HagaMUN – 6,7 and 8 March 2020

 HagaMUN 2020Curbing the continuing trade war between China and the USA6th, 7th and 8th of March 2020Gymnasium Haganum, The HagueForum: GA2Issue:Curbing the continuing trade war between China and the USAStudent Officer:Aaron BirdPosition:Chair of GA2IntroductionA trade war affects either two or multiple countries by decreasing the GDP of an affected country as exports decrease due to either trade sanctions or barriers which effectively stagnate all trade from one region to another. The trade war between China and the USA affects a variety of nations, as both nations have multiple great financial and economic relations. The USA and China share 660 billion in trade which is constantly increasing and affects multiple economies allowing them to achieve cheap labour, products, and services. Both China and the USA have implemented tariffs on each other to stagnate exports from one another, with the USA implementing 25% tariffs on a $34 billion market of Chinese goods, which led to China reacting with an increase in duties on $34 billion worth of American products. After these tariffs and sanctions were first placed upon both countries (On July 6th 2018) the USA’s previous largest trade partner (China) was overpassed by both Canada and Mexico meaning that China was no longer as important to the USA as previously thought.The USA first implemented trading tariffs on China to combat and hopefully alter the way in which China implements and regulates its laws on how businesses and the government itself treats and respects its employees. Despite this China did not alter their laws and regulations but countered the USA’s tariff with the implementation of counter-tariffs which affected the USA equally as to the first “economical attack” (of 25%). These tariffs were continually placed upon the two countries, somewhat fighting against each other, embarking in trade talks once in a while, which unfortunately came to no conclusion. The US is taking the ethical side of the situation while China focuses on its economic/financial side/status.Definition of Key TermsTrade War:Is a conflict between two or more countries which results from extreme protectionism in which multiple member states or countries raise or create tariffs or other trade barriers/sanctions against one another in order to combat previous detrimental barriers/sanctions.Tariff:Is a tax/duty paid on a particular class of imports or exports. This tax is specifically provided or dealt within a trade link between two sovereign states, and is often used to provide income for a government or safeguard domestic industry.Economic sanctions: An economic sanction is a penalty placed upon a sovereign state decreasing its exports or imports directly stagnating its economy, placed upon by either one or several member states as seen within the United Nations Security CouncilDiplomatic relations: Refers to the relative communication and collaboration between two sovereign nations specifically relating to political, economic, or war relationsEconomic stimulation: Refers to the active movement and spending of an economy, Background InformationEconomic tensions between China and the USA have increasingly grown since 2018 where both nations have increased and implemented a variety of economic tariffs. China and the USA re-established diplomatic relations and both agreed and went forward with signing a bilateral trade agreement which allowed for the rapid growth of trade between the two large nations. This growth increased from an original $4 billion in exports and imports to $660 billion over the time period between 1979 and 2017. These tariffs have led to a variety of losses in terms of economical, businesses, and governmental gains which has led to a decrease in the quality of life of citizens and the disposable income of all stakeholders.China has shown its interest and publicly displayed its interest in reducing tariffs and increasing trade relations between the two nations to increase the GDP and economic stimulations of the two nations, although the USA has shown little interest in decreasing its tariffs until China follows through with the respective requested implemented rules. The tariffs come to a total tax cost imposed on China by the USA of approx 360bn, whereas China has imposed a total tax cost of 110bn on American goods. The tariffs have been completely proposed and enforced by the USA, which China reacting individually to each tariff, although at a smaller quantity. Although throughout May of 2019 the USA implemented a large $200bn tariff which China did not react to, which later resulted in $60bn from China onto the USA, which did not result in a reaction from the USA. Despite this decrease, both nations have threatened to increase current tariffs, and implement new tariffs which could have detrimental effects on both nations' economies.The main reason and manager for these tariffs is Donald Trump (the current President of the USA), who has implemented a variety of tariffs on China and has publicly recommended a variety of organizations and businesses to find and approach other sources for labour, and products to reduce dependency on China. Which again led to China unveiling further plans to tax American imports, to ensure that the American economy has some backlash for the public display of distrust and disbelief in the