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HERITAGE M.U.N. 2012 Economic & Social Council UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL (ECOSOC) Trade Liberalization and the Economy Enhancing Energy Security through Development of Alternative Sources of Energy

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Page 1: UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL (ECOSOC) · HERITAGE M.U.N. 2012 – Economic & Social Council Letter from the Executive Board Dear Delegates, I would like to take this

HERITAGE M.U.N. 2012 – Economic & Social Council

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL

(ECOSOC)

Trade Liberalization and the Economy

Enhancing Energy Security through Development of Alternative Sources of

Energy

Page 2: UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL (ECOSOC) · HERITAGE M.U.N. 2012 – Economic & Social Council Letter from the Executive Board Dear Delegates, I would like to take this

HERITAGE M.U.N. 2012 – Economic & Social Council

Letter from the Executive Board

Dear Delegates,

I would like to take this opportunity to formally welcome you to the United Nations

Economic and Social Council of Heritage Model United Nations: The Third Session 2012.

On my behalf, I assure you I will try to make this experience worth remembering. I will be

assisted by my Vice-Chair Kartikeya Batra who will help me in doing so. We will try and give

you the best debate possible on the given agendas. I would like to give you a few pointers

which shall help you in the preparation of your research.

Firstly, the background guide is the starting point of your research. It is just the tip of the

iceberg and should be used as a beginning point for much more detailed analysis and

observations pertaining to the agenda. Do much more research so that you are aware in

committee.

Secondly, maintain decorum. Have a thorough knowledge of the Rules of Procedure.

Remember you are the ambassadors of your respective countries and it goes without saying

that diplomacy and good conduct should be maintained at all times.

We hope to have a rigorous learning experience from you and are positive that you will have

a lot to draw from the committee for future conferences.

Also please note that only news reports, facts and articles from sources like

Reuters, ECOSOC official reports and journals and UN official reports shall be

accepted in the committee.

Feel free to approach any of us in case you have doubts or clarifications regarding the agendas.

Sameera Rao Kartikeya Batra

Chairperson Vice-Chair

Page 3: UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL (ECOSOC) · HERITAGE M.U.N. 2012 – Economic & Social Council Letter from the Executive Board Dear Delegates, I would like to take this

HERITAGE M.U.N. 2012 – Economic & Social Council

COMMITTEE DESCRIPTION-

The United Nations Economic and Social Council (ECOSOC) constitutes one of the principal

organs of the United Nations. It is responsible for coordinating the economic, social and

related work of 14 UN specialized agencies, their functional commissions and five regional

commissions. ECOSOC has 54 members; it holds a four-week session each year in July. Since

1998, it has also held a meeting each April with finance ministers heading key committees of

the World Bank and the International Monetary Fund (IMF). The ECOSOC serves as the central

forum for discussing international economic and social issues, and for formulating policy

recommendations addressed to member states and the United Nations system.

What is the mandate of the Economic and Social Council?

The functions and powers of the Economic and Social Council are stipulated in Chapter X of

the Charter of the United Nations. The complete text of the UN Charter is accessible

at: http://www.un.org/aboutun/charter/index.html.

How is the work of the Economic and Social Council organized?

The Council holds several short sessions and many preparatory meetings, round tables and

panel discussions with the members of civil society throughout the year, to deal with the

organization of its work. It holds a four-week substantive session in July, alternating between

New York and Geneva , which is organized in four segments (High-level, Coordination,

Operational Activities, Humanitarian Affairs and General Segments). At the High-level

Segment, national cabinet ministers and chiefs of international agencies and other high

officials discuss major economic, social and environmental policy issues. A Ministerial

declaration is generally adopted on the theme of the High-level Segment, which provides

policy guidance and recommendations for action. The official languages of the Economic and

Social Council are Arabic, Chinese, English, French, Russian and Spanish. The year-round

work of the Council is carried out in its subsidiary and related bodies.

FURTHER RESEARCH LINKS-

Reports of the Ecosoc - http://www.un.org/en/ecosoc/docs/report2012.asp

Subsidiary Bodies- http://www.un.org/en/ecosoc/about/subsidiary.shtml

Statements made by the President of the Ecosoc -

http://www.un.org/en/ecosoc/president/statements.shtml

Agenda- Trade Liberalization and the Economy

Important definitions-

Trade Liberalization- The removal or reduction of restrictions or barriers on the

free exchange of goods between nations. This includes the removal or

reduction of both tariff (duties and surcharges) and non-tariff obstacles (like

licensing rules, quotas and other requirements). The easing or eradication of

these restrictions is often referred to as promoting "free trade."

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HERITAGE M.U.N. 2012 – Economic & Social Council

Economy- An economy consists of the economic systems of a country or other area;

the labor, capital, and land resources; and the manufacturing, production,trade, distribution,

and consumption of goods and services of that area.

Types of Economies-

A market based economy may be described as a spatially limited social

network where goods and services are freely produced and exchanged according

to demand and supply between participants (economic agents) by barter or a medium of

exchange with a credit or debit value accepted within the network. Capital and labor can move

freely across places, industries and firms in search of higher profits, dividends, interest,

compensations and benefits. Rent on land allocates this generally fixed resource among

competing users.

Contemporary Capitalism is a market economy in which most of the production capacity is

owned and directed by the private sector. Government role is limited to provide for defense

and internal security; administer justice and prisons; make laws and regulations; enforce

contracts, laws and regulations; correct market imperfections and failures; ensure full

employment without inflation; promote balance economic growth and development; provide

for the poor, children, and elderly; protect and assist in emergencies and natural disasters;

provide basic opportunities to all members of society; prevent future calamities and disasters;

and, pursue national goals established by society at large such as protection of the

environment and natural resources.

On the other hand, traditional socialism is a command-based economy in which markets and

the free exchange of goods and services, as well as manufacturing, production, trade and

distribution are replaced or done by government central planning and state owned enterprises.

In this economy all private owners of capital (called capitalist) and of land (called landowners)

are not allowed or banned; and the only permitted private ownership is of consumption goods.

Capital and land are assigned by the state and movement of labor is severely restricted. There

are no profits, dividends, interest or rent. Labor compensation and benefits are decided by

central planners.

Finally, a mixed economy contains elements of both capitalism and socialism which means a

market based economy with a varied degree of government central planning and state owned

enterprises.

World Trade Organization-

The World Trade Organization (WTO) is an organization that intends to supervise

and liberalize international trade. The organization officially commenced on January 1, 1995

under the Marrakech Agreement, replacing the General Agreement on Tariffs and

Trade (GATT), which commenced in 1948. The organization deals with regulation of trade

between participating countries; it provides a framework for negotiating and formalizing trade

agreements, and a dispute resolution process aimed at enforcing participants' adherence to

WTO agreements which are signed by representatives of member governments and ratified by

their parliaments. Most of the issues that the WTO focuses on derive from previous trade

negotiations, especially from the Uruguay Round (1986–1994).

