International Model United Nations of Alkmaar 2017 | 9th - 11th of June 2017

IMUNA 2017: Research Report - SpC

Forum: Special Conference 2 (SpC2)

Issue: Improving Legal Standards to Deal with Trade Disputes

Student Officer: Remco Holstege

Position: President

Introduction

Between the United States of America and the EU, Canada and Australia, Poland and India,
and even Thailand and Brazil, trade disputes are an inevitable aspect various member states
endure. This is mainly due to a discord in the rules and regulations for trade of different member
states. As a matter of fact, the World Trade Organisation (WTO) has had to deal with an average of
25 trade disputes each year since its creation in 1995.

Due to various factors, including the rise of international globalisation and the further
development of Less Economically Developed Countries (LEDCs), the relevance of international
trade laws continues to grow. Through the improvement of the standards of international trade
law, the economic development of all member states (specifically LEDCs) would drastically
increase, and lead to the well-being of all member states and their peoples.

Furthermore, the issue also relates to the Sustainable Development Goals (SDGs),
specifically SDG 17 (Partnerships for the Goals). Through the completion of this SDG, SDG 8 is also
partially achieved (Decent Work and Economic Growth). Therefore, it is in the best interest of the
world to improve the international legal standards for trade, in order to avoid the occurrence of
trade disputes between member states.

Definition of Key Terms

Economic Partnership Agreements (EPAs)

Economic Partnership Agreements (EPAs) are agreements between member states, or a

scheme, to create an area where free trade can occur, this allows for all of the economies
within the area to partner together to achieve economic growth between them. An example
of this is the European Union, and the African, Caribbean and Pacific Group of States (ACP).
This increase of economic trade can achieve more employment and sustained economic
growth.
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Free Trade

The term free trade normally refers to an the idea in which economies can exchange goods
and services (mainly through imports and exports) without any restrictions created by the
governments of said economies, such as tariffs or taxes. This is what is normally used in EPAs.
Less Economically Developed Countries (LEDCs)

The term LEDC, refers to countries which are economically underdeveloped, relative to all
countries. Some features of LEDCs are economies which are mostly reliant on primary industry,
such as agriculture. Appendix 1 shows the UNs complete list of the LDCs (Least Developed
Countries) as of May 2016.
More Economically Developed Countries (MEDCs)

The term MEDC, refers to countries which are the most economic developed countries,
relative to all countries. These countries focus more on tertiary (a service, such as teaching),
quaternary (a knowledge based job, such as finance), or quinary (a domestic service) industry.
See appendix II for more information on quinary services.
Trade Dispute

In terms of macroeconomics, a trade dispute refers to a disagreement between member states

and their (international) trade policies. Currently, most disputes between nations are reported
to the World Trade Organisation (WTO).
World Trade Organisation (WTO)

Replacing the General Agreement on Tariffs and Trade (GATT), the WTO is an international
organisation, which mainly deals with the rules and regulations of trade between different
member states. Most trade dispute cases are reported to the WTO in order to help resolve the
disagreements.

Background Information

Trade is an important aspect for fostering the economic growth of a nation. The
interconnectivity of different member states allows for goods and services to be exchanged for
money. This increases the GDP of different economies. Furthermore, more employment occurs in
order to sustain this increase in demand. This allows for more human development as the tax
revenue for governments increases as a result of more employment and a higher GDP. A historical
example of this is the silk road. The silk road was a network of trading routes which connected the
greater continent of Eurasia and all of the large empires within it and allowed for merchants to sell
foreign goods between them. All major member states whom were involved in the silk road (the
Roman Empire, Ancient Egypt, Ancient Greece, Ancient China, Ancient India, the Persian Empire) all
gained immense wealth and grew economically due to the ability to gain foreign goods.
Particularly, cities started to appear along the silk road, and already existing cities started to see

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immense growth in economic and human development as a result of the interconnectedness and
trading between all of these nations, an example of this is Constantinople (or Istanbul).

