International Organisations Lecture 8 - UN Economic Institutions - UPSC Exam

WTO

World Trade Organization (WTO) is the global international organization dealing with the rules of trade between nations.
The overall objective of the WTO is to help its members use trade as a means to raise living standards, create jobs and improve people’s lives.
The WTO operates the global system of trade rules and helps developing countries build their trade capacity.
WTO also provides a forum for its members to negotiate trade agreements and to resolve the trade problems they face with each other.

History of WTO

GATT – 1947
WTO – 1995
- WTO started functioning on 1 January 1995.
- However before WTO trading system was governed by General Agreement on Tariffs and Trade (GATT).
- General Agreement on Tariffs and Trade (GATT) traces its origins to the 1944 Bretton Woods Conference.
- Over the years, GATT evolved through several rounds of negotiations. The last round of negotiations were Uruguay round which started in 1986 and lasted till 1994 leading to WTO.

History of WTO

GATT mostly dealt with trade in goods but WTO and its agreements not only cover goods but also trade in services and other intellectual properties like trade creations, designs, and inventions.
WTO has 164 members and 23 observer governments.
European Union is a member and each EU country in its own right is also a member.
Headquarters : Geneva, Switzerland

WTO

Role of WTO
1. Improving people’s lives
2. Negotiating trade rules
3. Overseeing WTO agreements
4. Maintaining open trade
5. Settling disputes

WTO

Basic principles of WTO
- Trade without discrimination
  - Most-favoured-nation (MFN): treating other people equally
  - National treatment: Treating foreigners and locals equally
- Freer trade: gradually, through negotiation
  - Lower trade tariffs
  - Quota free trade/Import Ban reduction
- Predictability: through binding and transparency
- Promoting fair competition
- Encouraging development and economic reform

WTO

Ministerial Conference
1. The highest decision-making body of the WTO is the Ministerial Conference.
2. WTO article 4 states, There shall be a Ministerial Conference composed of representatives of all the Members, which shall meet at least once every two years.
3. The Ministerial Conference shall have the authority to take decisions on all matters under any of the Multilateral Trade Agreements, if so requested by a Member, in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement.
All decisions of WTO are taken by consensus..!!

WTO

MC1 1996 – Singapore
- “Singapore issues” were the prime focus.
  1. Transparency in government procurement
  2. Trade facilitation (customs issues)
  3. Trade and investment
  4. Trade and competition policy

WTO

MC4 : Doha round 2001 and Doha development agenda
The Doha Round was launched in 2001 to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. A fundamental objective of the Doha Development Agenda is to improve the trading prospects of developing countries.

WTO

Important Agreements:
1. Agreement on Agriculture 1995
  - Domestic support
  - Market access
  - Export subsidies.
2. General Agreement on Trade in Services (GATS)
3. Agreement on Trade-Related Aspects of Intellectual Property Rights
4. Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement)
5. Agreement on trade facilitation
6. Agreement on Technical Barriers to Trade
7. Agreement on Customs Valuation etc

WTO

World Customs Organization

World customs Union was established in 1952 as an independent intergovernmental body whose mission is to enhance the effectiveness and efficiency of Customs administrations.
The WCO works on customs-related matters including the development of international conventions, instruments, and tools on topics such as commodity classification, valuation, rules of origin, collection of customs revenue, supply chain security, international trade facilitation, customs enforcement activities, combating counterfeiting in support of Intellectual Property Rights (IPR), illegal drug enforcement, combating counterfeiting etc.
Headquarters: Brussels, Belgium

World Customs Organization

World Customs Organization has a total of 183 members. India is a member since 1971.
WCO has divided its membership into six regions.
1. Each of the regions is represented by an elected vice-chairperson to the WCO council headed by chairperson. Council meets once in a year.
2. WCO is headed by a secretary general appointed by council for 5 years.
WCO council is considered as the voice of the International Customs community. Earlier it was called Customs Co-operation Council (CCC).