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HERITAGE M.U.N. 2012 – Economic & Social Council

The organization is attempting to complete negotiations on the Doha Development Round,

which was launched in 2001 with an explicit focus on addressing the needs of developing

countries. As of June 2012, the future of the Doha Round remains uncertain: the work

programme lists 21 subjects in which the original deadline of 1 January 2005 was missed, and

the round is still incomplete. The conflict between free trade on industrial goods and services

but retention of protectionism on farm subsidies to domestic agricultural sector(requested

by developed countries) and the substantiation of the international liberalization of fair

trade on agricultural products (requested by developing countries) remain the major

obstacles. These points of contention have hindered any progress to launch new WTO

negotiations beyond the Doha Development Round. As a result of this impasse, there has

been an increasing number of bilateral free trade agreements signed.

INTRODUCTION

Free trade is an intricate global phenomenon; it touches upon other important national and international topics, including employment, poverty alleviation, wage inequality, economic growth, globalization, hazards such as smuggling, environmental degradation and the divide between the developed and the developing worlds.

Free trade refers to the unhindered flow of goods and services between and within countries. Trade liberalization entails reduction to the various trade barriers to facilitate relatively unrestricted trade transactions. These trade barriers include government imposed tariffs, quotas and other measures of protectionism. However, different countries possess different outlooks towards opening their domestic markets to foreign competition.

The resulting integration of the world economy has raised living standards around the world. Most developing countries have benefited; in some, incomes have risen dramatically. The developing countries have now acquired an important position in world trade —they now account for one-third of world trade, up from about a quarter in the early 1970s. Many developing countries have substantially increased their exports of manufactures and services relative to traditional commodity exports: manufactures have risen to 80 percent of developing country exports. Moreover, trade between developing countries has grown rapidly, with 40 percent of their exports now going to other developing countries.

But the progress has been uneven. While countries in Asia such as India, China, Singapore etc have benefited greatly, progress has been less rapid for many other countries, particularly in Africa and the Middle East. Countries that are in the initial stages of development have seen their share of world trade decline substantially, and without lowering their own barriers to trade, they risk further marginalization. The reasons for their marginalization are complex and deep rooted including deep-seated structural problems, weak policy frameworks and institutions, and protection at home and abroad.

BACKGROUND

Outsourcing

Outsourcing refers to the practice of sub-contacting some or all of the company’s internal operations/jobs to a third party entity. Outsourcing can include anything from outsourcing all management of IT to an IBM or EDS to outsourcing a very small and easily defined service, such as disaster recovery or customer care service, and everything in between

Trade liberalization has brought with itself the trend of outsourcing various functions of an organization to another. This system works on the theory of comparative cost advantage, wherein the opportunity cost of production is lower. Sometimes these functions are also

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HERITAGE M.U.N. 2012 – Economic & Social Council outsourced to third party organizations outside the geographical boundary of the parent organization i.e. offshore outsourcing. However, this poses a serious threat to the labor market. This is because, while outsourcing may provide benefits to less developed countries or the global society as a whole, in the form of rising wages or increasing standards of living - these benefits are not secure. Further, in the process of outsourcing, an internal department’s equipment as well as personnel is sold to a service provider, who may retain the workforce on worse conditions or discharge them in the short term.

CRITICAL THINKING

Outsourcing is a difficult proposition. The failure rate of outsourcing relationships remains high. The

client is seeking to get better service, often at lower costs, than it would get by doing the work

themselves The vendor, however, wants to make a profit. Can you suggest measures to manage this

tension and ensure a successful outcome for both, the client and the vendor?

Protectionism

Protectionism is the economic policy of restraining trade between nations by imposing tariffs and quotas on imported goods. Most developed countries wish to eliminate protectionism through agreements, international treaties and organizations like the World trade organization. Despite this, many of these countries still place protective and/or revenue tariffs on foreign products to protect some favored or politically influential industries such as agricultural products or labor intensive manufactures (e.g., construction) where developing countries have a comparative advantage. While economists vehemently oppose protectionism, many governments feel that it is necessary and serves as the economic means to achieve a country’s political goal.

Export subsidies

In order to facilitate the growth of a certain economic sector, many governments provide concessions and incentives to the producers in the form of tax-waivers, enhanced credit system etc. Often in order to encourage export of goods, exporters are provided with export subsidies which reduce the overall cost incurred by them, reducing the price paid by the foreign importers. This substantially increases the profit margins of the producers and significantly adds the GDP. However, this handicaps the indigenous industries of the importing nations by exposing their domestic producers to compete with foreign goods at depressed prices, thereby posing a serious threat to their domestic labor market and simultaneously intensifies the competition faced in the global export market. Export subsidies can also be perpetual inflation machines and are greatly discouraged by the WTO.

Consumers vs. Producers

Trade liberalization provides the consumer with access to a variety of international goods, most of which are available at prices cheaper than those of domestically manufactured ones. The consumer stands to gain by choosing the best quality product at the least possible price. However, the flipside to this is that the local producers get washed away in this stiff competition as the goods produced by them do not enjoy a popular share of the market demand. Though this competition for survival may seem as an incentive for indigenous industries to perform better, it seldom does so, rendering many unemployed and pushing the poverty line further lower.

“Developing countries face higher tariffs on processed goods than on commodities; this is one of the

reasons that countries in the initial stages of development are heavily dependent on a few

commodities. Typical example, Burundi, where 98% of the exports are coffee, tea and cotton.”

- Andrew Walker, Source: BBS News, 29 April 2002

Page 7: UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL (ECOSOC) · HERITAGE M.U.N. 2012 – Economic & Social Council Letter from the Executive Board Dear Delegates, I would like to take this

HERITAGE M.U.N. 2012 – Economic & Social Council PLEASE NOTE:

The information provided in the study guide is for research purpose only and cannot be

quoted as proof unless from individual sources accepted by the Executive Board.

Dumping

If a company exports a commodity at lower prices than what it is charging for it in the domestic market. It is said to be “dumping” that particular commodity. Opinions differ on whether this is unfair competition or not. While the WTO has not prohibited it, most governments take action against dumping to protect their domestic industries. The Anti-dumping Agreement under the WTO allows governments to act against dumping where there is genuine (“material”) injury to the competing domestic industry. In order to do that the government has to be able to show that dumping is taking place, calculate the extent of dumping (how much lower the export price is compared to the exporter’s home market price), and show that the dumping is causing damage or threatening to do so. Therefore, a detailed investigation has to be conducted according to specified rules first. If the investigation shows dumping is taking place and domestic industry is being hurt, the exporting company can undertake to raise its price to an agreed level in order to avoid anti-dumping import duty.