Chinese government when treating their civilians, and ensuring their human rights are respected.Effects on ChinaChina has obviously been against the ever increasing trade war between the two economic powerhouses, and states publicly that the USA is to blame for the situation which harms both great economies and neighboring allies. As the USA started first with the tariffs China states that the USA is only placing these tariffs to stunt the growth of China. Reports have detailed often how the increased tariffs are terrible for the Chinese economy and for the living standards and human rights of its citizens who depend on exports for their living. The UN has publically displayed how the trade war is bad for China stating that these tariffs put a big strain on independent organizations and their employees stunting China’s growth, and stagnating the growth of their economy. China relies completely on the US in a large way which can be seen in their reactions to the implemented tariffs, with organizations still attempting to keep up and find other ways to compensate for these losses. On top of this the way in which China is losing exports is beneficial for a variety of other countries which attempt to take its place. Member states and regions such as the EU, Mexico, Vietnam and other previously smaller trader partners, are growing to more substantial levels which directly cuts China out of the equation something China doesn't want but the USA does. To conclude, this trade war is not beneficial for China, although it may come with some advantagesEffects on USAThe trade war has been mostly driven by Donald Trump (The President of the USA), and the USA as a whole. The USA started the trade war, and has implemented tariffs previously before China with China only reacting to what the USA had done. Despite this courage, determination, and confidence displayed by the USA, its consumers, and businesses are being threatened and are somewhat struggling due to the increase export and import costs which have obviously come as a result to the tariffs in which the USA has placed. The USA’s economy is still recovering from the 2008 financial crisis, yet is very strong and has many businesses growing out of nowhere in the USA has grown to utilize the proliferation of technology and media. The consumers and the general public still suffer from the trade war unlike extremely large corporations and the government, and therefore protest and publicly speak for the trade war to come to a stand still. These consumers struggle as they can afford less, and the economy is somewhat damaged as the living standard for the low income population decreases. Despite the detrimental effects of the trade war, the USA has found other trading partners and is looking to improve ties with different nations especially nations within its region or within the UN member states.Major Countries and Organizations InvolvedUnited States of AmericaThe USA has been one of the main two reasons for this conflict, and is also a main factor to the world economy and a main stakeholder for this issue. The USA has a nominal GDP of approximately $21.44 trillion, with a large percentage growth per year. The USA has implemented multiple tariffs on China, and gained much governmental income from the situation at hand.ChinaChina is similar to the USA as it has been a primary factor in the trade war, and is an upcoming and growing nation affecting multiple economies and growing trade relations with the EU as well as the USA. China has also reacted to the many tariffs which have been placed on it by the USA by implementing its own, and therefore the Chinese government has also gained significant income in the situation at hand.Timeline of EventsDateDescription of eventSeptember 21st, 2011Future USA president Donald Trump publicly announced that China is neither an ally nor a friend.May 3-7th, 2018USA demands that China reduce the trade gap by an approximate $200 billion, but there was no solution or immediate result.July 6th, 2018The USA implements the first tariffs on Chinese goods valued at $34 billion .August 3rd, 2018China reacts to increased tariffs by implementing more tariffs and US based products valued at $60 billion.August 7th, 2018The USA reacts to China’s increased tariffs taxing another $16 billion worth of Chinese goods.August 14th, 2018China files WTO claim against the USA alleging that USA tariffs have damaged China’s trade interests.August 22-23rd, 2018China and the USA meet to discuss the trade war but come to no important conclusions due to mixed values and beliefs.August 24 - December 1st, 2018China and the USA continue to implement new tariffs and increase the tax on previous damaging both economies while complaining about one another publicly.December 2nd, 2018 The USA and China agree to a temporary truce upon the trade war.April 10th, 2019The USA and China agree upon the establishment of various trade deal enforcement offices with the intention of reducing the conflict.May 10th, 2019The USA increased tariffs on China from 10-25% on 200 billion worth of Chinese imported goods.May 13th, 2019China reacts to increased tariffs and prepares to implement more tariffs on the USA in reaction.May 16th - May 31st, 2019China and the USA both develop or create their unreliable entities lists harming each other's economies in the process.June 29th, 2019Trade talks