1ST YNC - NATIONAL NEGOTIATION COMPETITION, 2022

November 25-27, 2022

PROPOSITION FOR FINAL ROUND

General Information

THE GREEN PACT

1. The Great Union (“TGU”) is a political and economic union of nine (9) Member States that are
located primarily in the continent of Gribly. TGU, as a whole, is a highly developed market
economy and maintains high standards with regard to goods and services imported into the
union.

2. TGU has an internal single market, and there exists free movement of people, goods, services
and capital within the internal market. TGU maintains common policies on trade, agriculture,
fisheries and regional development. TGU is famous for its high-quality buildings, defense
equipment and cars.

3. TGU also maintains the TGU Carbon Market (“TCC”), under which TGU sets a cap on the annual
carbon emissions. Within this cap, TGU companies can purchase TCC Licenses for every tonne
of CO2 emitted by them within one financial year. These licenses are tradeable.

4. In January 2022, in order to combat carbon leakage, TGU introduced a carbon border
adjustment mechanism (“TCBAM”), which requires importers to also purchase similar TCC
licenses for importing carbon intensive products. The TCC and TCBAM are limited to a number
of carbon-intensive sectors, namely, cement, electricity, fertilizers, iron and steel and
aluminium. TCBAM exempts imports from countries with a domestic emissions trading system
linked to the TCC under an agreement with the TGU.

5. Yelti is a developing country and is moving towards becoming a hub for industrialization.
However, it continues to face challenges of infrastructure bottlenecks and bureaucratic

Young Negotiators Club | Drafted by Ms. Divyashree Suri, Associate at Economic Laws Practice (ELP)
 corruption. Therefore, while Yelti has a domestic emissions trading system in place, several
manufacturers find illegal ways to produce fake licenses and distort the trade of such licenses.
Understandably, the domestic emissions trading system is not effective in Yelti. Accordingly,
TGU notified that Yeltian imports cannot be exempted from compliance under the TCBAM.
Yelti and TGU have entered into consultations to resolve the said issue.

6. The TGU is Yelti's third largest trading partner. Yelti’s exports to the TGU were worth USD 88
billion in 2021 alone. Of particular importance to Yelti are the exports of aluminium, iron and
steel. According to the TCBAM impact assessment conducted by the TGU, Yelti was the second
largest exporter of iron and steel and the fifth largest exporter of aluminium to the TGU in
2019.

7. On the other hand, Yelti is TGU’s fifth largest trading partner, accounting for 5.2% of TGU’s
total trade in goods in 2021. Trade in goods between TGU and Yelti increased by around 30%
in the last decade. TGU companies also rely heavily on Yeltian iron and steel for the production
of various key products. TGU has invited Yelti to sit down and talk things through before
December. The parties along with their lawyers have agreed to meet for a negotiation session
on 27th November, 2022 to discuss the issue.

General Principles for Treaty Negotiation

1. The agreement between Yelti and TGU, should be based on and refer to the following
underlying principles and key objectives:

• Recognize that prosperity and security are enhanced by rules-based international order,
defending individual rights and rule of law, high standards of protection of workers’ and
consumers’ rights and of the environment, the fight against climate change, and free and
fair trade;

• Re-affirm the Partiers’ commitment to work together to safeguard these general principles
and to cooperate against internal and external threats to their values and interests;

• Ensure a balance of rights and obligations, and create a level playing field. The balance
must ensure the autonomy of the Parties’ decision-making and legal order.

• Re-affirm the Parties’ commitment to shared values and commitments, including human
rights, democracy and rule of law, respect and safeguarding of human rights.

Young Negotiators Club | Drafted by Ms. Divyashree Suri, Associate at Economic Laws Practice (ELP)
2. The partnership should provide for, as appropriate, dialogue and exchanges in areas of shared
interest, with the view to identifying opportunities to cooperate, share best practice and
expertise, and act together.

Young Negotiators Club | Drafted by Ms. Divyashree Suri, Associate at Economic Laws Practice (ELP)