PAST INTERNATIONAL ACTION

General Agreement on Tariff and Trade (GATT)

UN agency for promotion of free trade between signatory countries (called contracting parties). Formed in 1947 in Geneva, its objective was to counter the devastating effect of

Page 8: UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL (ECOSOC) · HERITAGE M.U.N. 2012 – Economic & Social Council Letter from the Executive Board Dear Delegates, I would like to take this

HERITAGE M.U.N. 2012 – Economic & Social Council protectionist measures. GATT instituted a rule-based multilateral trading system for trade in both goods and services through a series of negotiations (called 'rounds'). It succeeded in achieving reduction in the average tariff on manufactured goods from 40 percent to about 5 percent in the industrialized nations, and in obtaining varying degrees of promised reductions from the developing nations. Its approach was based on two non-discriminatory principles, the Most favored nation and national treatment, and Reciprocity. It worked to eliminate all non-tariff barriers and import quotas, and advocated use of countervailing duties to fight dumping and to negate the effects of subsidies. On January 1, 1995, after the culmination of Uruguay Round, GATT was replaced by World Trade Organization (WTO).

Doha Development Declaration - 2001

The World Trade Organization adopted this declaration at the 2001 Fourth Ministerial Conference in Doha, Qatar, to assist developing countries in implementing WTO agreements, covering issues related to agriculture, services, industrial tariffs, investment, trade and competition policy.

WTO Ministerial conferences

Several other ministerial conferences were held other than the Doha declaration namely the

Hong Kong declaration, 2005; the Cancun declaration, 2003; the Seattle declaration,1999; the

Geneva declaration,1998; and the Singapore declaration 1996, each discussing the various

aspects of trade liberalization and working towards eliminating its challenges.

Various countries have come together and formed trade associations in order in order to

promote unrestricted trade transactions within member nations and ensure increased

development through aid and cooperation. Some of these organizations are; European Free

Trade Association (EFTA); North American Free Trade Agreement (NAFTA); Organization of

Petroleum Exporting Countries (OPEC); Association of South east Asian nations (ASEAN);

South Asean Association for Regional Cooperation (SAARC) and the Organization for

Economic Cooperation and Development(OECD).

RECOMMENDATIONS

The aim of the ECOSOC in this session is to bridge the divide between the developed and the developing nations through trade liberalization and globalization. Delegates are required to work and reach a consensus wherein the interests of both the developed and the developing countries are catered to.

Sustained economic growth as the way to human progress

Free markets without government “interference” allow for the most efficient and socially optimal allocation of resources

Economic globalization is beneficial to everyone

Privatization removes inefficiencies of the public sector

Governments should mainly function to provide the infrastructure to advance the rule of law with respect to property rights and contracts

Stages of Economic Integration

The level of economic integration throughout the world is deepening. Although it is rare for the development of relationships between countries to follow a strict pattern, formal economic

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HERITAGE M.U.N. 2012 – Economic & Social Council integration often takes place in stages. It begins with the lowering and removal of trade barriers and culminates in the creation of an economic union.

The first step in economic integration is the establishment of free trade agreements (FTAs) or preferential trade agreements (PTAs). FTAs eliminate import tariffs and quotas between signatory countries and can encompass a whole spectrum of trading activity ranging from a few sectors to all international trade. Signatory nations are not required to harmonize economic policies or regulations and movement of labor, and capital need not be included in the agreement. In addition, signatory nations maintain independent trade policies with countries outside of the agreement. One key aspect that is important for the functioning of FTAs is a framework for rules of origin for third-party goods entering the free trade area. Goods produced within the free trade area may cross borders tariff free and manufacturers must fulfill certain requirements to prove that the exported goods were in fact produced in the exporting country. Prominent examples of FTAs include the North American Free Trade Agree-ment (NAFTA) and ASEAN Free Trade Area (AFTA).

A customs union (CU) is the following step in economic integration. In addition to the elimination of internal barriers to trade, the union also requires signatory countries to harmonize and coordinate external trade policy. Examples of external trade policy harmonization include a common external tariff and import quotas on products entering the CU from third-party countries and anti-dumping measures. A key benefit of CUs over FTAs is the elimination of rules of origin — any product entering the CU area would be subject to the same import tariffs and quotas. Since maintaining and enforcing rules of origin requires costly, extensive documentation by all FTA members and leads to trade delays, this elimination results in administrative cost savings and efficiency gains. As with any benefit, the gains have a cost. Member countries give up a degree of control over an independent trade and foreign policy.

A common market (CM) offers a higher level of economic integration. In addition to the aspects of a CU, the common market removes all barriers to mobility of labor and capital and non-tariff barriers to trade such as regulatory treatment of product standards. As a result, a significant harmonization of policy is expected. For example, countries will need to standardize worker qualifications and certifications to allow free movement of labor across borders. In addition, common markets often see a convergence of fiscal and monetary policies due to the increased economic interdependence within the region and the effect that one member country’s policies can have on other member countries. A common market offers greater economic efficiency as labor, capital, and goods can easily respond to economic signals, move easily between countries, and increase efficiency in the allocation of economic resources. Simultaneously, greater economic integration severely constrains member countries’ abilities to carry out independent fiscal, monetary, and economic policies.

Current Situation

The current Doha Development Round has been the most contentious in the history of the GATT and reflects a changing international trade system. Earlier trade rounds including the Uruguay Round primarily involved developed countries and their concerns. However, over the past two years, the global trade regime has expanded to include most of the developing world and formerly more closed economy countries like China and India. The increasing economic weight of these countries in the global economy as well as expected higher rates of growth in the future allows these countries to effectively voice their own concerns about international trade. Many developing countries have concerns about liberalization in sectors like agricultural in which they are not internationally competitive. Protection and nurturing of domestic industries in the manufacturing and service sectors are also a high-priority for developing nations due to these sectors’ ability to absorb growing labor forces, low-income individuals, and low-productivity farmers. On the contrary, developing countries want to liberalize sectors in which they are competitive. These include agriculture, textiles, and apparel. With such stark differences, it will not be easy to reach an agreement to conclude this round. As stated by the Carnegie Endowment, a global think tank, “Global trade is carried out through myriad two-way trade relationships between countries that have different sets of

Page 10: UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL (ECOSOC) · HERITAGE M.U.N. 2012 – Economic & Social Council Letter from the Executive Board Dear Delegates, I would like to take this

HERITAGE M.U.N. 2012 – Economic & Social Council assets, capabilities, and vulnerabilities. Differences in the size and skills of workforces, suitability for cultivating different agricultural crops, and amount of capital available for investment mean that a particular trade rule change will affect countries differently. Finding a mix of trade policy changes that offers opportunities for all, or even for most, is complex and difficult.”

