Main Exports & Imports
Scenario
The summer of 2022 was marked by a series of climate-induced adversities worldwide. Europe has been facing severe droughts, with primary water sources such as the Loire River, the Po River, and the Rhine being reduced to trickles. Complementary, the heatwave-incited wildfires devasted Africa, Asia, Europe, and South and North America.
Topping the series of red climate alerts, Europe is facing an unprecedented energy crisis. The crisis is deeply rooted in Europe’s dependency on Russian natural gas.
Against the backdrop of the Russian-Ukraine war, the world has to bear the consequences of shifting energy geopolitics and global order.
After a tumultuous year, the beginning of 2023 is characterised by a wave of massive social protests throughout Europe. The demonstrations have as a focal point the rising prices in energy, inflation, anti-war sentiments, and, overall, the loss of trust in modern governance, which seems to have failed those in need. After a series of resignations of high-profile politicians following the scandalous leak of evidence linking numerous world leaders to a corrupt ring, early elections were held throughout Europe. In many European member states, new populist governments gained power against the backdrop of social dissent, public outrage, and a collective need for systemic change. The emergent social imaginaries spreading across Europe are plagued by unprecedented scepticism and mistrust from other international players, who are blamed for the recent drop in living standards across Europe.
Responding to public pressure, newly elected populist governments have started a reform process to prioritise the well-being of European consumers, workers, and citizens at the expense of the rest of the world. However, the shift to a protectionist, “Europe first” policy attracted dissenting responses at an international level. As a result, the U.S. is questioning how solid the alliance with Europe is. At the same time, China, sensing vulnerability during this transitional period for Europe, seized the moment to further crack down on imports from numerous European countries. Notably, the turf between Lithuania and China has spilled over into the Baltics, with Estonia and Latvia being targeted next.
Contrary to its expectations, the European Union manifested an unexpected behavioural pattern believed by analysts to be a particularity of the 2023 pan-European solidarism: extreme solidarity in a house that divided against itself cannot stand. After several rounds of warnings, the European institutions unanimously decided to deploy the anti-coercion instrument as a response to the Chinese aggressive economic coercion of the Baltics. The European Union broadened the scope of product export controls through this mechanism, mainly targeting high-tech sector commodities imported from China. Chinese officials accuse the European Union of trying to sabotage the Made in China 2025 Plan (MIC 2025) and refute all allegations of questionable practices deployed in all manufacturing stages.
The international community is in a state of awe. The U.S., facing its own domestic turmoil, is in a difficult position. Will it step up as a mediator, or will it risk the destabilisation of international trade? Despite any moral arguments, seeing its number one rival being cornered by the European Union could mean a fantastic opportunity to put some distance between itself and China. So, what will the rest of the global community do? Will they align with Europe, or will the appealing offers made by China persuade them?
“In a trade war, there are no winners, only losers,” an apocryphal quote goes. But times are changing, and maybe this last trade war could create a true global winner.
The upcoming years will be crucial for the international community. On top of dealing with one of the biggest crises of the 21st century, the entire ecosystem is changing. Constrained by resources, their own populations, and exogenous and endogenous limitations, world leaders and decision-makers must carefully calculate their next steps. To collaborate or to collide is only a matter of their strategy. As a result, everyone is uneasy about what the world will look like in the upcoming years and, most importantly, how the new dimensions of trade will shape their lives.
Countries
Countries
The countries represented in this simulation are:
Brazil
Canada
EU
India
Japan
Mexico
People’s Republic of China (China)
Russia
The U.S.
United Kingdom
Gameplay
Phases
The simulation takes place over the course of 5 years: each round represents a year. During each round, participants will need to use strategic gameplay, negotiations, and persuasion to deal with the ongoing trade war and the exogenous crises. Each Round has multiple phases,with their unique features.
Phase I: Initiation phase (approx. 5 mins)
During the initiation phase, the U.S and China will have the power to initiate measures against the other participants. The measures include but are not limited to: sector-specific import tariffs, technology war (enhanced regulations), sanctions, import quotas, embargos, domestic subsidies, and non-tariff barriers. The countries are limited to 1 actor they can impose the measures upon.
Phase II: Retaliatory phase (approx. 5-10 mins)
The targeted stakeholders who do not yield offensive trade powers will be allowed to address a response. The response is depended on the capabilities of each country. Some measures include protectionist policies, shifting preferential tariffs, FTAs or the thereafter annulment of FTAs, reducing tariffs, forming customs unions, deploying the “anti-coercion mechanism” or other country/region-specific mechanisms, whistleblowing, and more. The retaliatory measure can only be inflicted on one actor (e.g. the EU can deploy the anti-coercion mechanism against China but not against China and the U.S. in the same round).