FIGURE 1. The Silk Road

The world is a giant place, filled with different cultures, philosophies, and ideas. As a result,
different rules, and legal systems are created. This creates a variety of issues when trading in the
global market. This leads to trade disputes between different economies. Furthermore, each
member state has made an agreement or commitment to the World Trade Organisation, and due
to a culture clash, more trade disputes arise as members may have violated these agreements
made with the World Trade Organisation.
The current system of dealing with trade disputes is moderately effective, yet many cases
are left unsolved and inactive. Firstly, a consultation stage takes place, where it is seen whether or
not the 2 member states can settle the dispute by themselves, with minimal help. If this is not
successful, a panel is appointed to come to a decision. For more information about how the WTO
handles trade disputes, see appendix III. Each stage has a time constraint for when this must be
completed. Stage 1 has a constraint of 60 days and stage 2 of 6 months, taking 45 days to set up
the panel.
However, 33% of all cases are inactive or pending. Showing that the current method does
have its drawbacks. Therefore, it is the responsibility of the committee to ensure that the legal
standards of each member states and their trading policies should be increased in order to prevent
the amount of trade disputes. There have been some previous attempts at this, which will be
elaborated on later in this research report.

Major Countries and Organizations Involved

World Trade Organization (WTO)

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 The World Trade Organisation (WTO) is an international organisation which focuses on the
legislations of trade between nations. Its main goal, when created in 1995, was to deal with all of
the international trade between member states of the WTO, and to regulate whether the members
adhere to the agreements they made when entering the WTO. As stated before, they handle most
of the trade disputes between members. All members whom are part of the WTO are most
probably in favour of solving this issue. As stated before, access to trade can allow for all member

states to grow their economies and allows for them to increase their economic output.
FIGURE 2. A Map of all WTO Members and Observers
United Nations Commission on International Trade Law (UNCITRAL)

The United Nations Commission on International Trade Law (UNCITRAL) is an organisation

which is more relevant to the situation at hand. UNCITRAL was established by the UN General
Assembly on the 17th of December 1966 (see the Relevant UN Treaties and Events section for more
information). As UNCITRAL was established in the 1960s, an era where international trade was
growing at an exponential rate. Due to this unprecedented amount of international trade, the UN
sought out to remove or reduce legal obstacles to the flow of international trade and
progressively modernise and harmonize trade laws. As a result, UNCITRAL was created.
UNCITRAL carries out most of its work during annual sessions, and different conventions.
The main manner of working which UNCITRAL uses is by creating model laws, with the hopes that
its members adopt these model laws into their legal systems. This can ensure that all of the
member states have the same legal standards, thus preventing the need for a trade dispute to
occur, through lack of legal harmonization and standards. For a complete list on UNCITRAL, their
members, and time period of membership, see Appendix IV.
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 As this is UNCITRALs main goal, all member states who have endorsed UNCITRAL or are
currently a member state of it, are most likely going to endorse increasing the legal standards.

Timeline of Events

Date Description of event

October 30th, 1947 The GATT, General Agreement on Tariffs and Trade, (the predecessor to
the World Trade Organisation) is signed in Geneva which aimed to reduce
trade barriers.

December 17th, The General Assembly adopts resolution 2205, which creates the United
1966 Nations Commission on International Trade Law (UNCITRAL)

January 1st, 1973 UNCITRAL expands from its then 29 member states to 36

January 1st, 1995 The World Trade Organisation is created, replacing GATT

Relevant UN Treaties and Events

Establishment of the United Nations Commission on International Trade Law, 20 December

1965 (A/RES/2205)

Report of the United Nations Commission on International Trade Law on the work of its
forty-third session, 28 October 2010 (A/C.6.65/L.4)

Arbitration Rules of the United Nations Commission International Trade Law, 15 December
1976 (A/RES/31/98)