North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA) is a multilateral free trade deal between

Canada, Mexico, and the United States. The agreement eliminates or reduces tariffs in

agricultural, textiles, automobiles and other industries; and creates intellectual-property

protections and established a dispute-resolution mechanism.102 Proponents of NAFTA

ultimately hope to create a Free Trade Agreement of the Americas that would encompass all of

North and South America.

Statistics paint an impressive picture of NAFTA. Canada’s exports to NAFTA partners

increased 173 percent in value from pre-NAFTA levels. Its exports to the US alone grew from

US$116.8 billion to US$316.8 billion. US exports to Mexico and Canada grew by 157 percent

from US$142.0 billion to US$364.5 billion. Mexican exports to the US and Canada grew by 392

percent and 237 percent, reaching US$212.3 billion and US$5.2 billion, respectively.104

Furthermore, trade with NAFTA partners accounts for more than 80 percent of Canadian and

Mexican trade and more than a third of U.S. trade.

Although the economies and trade volumes of all three countries have grown since NAFTA’s

implementation, it is hard to conclude direct causality between NAFTA and economic change.

The comprehensive report, “The Effects of NAFTA on U.S.-Mexican Trade and GDP,” yielded

three main conclusions: 1) U.S. trade with Mexico was growing before NAFTA’s

implementation, and would likely have continued to grow with or without the deal on a scale

that “dwarfs the effects” of NAFTA itself; 2) the direct effect of NAFTA on U.S.-Mexico trade is

fairly small, and thus the direct impact on the U.S. labor market is also small; and 3) overall,

the NAFTA deal has expanded U.S. gross domestic product (GDP) “very slightly,” and has had

a similarly small, positive effect on the Canadian and Mexican economies.

Nevertheless, according to Gary Clyde Hufbauer and Jeffrey J. Schott, two experts at the

Peterson Institute for International Economics and the authors of NAFTA Revisited:

Achievements and Challenges, NAFTA’s basic impact on North American companies is clear.

“NAFTA was designed to promote economic growth by spurring competition in domestic

markets and promoting investment from both domestic and foreign sources,” they write. “It

has worked. North American firms are now more efficient and productive. They have

restructured to take advantage of economies of scale in production and intra-industry

specialization.”

Similarly, trade experts C. Parr Rosson, III, C. Ford Runge, and Kirby S. Moulton published a

paper arguing that although preferential trading arrangements can actually divert trade in the

short-term—and can cause labor-market disruptions that are painful to some workers—they

are expected to have major long-term benefits.

NAFTA has received its share of criticism since its inception. A major concern among critics is the significant loss of American jobs. Because labor is cheaper in Mexico, manufacturers moved parts or all of their production from high-cost US states to Mexico. Between 1994 and 2002, the US experienced a net loss of 879,000 jobs, 80 percent of which were in manufacturing. Industries that were particularly affected include motor vehicles, textiles, computers, and electrical appliances. Critics argue that manufacturers that remained in the US suppressed wages to remain competitive.

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HERITAGE M.U.N. 2012 – Economic & Social Council Often during union organizing drives, manufacturers would use the threat of moving the factory. Workers would often choose the factory and union membership subsequently de-creased. No longer facing the unions’ collective bargaining power, manufacturers suppressed wage growth.110 Economists explain the loss of jobs as part of a structural shift in the US economy.

Free Trade Agreements are complex and controversial.

Often during union organizing drives, manufacturers would use the threat of moving the

factory. Workers would often choose the factory and union membership subsequently de-

creased. No longer facing the unions’ collective bargaining power, manufacturers suppressed

wage growth.110 Economists explain the loss of jobs as part of a structural shift in the US

economy.

Critics also claim that NAFTA has negatively affected Mexicans. US government subsidies for

agribusiness such as the 2002 Farm Bill that subsidized U.S. farmers by as much as 40% of

net farm income allowed American farmers to export corn and other grains to Mexico below

cost. The Mexican government did not adequately prepare small farmers in Mexico for the

transition. Instead, most of the $1.4 billion in budget of Procampo, a government program

meant to provide a minimum income for every farmer, goes to large-scale farmers in north

Mexico. Increasing competition from the US also contributed to market concentration over the

past decade with advocates for subsistence farmers claiming that the big tortilla maker Grupo

Maseca controls 85% of the market for maize flour.111 In addition to changing market dy-

namics, Mexico has also seen an increase in pollution due to NAFTA. Mexican agribusiness

began using more fertilizers and chemicals to increase crop yields which cost approximately

US$36 billion every year in pollution. Small farmers also expand into more marginal land

through deforestation that costs 630,000 hectares per year.

Canada seems to emerge as a major beneficiary without significant downsides from NAFTA. Canada’s GDP has grown at a faster rate than either Mexico’s or the United States’s since 1994, and manufacturing employment levels have held steady. According to the Canadian

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HERITAGE M.U.N. 2012 – Economic & Social Council government, “NAFTA has contributed to enhancing Canada’s attractiveness to foreign investors while providing more opportunities for Canadians to invest in NAFTA partners’ economies. The Agreement’s provisions ensure greater certainty and stability for investment decisions by guaranteeing fair, transparent and non– discriminatory treatment of investors and their investments throughout the free trade area.”

