 11%, South Korea 4. 6%, and Germany 4. 3%. Its main exports are plastics, optical and medical equipment, iron and steel. It imports mainly oil and mineral fuels and machinery. b. ) Two main economic issues involving China are 1. ) its stand on textile manufacturing in the world economy and 2. ) its treatment of Research In Motion (RIM) regarding the release of BlackBerry in Beijing. In the first issue, many critics have accused China of maneuvering the Doha talks on NAMA to allow itself unfettered access to the worlds textile and clothing industry. Since labor in China is so cheap and clothing raw materials so abundant, China could veritably launch a full scale monopoly of clothing and textile if given the chance (Barrie, 2006). In the second issue, China had signed a contract with RIM for the company to release its state-of-the-art PDA, BLackBerry in Beijing. However just a few months before the scheduled release, the Chinese government took advantage of the advertising efforts that RIM had previously exerted and released their own version of the PDA, RedBerry. RIM is currently assessing whether they should press charges but China seems to powerful to actually be affected (Jones, 2006). c. ) Both issues seem to point out the potential and actual abuses that China could and has made because of the great power that its vast economic strength bestows upon it. I believe that there is no other solution to such a situation other than fervent watchfulness of the international community. While Chinas entry into global trade should be celebrated, its belligerent attitude and immense resources should not be taken lightly.