Chinese Devaluation of Currency: The Butterfly Effect of Global Economy

January 27, 2017

At the World Trade Organization of Model UN 2017, a fevered debate is ongoing after a crisis, in which China devalued their currency, leading to destructive conditions of the life of a  Brazilian woman. According to the recall and  by delegations of Bosnia, Libya, and the Czech Republic, the Brazilian woman, being a civilian, cries for her uneasy life maintaining her household. The main issue that delegates have discussed is the lack of cheap daily necessity products on the market.

To address and prevent this situation, the delegates of Mali, Philippine, Libya, and Thailand, among many others, are wary of the negative impact the depreciation of one country’s currency on the others. They believe that every country should notify their currency status to a central forum, such as the World Trade Organization, and that no government should manipulate the currency with bad intentions of crushing another economy. The delegate of Mali specifically reminds the Review that many others might focus on agriculture as the foundation of economy and implicating clauses regarding agriculture, and in which case they would be ignoring and avoiding the immediate crisis. The delegate claims that by doing so the WTO would be missing the fundamental solution to the situation completely and render irresponsible.

In another working paper, the Harvard International Review sees more instrumental methods provided to deal with the problem. Represented by Mongolia, the bloc believes that the UN should pass clauses implementing the General Agreements on Tariffs and Trade (GATT). Mongolia is confident to say that the agreement would allow for no loopholes, and prevent developing countries from failing communally. He has also complained that nobody has, so far, paid the due attention to this agreement and that formal discussion is necessary. Suriname, from the same bloc, approaches the Review proudly, and presents his inputs that countries should align the international exchange rates for the listed nations, which would allow for proper use and control by the WTO.

Meanwhile, the United Kingdom and France lead another bloc towards some radically different and novel approaches. The delegate of France calls for agricultural support on farmers, which was predicted previously by the Mali delegates. The delegate of France argues that the depreciation of economy was not caused merely by the manipulation of currency in other countries, but due to the local and global proliferation of terrorism. He believes that in order to defend the intellectual property of due countries, the UN should provide safety clause for developing countries in the face of economic crisis. The United Kingdom stands side by side with France, and argues that instead of currency manipulation, the committee should focus more on subsidizing developing countries and lowering competiveness of the market boost the national economy. The delegate of the United Kingdom goes on to saying that both the WTO and Monetary Fund should be involved in the solution to this crisis. The main role for the UN, according to him, is to investigate disputes filed by respective countries after the destruction was done, and provide reparation.

Overall, there remains to be many conflict and lack of understanding within the committee. The Review looks forward to following the conference for updates. From this report, we learn that currency changes in China can affect a housewife in Brazil, and that the difference in interest lead to radically conflicting viewpoints and solutions to problems. This situation effectively represent the spirit of Harvard Model United Nations: To understand our differences, and To embrace our common cause.

 

Harvard International Review

Sally Liu

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