Benefits and drawbacks of trade for development The costs and benefits of trade are different depending on each country’s resources, geography and market. According to Pascal Lamy, “all of the models suggest that the gains to developing countries will be larger the more they open their markets to trade” As countries open up their economies, they guarantee the access of their products to the international market, while, domestically, the customer enjoys a wider variety of products. This step enhances the efficiency of domestic production because of the international division of labor and the increasing global competition. Domestic producers find themselves in need to specialize in a good in which they have a comparative advantage and learn to use their resources efficiently, while at the same time maintaining a high standard of quality. Furthermore, nations that engage in trade have the benefit of transferring new technologies to each other, which is very useful to developing countries specifically. Still, an evident imbalance between developing and developed countries persists because the developed countries remain the major market for world export. Benefits of trade for development as outlined above, at first glance, seem to only relate to trade; however, other aspects that are closely linked to trade for development are prevalent. As trade levels increased over the last twenty years, a significant relation was drawing Foreign Direct Investment (FDI), both incoming and outgoing, which have increase drastically in a direct relationship to trade. However, FDI growth rates have far outpaced that of trade, reaching rates of 1000% over the last twenty years. FDI, when channeled correctly, leads to long-term growth and an overall increase in the standards of living. Although FDI is not usually introduced as a byproduct of trade liberalization, its increased levels along with trade liberalization do follow reason. As trade increases in the economy, an inflow of capital goods occurs as a way to increase productivity and thus profits entities operating in that economy. A number of other benefits are linked to trade liberalization and pursuing development through trade; however, they are not as clear-cut as these but need to be addressed on a case-by-case basis. At first glance, attempting to pursue economic development through trade might seem as the optimal solution for all cases; however, economic minds rarely converge towards the same idea, especially with regards to development. Development through trade presents economies with challenges that some argue make pursuing such a deed as not worthwhile. When discussing FDI, two major challenges seem to be viewed as the main drawbacks. The first is problems with the channeling of FDI funds into the right paths in order to add a significant portion to productivity and living standards within the economy. This has proven to be very difficult as most cases of FDI regarding developing countries and LDCs did more harm than good. Another widely criticized aspect of trade for development is the negative factors associated with trade liberalization on the vulnerable population sectors of the economy. Contingency plans should be formulated in order to offset the effects of negative impacts on the economy, which might in some cases totally circumvent the widespread propagation of benefits associated with trade liberalization due to the extra cost. Another challenge is corruption, which is prevalent within a large number of developing countries and LDCs, circumventing the benefits from bolstering the economy while exploiting the labor for the benefit of the elite, leading to worse standards of living for the general population. “Aid for development, is it the answer?”

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HERITAGE M.U.N. 2012 – Economic & Social Council The OECD defines aid as a voluntary transfer of wealth from one country to another with the aim of benefiting the recipient country. This, however, is not always the case, as many donors use aid as ways to benefit themselves either by favorably influencing the politics of a certain country, opening up market access to the donor country’s goods, or by improving infrastructure for the benefit of the donor. Aid can be a powerful tool in the hands of developing countries and LDCs; and even though aid varies in method of implementation, it is believed to be of utmost benefit to development alongside technical assistance and workers’ remittances. A problem that is always present with regards to aid is its volatility. Many of the donor countries do not undertake legally binding agreements guaranteeing the consistency of aid provided to recipient nations. This proves to be detrimental to many recipient countries that are still in their first stages of development by virtue of their development status reliant on foreign aid to support their weak economies. Countries which have been deprived of access to aid through subsequent years tend to have a decline in the standards of living throughout the economy, which, in some cases, fall below the levels before the start of the aid. Aid also possesses some drawbacks for donor countries. Although aid is perceived to be a duty by developed countries towards their developing and least developed counterparts, donor countries are going deeper and deeper into debt each year partly due to increasing aid bills. As levels of debt increase at higher rates throughout the majority of the developed world it threatens to destabilize the world economy and lower the standards of living even within developed economies, leading to a cyclical decrease in the level of welfare throughout the world economies and thus eliminating gained income through aid. While aid flows into developing countries and LDCs, one might expect inflated growth in the economy. The gap between the expected and actual growth can be traced back to corruption and private consumption. Corruption is widely spread in countries with low development conditions; however, quantifying it has proved to be elusive. Corruption continues to be a taboo subject; thus, the ability to separate corruption costs from wastage, mismanagement and inefficiency is impossible. This leads to more control clauses from the donor countries enforced upon recipients in order to limit these wastages. However, this leads to loss of flexibly to the recipient economy, as it has to deal with more constraints thus lowering the aid efficiency.

“One size fits all?” After viewing a number of different methods of pursuing development, it becomes evident that reaching a clear-cut solution whereby a recommendation can be issued to all countries seeking development is impossible. Certain methods seem to work in some cases, while causing extreme damages in other cases. This leads to the belief that every case needs its own recommendation based on its economic strengths, weaknesses and development status, to name a few economic indicators. Unfortunately, the typical recommendation from the WTO to any developing economy is to fully liberalize. Direct implementation of an economic policy framework without taking into consideration the underlying social, political and economic structure led to a large duality among the society, i.e., large corporations ran by corrupt few elites and the remaining impoverished workers trying to survive with the effects of sudden globalization.

Further Readings - http://unctad.org/en/Pages/Home.aspx

- http://www.wto.org/english/tratop_e/devel_e/devel_e.htm

- http://www.quno.org/geneva/pdf/economic/Background/Patents-Trade-Development-English.pdf

- http://www.ycsg.yale.edu/core/forms/Trade_for_Development.pdf

- http://www.oecd.org/investment/investmentpolicy/1922690.pdf

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HERITAGE M.U.N. 2012 – Economic & Social Council

- http://www.farmfoundation.org/news/articlefiles/816-vsmith.pdf

QUESTIONS TO CONSIDER

Listed below are some concerns which the council wishes to resolve.

1. What about the reality of the current form of globalization, compared to the theory? 2. What has been the impact on the environment? 3. Do the workers enjoy their rights? Or are they eroding? 4. Brain Drain from the Developing Countries to the Developed Countries. 5. Increasing poverty and inequality for the majority. What are the solutions to bridge the gap between the rich and the poor? 6. Should Protectionism be enforced? To what extent? Should the laws apply equally to developed and developing nations? 7. How have the functions of power and politics (which cannot be ignored) affected the process of globalization? Have the old imperial powers just managed to (intentionally or unintentionally) devise a more sophisticated way of appropriating the world’s wealth?

REFERENCES AND SOURCES FOR FURTHER RESEARCH

Meeting the challenges of Globalization in the Advanced Economies: http://www.imf.org/external/pubs/WEOMAY/chapter3.pdf

Global Trade Liberalization and the Developing Countries: http://www.imf.org/external/np/exr/ib/2001/110801.htm#ii

Failure of the Doha round: http://www.globalissues.org/TradeRelated/FreeTrade/dohacollapse.asp

Criticisms of current form of free trade: http://www.globalissues.org/TradeRelated/FreeTrade/Criticisms.asp

Anti-dumping, subsidies, safeguards, contingencies etc.: http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm

Agriculture: fairer reforms for farmers: http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm3_e.htm

Tariffs: http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm2_e.htm

Anti- Dumping Agreement: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm

TERMS AND CONCEPTS

Opportunity cost: cost of the next best alternative foregone or sacrificed to stay in the current

application.

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HERITAGE M.U.N. 2012 – Economic & Social Council

Comparative Cost Advantage: A country having greater relative efficiency in production (lower

opportunity cost) of one good as compared to another country.

Export subsidy: Concessions and incentives provided to exporters in the form of tax-waivers,

enhanced credit system etc, in order to encourage exports.