World Customs Organization

Important Initiatives of WCO
1. International Convention on the Harmonized Commodity Description and Coding System (HS Convention)
2. ATA Convention and the Convention on Temporary Admission (Istanbul Convention) – Passport for cargo
3. Arusha Declaration on Customs Integrity
4. SAFE Framework of Standards to Secure and Facilitate Global Trade
5. Columbus Program for capacity building

Bank for International Settlements

Bank for International Settlements (BIS) is an international financial institution owned by central banks setup in 1930.
BIS aims to fosters international monetary and financial cooperation and serves as a bank for central banks. It is not accountable to any national government.
63 central banks and monetary authorities are currently members of the BIS.
Headquarters: Basel, Switzerland

Bank for International Settlements

The mission of the BIS is to serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks.
The BIS has 63-member central banks, representing countries from around the world that together make up about 95% of world GDP.
Basel Committee for Banking Supervision (BCBS) which works closely with BIS is responsible for the Basel Accords which led to BASEL norms for banks.
Basel III is an internationally agreed set of measures developed by the BCBS in response to the financial crisis of 2007-09.

WEF

World Economic Forum was established in 1971 as a not-for-profit foundation.
WEF was formed with an initiative to improve the states of the world. WEF was formerly called as the European Management Forum.
Headquarters: Cologny, Switzerland.
The Annual Meeting of World Economic Forum is held in Davos, Switzerland.

WEF

Publications:
1. Global Competitiveness Report
2. Global Enabling trade Report
3. Global risk report
4. Global Gender Gap Index
5. Human Capital Index
6. Inclusive Development Index
7. Energy Transition Index.
8. Global IT report
  - Note: WEF has established the Centre for the Fourth Industrial Revolution in San Francisco to develop policy frameworks and advance collaborations that accelerate the benefits of science and technology

FATF

Financial Action Task Force (FATF) is an inter-governmental organization established to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
FATF is basically the global money laundering and terrorist financing watchdog.
It was formed in 1989 at the G7 Summit. FATF currently comprises 37 member jurisdictions and 2 regional organisations. India is a member since 2010.
Headquarters: Paris, France

FATF

Role of FATF
1. The FATF reviews money laundering and terrorist financing techniques and continuously strengthens its standards to address new risks.
2. FATF is really a policy-making body that works with governments to bring about national legislation and regulatory reforms in these areas.
3. The FATF monitors countries to ensure they implement the FATF Standards fully and effectively and holds countries to account that does not comply.

FATF

FATF Grey List
1. Countries that are considered safe haven for supporting terror funding and money laundering are put on the FATF grey list.
2. Entering Grey list is a warning to the country that it may enter the blacklist.
3. Recently, Pakistan was retained in the grey list for its failure to prosecute top leadership of UN Security Council-designated terror groups.
4. To be pulled out of the grey list, a country has to fulfill the tasks recommended by the FATF, for instance, confiscating properties of individuals associated with terrorist groups. If the FATF is satisfied with the progress, it removes the country from the list.

FATF

FATF Blacklist
1. Officially called the “Non-Cooperative Countries or Territories (NCCTs), the FATF Blacklist is a list of countries that the FATF considers to be non-cooperative in the international fight against terrorist financing and money laundering.
2. North Korea, Iran are on the Blacklist.

Organization for Economic Cooperation and Development (OECD)

Organisation for Economic Co-operation and Development (OECD) is an inter-governmental organization/forum founded in 1961 to accelerate economic progress and world trade.
OECD is unique organization of 38 Democracies working together with other market economies to promote economic growth, prosperity, and sustainable development.
OECD members are high-income economies with high Human Development Index (HDI) and are regarded as developed countries. OECD is funded by contributions from member states. The OECD is an official United Nations observer.
Headquarters: Paris, France

Organization for Economic Cooperation and Development (OECD)

Role of OECD
1. OCED works for global economic growth.
2. Promoting economic stability on a global scale
3. Raise standards of living.
4. Expansion of world trade.
5. OECD also aims to eliminate bribery and other forms of financial crimes worldwide.
6. OCED also maintains a “blacklist” of nations that are considered uncooperative tax havens.
India is not a member of the OECD but a key partner of OECD.