Possible Solutions

UNCITRAL does most of its work in annual conferences, where model laws are created.
However, a solution to deal with trade disputes is to make UNCITRAL have conferences more
frequently, or even make it an organisation which works full time. Trade disputes occur often, and if
an organisation worked consistently to gather data from real time occurring trade disputes, they
can create laws more effectively. This can ensure that trade disputes would decrease, as the
legislations adopted are more effective and can tackle the issue at hand.
Another solution would to create EPAs, or Economic Partnership Agreements. This will
allow for free trade to occur between nations. As a result, we can see that, as countries allow for
more trade to occur. As a result, more trade disputes will occur. Through this, UNCITRAL can learn
more and create more model laws for member states. If more free trade occurs, the overall legal
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standard would increase, as more is learnt through more trade occurring. This tackles the issues
and also increases the GDP of the involved member states.
It could also be asked by the United Nations to consult new legislations related to trade
with the WTO or UNCITRAL. Having these consultations could also prevent trade disputes and will
increase the legal standards between all member states. Furthermore, when UNCITRAL consulted
certain trade laws, they can also apply same based laws to different countries, and even include
them in model laws. This will further legislative harmony throughout all member states, and
therefore decrease trade disputes. However, the WTO or UNCITRAL dont specifically have to be
included, any arbitrator to consult the legislation could be in order.

Bibliography

Arbitration Rules of the United Nations Commission on International Trade Law as Revised in 2010.
Arbitration Rules of the United Nations Commission on International Trade Law as Revised in 2010,
documents-dds-ny.un.org/doc/RESOLUTION/GEN/NR0/005/08/IMG/NR000508.pdf?OpenElement.

Cyril.emery. Welcome. UNCITRAL, www.uncitral.org/.

General Agreement on Tariffs and Trade. Wikipedia, Wikimedia Foundation, 5 May 2017,
en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Trade#GATT_and_the_World_Trade_O
rganization.

Maggi, Giovanni, and Robert W Staiger. Trade Disputes and Settlements. 2015, Trade Disputes and
Settlements, www.dartmouth.edu/~rstaiger/TradeDisputes_022215.pdf.

Member States History. UNCITRAL, www.uncitral.org/uncitral/about/origin_history.html.

Report of the United Nations Commission on International Trade Law on the Work of Its Forty-Third
Session. United Nations General Assembly, 2010, Report of the United Nations Commission on
International Trade Law on the Work of Its Forty-Third Session, documents-dds-
ny.un.org/doc/UNDOC/LTD/N10/609/21/PDF/N1060921.pdf?OpenElement.

Reynolds, Kara M. Why Are So Many WTO Disputes Abandoned? 2007, Why Are So Many WTO
Disputes Abandoned?, fs2.american.edu/reynolds/www/Consultations.pdf.

Silk Road. Stratfor, 2012, geography.name/wp-content/uploads/2016/02/Silk-Road.jpg.

UN General Assembly - Legal - Sixth Committee. United Nations, United Nations,

www.un.org/en/ga/sixth/65/UNCITRAL.shtml.

Understanding the WTO - A Unique Contribution. WORLD TRADE ORGANIZATION,

www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm.

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United Nations Commission on International Trade Law. Wikipedia, Wikimedia Foundation,
en.wikipedia.org/wiki/United_Nations_Commission_on_International_Trade_Law.

What Is the World Trade Organisation? WTO,

www.wto.org/english/thewto_e/whatis_e/whatis_e.htm.

WTO Members and Observers. WTO,

assets.weforum.org/editor/G9dCqUHrlLClZwBYcQ6yVrglJ_TGwFtquw6Eb7Z-k6o.PNG.

Appendix/Appendices

I. The United Nations official list of LDCs (as of May 2016)

http://www.un.org/en/development/desa/policy/cdp/ldc/ldc_list.pdf
II. Quinary Industry
http://study.com/academy/lesson/quinary-sector-of-industry-definition-examples.html
III. The WTOs protocol for settling a dispute
https://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm
IV. UNCITRAL and its Member States History
http://www.uncitral.org/uncitral/about/origin_history.html