Offshore Outsourcing: It is an important subset of outsourcing wherein a company outsources

services to a third party in a country other than the one in which the client company is based.

Dumping: The act of charging a lower price for a good in a foreign market than what the

manufacturer charges for the same good in a domestic market.

Tariffs: It is a tax imposed on imported goods. There are 4 types of tariffs:

1. An ad valorem tariff is a set percentage of the value of the good that is being imported.

2. A specific tariff is a tariff of a specific amount of money that does not vary with the price of the

good.

3. A "revenue tariff" is a set of rates designed primarily to raise money for the government.

4. A "protective tariff" is intended to artificially inflate prices of imports and "protect" domestic

industries from foreign competition.

Quotas: An import Quota sets a physical limit on the amount of quantity of a good that can be

imported into a country at a given period in time.

Reserve Agenda: ENHANCING ENERGY SECURITY THROUGH DEVELOPMENT OF ALTERNATIVE SOURCES OF ENERGY

OVERVIEW

Without doubt, one of the biggest challenges that shall face the global economy in the near

future is that of energy security. With the world economy witnessing increasing economic

activity, and developing economies growing at rapid paces, there is massive pressure on the

world’s current energy sources. Making this situation even worse is the fact that as per

estimates, around 85% of the world’s current energy needs are met by non-renewable sources

of energy, which, once depleted, shall not be replenished. It is also important to understand

that supply of non-renewable sources of energy, especially oil, are prone to fluctuations

caused by much larger factors like geo-political tensions. On the other end, production of

energy sources like coal, which are found beneath the Earth’s surface, may hit possible

roadblocks due to socio-economic factors like population displacement caused by mining

operations.

Under these circumstances, it seems viable for the world’s energy economy to

diversify its energy portfolio. In other words, it makes total economic sense for

economies to look beyond the present conventional sources of energy, and exploit

avenues to ensure higher levels of wind, solar, hydroelectric and nuclear energy

occupy the global energy portfolio. While it cannot be denied that such sources are

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HERITAGE M.U.N. 2012 – Economic & Social Council already being exploited across nations, the said figures about massive dependence on non-

renewable sources clearly highlight that the present levels of non-renewable energy being

produced are not as desirable.

Adding further impetus to this argument in favor of renewable sources of energy is the fact

that such sources are also eco-friendly. While the process of combustion of sources like coal

and petroleum is held responsible as a major source of pollution, which has severe

ramifications on the environment, renewable sources, apart from being sustainable, are also

considered as “eco-friendly”, i.e. they are not harmful to the environment.

However, while the above stated credentials being attached to renewable sources are well-

established, there are also some well-founded reservations regarding the same. The overall

potential of hydroelectric, wind and solar energy across different nations, for instance, is one

such issue. Besides, exploitation of these sources will also require significant investments,

and a long-term strategy that shall involve changing the very structure of the current global

energy economy. Similarly, nuclear energy comes with its own limitations, which were fully

exposed in the aftermath of the 2011 Japanese Tsunami.

PRESENT SCENARIO

Non –Renewable Sources

The BP Statistical Review of World Energy 2012 summarizes the global energy scenario, and

throws light on some of the most important facets of the same.

As per this document, world primary energy consumption grew by 2.5% in 2011, roughly in

line with the 10-year average. Consumption in OECD countries, which comprise almost all the

major developed economies of the world, fell by 0.8%, the third decline in the past four years.

Non-OECD consumption grew by 5.3%, in line with the 10-year average, hence reflecting the

growing needs of the emerging economies of the world and hinting towards one of the

possible reasons why energy sources may turn scarce in the future. Noteworthy in this

context is the fact that in 2011, China recorded the largest increment to global consumption

growth (+505,000 b/d, +5.5%) although the growth rate was below the 10-year average. On the

whole, oil remained the world’s leading fuel, at 33.1% of global energy consumption.

As per the report, in 2011, world natural gas consumption grew by 2.2%. Consumption growth

was, however, below average in all regions except North America, where low prices drove

robust growth. Outside North America, the largest volumetric gains in consumption were in

China (+21.5%), Saudi Arabia (+13.2%) and Japan (+11.6%). These increases were partly offset

by the largest decline on record in EU gas consumption (-9.9%), driven by a weak economy,

high gas prices, warm weather and continued growth in renewable power generation.

In the same year, coal consumption grew by 5.4% in 2011, an above average growth figure that

made coal the fastest-growing form of energy outside renewables. Coal now accounts for

30.3% of global energy consumption, the highest share since 1969. Consumption outside the

OECD rose by an above-average 8.4%, led by Chinese consumption growth of 9.7%.

Renewable Sources

Global hydroelectric output grew by 1.6%, the weakest growth since 2003. Heavy rainfall drove

strong growth in North America (+13.9%) – with the US recording the strongest increment on

record – offsetting drought-related declines in Europe and China. Worldwide nuclear output

fell by 4.3%, the largest decline on record, on the back of sharp declines in Japan (-44.3%) and

Germany (-23.2%).

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Global biofuels production stagnated, rising by just 0.7% or 10,000 barrels per day oil

equivalent (b/doe), the weakest annual growth since 2000. In contrast, renewable energy used

in power generation grew by an above-average 17.7%, driven by continued robust growth in

wind energy (+25.8%), which accounted for more than half of renewable power generation for

the first time. The US and China accounted for the largest increments in wind generation. Solar

power generation grew even more rapidly (+86.3%), but from a smaller base. Renewable forms

of energy (excluding nuclear and hydroelectric) accounted for 2.1% of global energy

consumption, up from 0.7% in 2001.

PROBLEMS WITH THE CURRENT SITUATION

The high reliance on non-renewable sources of energy is well enshrined in the following

statements made in a 2011 report issued by the World Wildlife Fund (WWF). The report says:

“The way we produce and use energy today is not sustainable. Our main fossil fuel sources –

oil, coal and gas – are finite natural resources, and we are depleting them at a rapid rate.

Furthermore they are the main contributors to climate change, and the race to the last ‘cheap’

fossil resources evokes disasters for the natural environment as seen recently in the case of

the BP oil spill in the Gulf of Mexico. In the developing world, regional and local desertification

is caused by depletion of fuelwood and other biomass sources that are often used very

inefficiently causing substantive in-door pollution and millions of deaths annually. A fully

sustainable renewable power supply is the only way we can secure energy for all and avoid

environmental catastrophe.”