Organization for Economic Cooperation and Development (OECD)

New Development Bank

New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral development bank established by the BRICS states (Brazil, Russia, India, China and South Africa) in 2014.
NDB’s focus is to finance infrastructure and sustainable development in emerging market and developing countries. It supports sovereign and non-sovereign projects through loans, guarantees, equity participation and other financial instruments.
Headquarters: Shanghai, China

New Development Bank

The initial authorized capital of the bank is $100 billion divided into 1 million shares having a par value of $100,000 each. The initial subscribed capital of $50 billion shall be equally distributed amongst the founding members (BRICS countries).
The Agreement on the NDB specifies that every member will have one vote no one would have any veto powers.
Bank’s Articles of Agreement specify that all members of the United Nations could be members of the bank, however the share of the BRICS nations can never be less than 55% of voting power.
Todays, NDB members include, Bangladesh, Brazil, China, Egypt, India, Russia, South Africa UAE & Uruguay

Asian Development Bank

Asian development bank was conceived in 1966 as a financial institution that would be Asian in character and foster economic growth and cooperation in one of the poorest regions in the world.
ADB has 67 members of which 48 from within Asia and Pacific while remaining 19 from outside. The bank admits member countries from Asian region and non-regional developed countries. It was modelled closely on the World Bank and has a similar weighted voting system where votes are distributed in proportion with members’ capital subscriptions.
Japan holds the largest share in ADB with 15.6%, followed by U.S.A (15.5%), China (6.4%), and India (5.8%).
Headquarters: Manila, Philippines

Asian Development Bank

ADB assists its members, and partners, by providing loans, technical assistance, grants, and equity investments to promote social and economic development.
ADB has evolved Strategy 2030 to respond effectively to the Asian region’s changing needs.
- Under Strategy 2030, ADB will sustain its efforts to eradicate extreme poverty and expand its vision to achieve a prosperous, inclusive, resilient, and sustainable Asia and the Pacific
India is founding member of ADB.

Asian Infrastructure Investment Bank

AIIB is a multilateral bank which brings countries together to address the daunting infrastructure needs across Asia.
It was setup in 2016 with 57 founding members but today the bank has 103 approved members. The membership is open to members of the International Bank for Reconstruction and Development or the Asian Development Bank.
AIIB is modelled after World bank model as a counter to ADB. China is the largest shareholder in AIIB with a 26.06% voting power, followed by India with 7.62% and Russia with 5.92% voting power.
US& Japan are not its members. India is a founder member.
Headquarters: Beijing, China

European Bank for Reconstruction & Development

European Bank for Reconstruction and Development (EBRD) is an international financial institution founded in It was set up after the fall of the Berlin wall to promote private and entrepreneurial initiative in emerging Eastern Europe.
EBRD is owned by 71 countries and two EU institutions i.e. EU & EIB. US is the biggest shareholder in EBRD Russia is also member of EBRD.
EBRD’s core operations pertain to private sector development in their countries of operation.
Headquarters : London, UK

European Investment Bank

European Investment Bank (EIB) is the EU’s investment bank and is owned by the EU Member States. EIB was founded by the Treaty of Rome in 1958.
The EIB was established to facilitate equitable development in the EU through lending to regions that are less developed and to support the EU’s internal market.
EIB lends to both the private and the public sector through various financial product. As of today, EIB is one of the biggest financiers of green finance in the world.
Headquarters: Kirchberg, Luxembourg

European Central Bank

The European Central Bank (ECB) is the central bank responsible for monetary policy of those European Union (EU) member countries which have adopted the euro currency.
This region is known as the eurozone and currently comprises 19 members.
The principal goal of the ECB is to maintain price stability in the euro area, thus helping preserve the purchasing power of the euro.
The European Central Bank (ECB) is headquartered in Frankfurt , Germany.
It has been responsible for monetary policy in the Euro area since January 1, 1999.