Phase III: Special event (approx. 5 mins)
Each round will have a specific overarching theme caused by an exogenous change in the conditions of the international system. Participants will need to deal with the consequences of external events on top of their offensive or retaliatory measures.
Phase IV: Negotiations (approx. 25 mins)
In anticipation of the GEF (Global Economic Forum), participants can use the time to build alliances or try to find out information from their rivals.
Phase V: Global Economic Forum (30 mins)
The state representatives will meet and discuss at the Global Economic Forum each year. Participants will review what has happened throughout the year and will try to commit to taking collective action to solve the crises. Each delegation has a maximum of 2 minutes to address
Phase VI: Outcomes (5 mins)
At the end of each year, the Yearly Economic Review will be revealed, showing participants how their gameplay affected their countries’ GDP and social inequality, as well as reporting how the world looks based on how the participants engaged with the external crisis.
Special powers
There will be two types of countries in the pedagogical exercise: offensive and retaliatory. The offensive countries with the power to initiate the trade war and subsequently pursue offensive powers will be China and the U.S. The leading bloc in terms of retaliatory power will be the EU, given its specific anti-coercion mechanism. Apart from the three actors (U.S., China and the EU), the other players will have retaliatory capacities, translated into the power to shift their economic loyalties. Those states will be free agents, having the choice of aligning with China, the EU, and the U.S., strategically.
Offensive powers (China and the U.S.)
-> sector-specific import tariffs
A tariff is a tax imposed by one country on the goods and services imported from another country.
-> embargo
An embargo is a trade restriction typically adopted by a government, a group of countries or an international organisation as an economic sanction. Embargoes can bar all trade or may apply only to some of it, such as arms imports. They are designed to punish the targeted country for its actions and to deny it the means to carry out objectionable policies.
-> enhanced regulations
An enhanced regulatory regime can slow down international trade.
-> non-tariff barriers
A non-tariff barrier is a way to restrict trade using trade barriers other than a tariff. Non-tariff barriers include quotas, embargoes, sanctions, and levies. As part of their political or economic strategy, some countries frequently use non-tariff barriers to restrict the amount of trade they conduct with other countries.
Retaliatory powers
-> Anti-coercion mechanism (exclusive to the EU)
It is a tool designed by the European Commission primarily crafted to deter coercive economic action. Potential actions include:
• Broadening the scope of export controls;
• Restrictions on foreign direct investment;
• Restrictions on intellectual property rights protections; and
• Restrictions on banking, insurance, and access to capital markets.
->FTAs or the thereafter annulment of FTAs
A free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them. Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
->imposing/reducing tariffs
Tariffs are a type of protectionist trade barrier. They add to the cost borne by consumers of imported goods and are one of several trade policies that a country can enact. The effect is to make foreign products relatively more expensive for consumers.
->customs unions
Customs unions are arrangements among countries in which the parties do two things:
agree to allow free trade on products within the customs union
agree to a common external tariff (CET) concerning imports from the rest of the world.
Customs unions and preferential trade arrangements, more generally, have become increasingly important in recent years .
->whistleblowing
This move will publicly reveal secret information, which might create domestic turmoil for the targeted player.
->collective agreements
Players are free to negotiate bilateral or multilateral agreements as well. However, entering an agreement with one or more states will be the equivalent of the move per that round. Players are not allowed to have an additional move on top of establishing an Agreement.
Deliverables
At the beginning of the simulation, each national delegation will be required to submit a “National Strategic Plan”. The document is a 5-years commitment to the country’s priorities vis-à-vis the international arena. It should outline a maximum of 4 priorities in any of the countries’ perceived key areas (e.g. International Cooperation, Development, Sustainability, Foreign Policy and aid, or any other relevant field).
Below, you can find resources helping you to shape your national priorities:
https://www.state.gov/u-s-strategy-to-prevent-conflict-and-promote-stability-2/ https://ec.europa.eu/info/publications/strategic-plan-2020-2024-climate-action_en https://www.state.gov/wp-content/uploads/2022/07/ICS_SCA_India_Public.pdf
At the end of the simulation, the participants will attempt to create a collective Joint Declaration to solve the international crisis. Each country will propose a commitment, and the other delegates will vote on adopting it. For a commitment to pass, a majority is needed. States cannot vote for their commitment, nor can they abstain.
External resources
To represent social media politics, this simulation will have a digital component. The players will have access to a private social media space. To create an account, participants must follow this link: https://eu-trade-simulation.tribeplatform.com/auth/join/1QZ4P4G15Ld7PwcPOArHv
After having accessed the link, participants should create an account. We advise players to use the name of their delegation (e.g. Delegate 1- Brazil).
The platform will be used for short statements (no longer than 280 characters).
All information will be kept private and deleted upon completion of the simulation. Please do not disseminate the links to third parties.