As is apparent from the said figures and statements, the world at large at present is highly

dependent on non-renewable sources of energy, especially oil. The first basic problem with

the same is that of depleting reserves. Let’s take the specific example of oil. Various estimates

show that sooner than later, we shall run out of oil supplies from the existing sources, which

implies that new sources of oil will have to be exploited. The cache lies in the fact that these

new sources that will have to be exploited may well be the ones that are located across hostile

terrains and climatic conditions. At some point in time, we may reach a position wherein the

cost of exploiting these sources may far exceed the profits that an oil producer may be able to

realize in the oil market. If appropriate pre-emptive steps are not taken in order to ensure that

the global energy economy is insulated from the catastrophic impacts of such a predicament,

the situation may lead to wide-ranging consequences on social, economic and political fronts.

Underscoring the same, the 2011 WWF report further adds:

“Supplies of cheap, conventional oil and gas are declining while our energy demands continue

to increase. It is clear that our reliance on fossil fuels cannot continue indefinitely. With the

world’s population projected to increase to over nine billion over the next 40 years, ‘business-

as-usual’ is not an option.

According to the International Energy Agency (IEA), production from known oil

and gas reserves will fall by around 40-60 per cent by 2030. Yet the developed world’s thirst for

energy is unabated, while demand is rocketing in emerging economies, such as China, India

and Brazil. If everyone in the world used oil at the same rate as the average Saudi,

Singaporean or U.S. resident, the world’s proven oil reserves would be used up in less than 10

years. Competition for fossil fuel resources is a source of international tension, and potentially

conflict.

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HERITAGE M.U.N. 2012 – Economic & Social Council Energy companies are increasingly looking to fill the gap with unconventional sources of oil

and gas, such as shale gas, oil from deep water platforms like BP’s Deepwater Horizon, or the

Canadian tar sands. But these come at an unprecedented cost – and not just in economic

terms. Many reserves are located in some of the world’s most pristine places – such as

tropical rainforests and the Arctic – that are vital for biodiversity and the ecosystem services

that we all depend on, from freshwater to a healthy atmosphere. Extracting them is difficult

and dangerous, and costly to businesses, communities and economies when things go wrong.

Processing and using unconventional fossil sources produces large quantities of greenhouse

gasses and chemical pollution, and puts unsustainable demands on our freshwater resources,

with severe impacts on biodiversity and ecosystem services.”

The other issue, as has been touched upon earlier, is that of environmental concerns arising

out of the usage of these conventional sources of energy. The WWF report, in this regard,

notes:

“Even if fossil fuel supplies were infinite, we would have another compelling reason for an

urgent switch to renewable energy: climate change. Hundreds of millions of people worldwide

are already affected by water shortages, crop failures, tropical diseases, flooding and extreme

weather events – conditions that are likely to be made worse by increasing concentrations of

greenhouse gasses in the Earth’s atmosphere. The WHO estimates that climate change is

already causing more than 150,000 deaths a year.

Global warming threatens the fragile balance of our planet’s ecosystems, and could consign a

quarter of all species to extinction. The loss of ecological services from forests, coral reefs

and other ecosystems will also have huge economic implications. The costs of adapting to

climate change will be colossal: a recent report suggests that by 2030, the world may need to

spend more than €200 billion a year on measures such as building flood defences,

transporting water for agriculture and rebuilding infrastructure affected by climate change. To

avoid devastating consequences, we must keep eventual global warming below 1.5°C

compared to pre-Industrial temperatures. To have a chance of doing that, global greenhouse

gas emissions need to start falling within the next five years, and we need to cut them by at

least 80 per cent globally by 2050 (from 1990 levels) – and even further beyond that date.

The global energy sector holds the key. It is responsible for around two-thirds of global

greenhouse gas emissions, an amount that is increasing at a faster rate than for any other

sector. Coal is the most carbon-intensive fuel and the single largest source of global

greenhouse gas emissions. Embracing renewable energy, along with ambitious energy-saving

measures, is the best way to achieve the rapid emissions reductions we need.”

That said, high dependence on oil poses yet another serious challenge. Despite the new

discoveries of oil reserves, a lion’s share of the global oil demand in the present context is

currently met by supplies from the Middle East. Add to that the fact that oil is freely traded in

the global commodity markets, which makes the price of oil at any given point in time a

function of the speculators’ activities. Under these circumstances, it is easy to understand

how even the smallest of adverse developments like geo-political tensions or natural disasters

in these areas can cause high speculator activity, leading to increased oil prices, and

jeopardizing the ability of importing nations to buy the same at much higher prices. A very

recent example of the same stems out of the ever-souring relationship between Israel and Iran.

On closer analysis, one will realize that following any direct or veiled threat from the former to

the latter with regards to military action, speculator activity goes up, pushing up oil prices,

whereas even the smallest signs of possibility of a truce between the two sides tends to cool

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HERITAGE M.U.N. 2012 – Economic & Social Council down the prices. Not only is Iran one of the major producers of oil in the region, it has also

time and again threatened to close the Strait of Hormuz, a key arterial route for shipment of oil

and gas supplies from the Middle East to the entire world. Naturally, post all such threats, one

has seen increased speculator activity, leading to higher prices of oil, as well as gas.

In a nutshell, high dependence on such non-renewable sources, a major chunk of whose

production is restricted to a single geography makes it highly prone to price fluctuations due

to developments in these regions. This jeopardizes the energy security of especially the

economically weaker nations that may not be able to import oil at inflated prices, leading to

turmoil for those who reside in these nations.

Accentuating the same, the Guardian, in April 2012, came up with the following:

“Developing countries in Africa received less in overseas aid last year than they paid

for oil imports, new figures show. Sub-Saharan Africa received about $15.6bn (£9.7bn) in

overseas development aid last year, but this was outweighed by the $18bn cost of importing

oil, according to the figures compiled by the International Energy Agency and seen by the

Guardian.

A decade of soaring oil prices has created huge problems for development efforts in countries

whose attempts to industrialize have left them heavily dependent on fossil fuels. Even though

overseas aid has increased, poor nations are effectively "running to stand still" in

development terms, because they are paying so much for energy imports.”

It further added the following:

“When industrialized economies were developing, oil was the equivalent of $13 a barrel, but

now developing countries must pay $120 to $130, noted Birol, which leaves developing

countries ‘hamstrung’ – so if more people are to be lifted out of poverty, clean energy must be

an imperative.

The data from the IEA, widely regarded as the gold standard for energy analysis, rang alarm

bells for campaigners, and is likely to be closely examined by donor governments, which have

not tended to prioritize clean energy in the past.

A DFID (UK’s Department for International Development) spokesperson said: ‘The whole world

is affected by rising oil prices, but no country can pull itself out of poverty until it has a decent

and reliable energy service. British aid is helping to improve the health, education and welfare

of millions of the poorest, including providing cleaner, greener energy such as solar power to

help grow their economies. Renewable and efficient energy can reduce dependency on fossil

fuels, as well as helping to create new jobs in emerging low carbon sectors.’

