Below is an excerpt from a September 10, 2006 Associate Press article on the breakdown of global trade negotiations.
The G-20 issued a statement Saturday indicating developing nations we unlikely to back off their demands that developed nations do away with subsides and tariff barriers from their farm products.
"Most of the the world's poor make their living out of agriculture. Their livelihood and standards of living are seriously jeopardized by subsides and market-access barriers prevailing in international agricultural trade" the group said in the statement.
Powerful farm lobbies in the U.S., Europe, and Japan, however, strongly oppose an end to subsides, a move they fear would leave them unable to compete with the flood of cheap imports.
Question 1: Can the Specific Factors Model explain the position of the developing countries? What about the developed countries? Explain how these two positions are or are not consistent with this model.
Question 2: Can the Heckscher-Ohlin Model explain the position of the developing countries? What about the developed countries? Explain how these two positions are or are not consistent with this model.