restart, and bans become more relaxed as a result. Tensions are beginning to decrease to a certain extent.June 29th, 2019 - January 1st, 2020Trade tensions relax, and both China and the USA decrease tariffs placed on each other, meaning that the conflict is coming to a halt, although the situation still remains fragile and therefore is dealt with with extreme caution.Previous Attempts to solve the IssueThe trade war between China and the USA is hated by a variety of citizens and businesses, and therefore there have been multiple attempts to solve this issue at hand. The USA and China have both attempted to have discussion and come to a final solution, although as they both believe that their countries deserve a variety of different outcomes, the final deal has still not been agreed on. Both countries have agreed to have discussions and have previously debated and conversed about possible solutions, although despite this, the trade war continues to somewhat continue. These discussions have been completely bilateral and have not really concerned the UN or any NGO’s, therefore a possible future solution could concern the usage of the UN or any UN body or any NGOs which specify in ensuring human rights or trade agreements between countries. One main problem that arises from the discussion has been monitoring compliance, as both nations care deeply about their privacy and sovereignty and aim to protect it at all costs. Especially with China’s idealistic approach to ruling its country and its citizens.The agreement of tariff truces throughout these meetings is ever present signalling that both the USA and China have the ability and economic infrastructure to lift these tariffs showing both have the capacity but not the willingness. It is also everprevailent that China is often more eager to solve the problem than the USA as it gets in the economic growth plan. Despite their different wants and opinions the only main solutions in which they have both agreed and taken part in have been limited to discussions and debated between important speakers and leaders, and occasional small peaceful stagnations within the trade war. These attempts have been somewhat un-successful in the past, although looking at the current trend in which way the trade war is going, it seems that these discussions have come to a relative consensus where both nations agree upon the same thing, “the trade war must stop”.Possible SolutionsList of possible solutions;A discussional committee which would deal with trade wars which specifically affect the human rights of civilians or the living standards. If a committee which dealt with situations like this on global stake was created, it could both work with China and the USA to come to a complete solution, and work with governments/stakeholders, in conflicts similar to this in the future. The committee could even work with a variety of NGO’s or previously established attempts such as the deal enforcement offices.A globally agreed convention which detailed the exact reasons and rules which a government must follow to ensure it does not place another economy in harm's way. To ensure sovereignty wasn’t breached this convention would need to be optional, but could potentially solve the problem at hand, and any future problems both between China and the USA or any other UN member states recognized globally.The solutions to this conflict must take into consideration sovereignty and a countries rights to tax imports, but must also take into account the urgency of the situation and its effects on the many stakeholder which are affected by this conflict directly or indirectly, as a member state or an individual business or consumer.BibliographyAbout the author(s) Nick Leung is a senior partner in McKinsey’s Hong Kong office. “China Brief: The State of the Economy.” McKinsey & Company, featured-insights/china/china-brief-the-state-of-the-economy.“Homepage: U.S.- CHINA: ECONOMIC and SECURITY REVIEW COMMISSION.” Homepage | U.S.- CHINA | ECONOMIC and SECURITY REVIEW COMMISSION, .“A Quick Guide to the US-China Trade War.” BBC News, BBC, 16 Jan. 2020, news/business-45899310.Rfi. “US-China Trade Talks in Attempt to Solve Crippling Trade War.” RFI, RFI, 8 Jan. 2019, rfi.fr/en/asia-pacific/20190108-us-china-trade-talks-attempt-solve-crippling-trade-wat.Silver, Caleb. “The Top 20 Economies in the World.” Investopedia, Investopedia, 29 Jan. 2020, insights/worlds-top-economies/.“Talking the Way to Calm Trade War Tension, Says JPMorgan Chief.” South China Morning Post, 8 May 2018, business/global-economy/article/2145181/bring-trade-tension-down-notch-and-talk-says-jpmorgan-chief.“Timeline: U.S. Relations With China 1949–2020.” Council on Foreign Relations, Council on Foreign Relations, timeline/us-relations-china.“U.S. Economy at a Glance.” U.S. Bureau of Economic Analysis (BEA), news/glance.“U.S.-China: Economic and Security Review Commission.” The Library of Congress, item/lcwaN0004055/.United Nations. “ Trade War Leaves Both US and China Worse Off.” Trade War Leaves Both US and China Worse Off, 6 Nov. 2019, en/pages/newsdetails.aspx?OriginalVersionID=2226.“US-China Trade War.” South China Morning Post, ics/us-china-trade-war.“The US-China Trade War: A Timeline.” China Briefing News, 17 Jan. 2020, news/the-us-china-trade-war-a-timeline/. ................
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