Ruth Davis, chief policy adviser at Greenpeace UK, said: ‘People in poorer countries are being

hit twice by the oil industry. They are the first to suffer the impacts of climate change, while

their economies are blighted by the rising cost of imported fuel. Instead of giving taxpayer

handouts to the fossil fuel industry through World Bank aid programs and Export Credit

Guarantee schemes, countries like the UK should be investing in renewable energy and

energy efficiency projects in developing countries, which will improve access to energy for the

poor and help build stronger economies.’

While rapidly emerging economies such as China and India are forging ahead on wind and

solar power, little has been invested in Africa. This is not because of a lack of renewable

energy resources, but because private sector investors see the continent as a riskier

proposition.

Under the United Nations scheme to give poor countries access to low-carbon technology –

the clean development mechanism – the lion's share of the billions of investment has gone to

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HERITAGE M.U.N. 2012 – Economic & Social Council China, followed by India and other big emerging economies, but a paltry sum has gone to

build projects in Africa.

Birol, one of the world's foremost authorities on energy economics, added that the problem of

oil addiction was compounded by distorting subsidies for fossil fuels, common in many

developing countries. These subsidies will reach a record $630bn this year, according to the

IEA's latest data, which Birol said represented not only a market distortion that would

exacerbate climate change, but a drain on the Treasuries of poor countries, which could better

spend the money on social projects such as in education or health.

Although such subsidies are supposed to protect poor people from the impact of rising energy

prices, in fact they usually disproportionately benefit the better-off, and in some cases are

hijacked by profiteers.

Birol also warned that putting off renewable energy investment because of the financial crisis

and recession was ‘a false economy’. Many countries have scaled back their investment in

low-carbon energy – the UK, Spain and Germany have slashed support for renewables, for

instance. But Birol's analysis shows that for every $1 that countries do not spend on cleaner

fuel, they will have to spend $4.3 within the next two decades to make up, for their reliance on

fossil fuels.

Developed countries are far from immune to the problems of oil dependence – Birol noted that

last year's bill to the EU for oil imports topped $500bn for the first time, and that these payouts

were a substantial drain on European economic resources.

That is the equivalent of a Greek crisis – every year, he warned.”

TAPPING INTO ALTERNATIVE SOURCES OF ENERGY

No wonder then that the clamor for the diversification of the global economy’s energy portfolio

can no longer be termed as mere breast-beating. Considering the said limitations of the

current energy economy, one can easily say that expediting this matter should be a key

priority area if the world wants to stave off a global energy crisis in the foreseeable future.

Having said that, while achieving such a goal may be difficult, it is, by no means, an

impossible task. In the words of James P. Leape, Director General, WWF International, “By

2050, we could get all the energy we need from renewable sources…such a transition is not

only possible but also cost-effective, providing energy that is affordable for all and producing

it in ways that can be sustained by the global economy and the planet….There is nothing more

important to our ability to create a sustainable future.”

The global energy crisis is a daunting challenge. Yet we do not have to look far for the

solutions. Energy derived from the sun, the wind, the Earth’s heat, water and the sea has the

potential to meet the world’s electricity needs many times over, even allowing for fluctuations

in supply and demand. We can greatly reduce the amount of energy we use through simple

measures like insulating buildings, recycling materials and installing efficient biomass stoves.

Biomass from waste, crops and forest resources has potential to provide a renewable source

of energy – although this raises significant social and environmental issues, which we will

discuss later in this report.

Around the world, people are taking steps in the right direction. In 2009, China added 37GW of

renewable energy, bringing its total renewable capacity to 226GW – equivalent to four times

the capacity required to satisfy the total peak electrical power consumption of Great Britain or

over twice the total electric capacity of Africa! In Europe and the U.S., more than half of all new

power capacity installed in 2009 came from renewable sources. In the developing world, more

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HERITAGE M.U.N. 2012 – Economic & Social Council than 30 million households have their own biogas generators for cooking and lighting. Over

160 million use “improved” biomass stoves, which are more efficient and produce less

greenhouse gas and other pollutants. Solar water heating is used by 70 million households

around the world. Wind power capacity has grown by 70 per cent, and solar power (PV) by a

massive 190 per cent in the last two years (2008 and 2009). During the same period, total

investment into all renewables has increased from about $US 100 billion in 2007 to more than

$US 150 billion in 2009.

But the pace of change is far too slow. Non-hydro renewables still only comprise a mere 3 per

cent of all electricity consumed. Huge quantities of fossil fuels continue to be extracted and

used, and global carbon emissions are still rising. Government subsidies and private

investments in fossil fuels and nuclear power ventures still vastly outweigh those into

renewable energy and energy efficiency, even though the latter would give a far greater long-

term return. While thousands of houses throughout the world, especially in Germany and

Scandinavia, have been built to “passive house” standards that require almost no energy for

heating and cooling, many more construction projects follow old-fashioned, energy-inefficient

designs.

ANALYSIS TABLES

Following are some important figures regarding the global energy economy as compiled by

Ecofys (a consulting firm in the area of energy) in conjunction with WWF, in December 2010.

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HERITAGE M.U.N. 2012 – Economic & Social Council

United Nations And Alternative Sources of Energy

The UN has, time and again, taken cognizance of the said problems. The Committee on Energy

and Natural Resources for Development was established by Economic and Social Council

resolution 1998/46 of 31 July 1998, which called for the merger of the former Committee on

Natural Resources and the Committee on New and Renewable Sources of Energy and on

Energy for Development. Besides, under the United Nations Development Programme (UNDP),

sustainable energy is one of the core focus areas that fall within the ambit of “Environment

and Energy”, which is one of the key focus areas of the UNDP. The United Nations

Environment Programme (UNEP) also treats the matter with utmost sincerity. Following is a

list of resources that shall help delegates in understanding the spirit and the modus operandi

under which the member nations have been acting over the years.

Page 23: UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL (ECOSOC) · HERITAGE M.U.N. 2012 – Economic & Social Council Letter from the Executive Board Dear Delegates, I would like to take this

HERITAGE M.U.N. 2012 – Economic & Social Council

LINKS FOR FURTHER RESEARCH-

1. Resource-1

2. Resource-2

3. Resource-3

4. Resource-4

5. Resource-5

6. Resource-6

7. Resource-7

8. Resource-8

9. Resource-9

10. Resource-10

11. Resource-11

12. Resource-12

USEFUL READINGS

1. BP Statistical Review of World Energy June 2012

2. WWF Energy Report 2011