Institutes of Global Governance (WTO & IMF)

Get Started. It's Free
or sign up with your email address
Rocket clouds
Institutes of Global Governance (WTO & IMF) by Mind Map: Institutes of Global Governance (WTO & IMF)

1. WTO

1.1. STRENGTHS OF CONTRIBUTING TO GLOBAL GOVERNANCE

1.1.1. In comparison to its predecessor (the General Agreements on Tariffs and Trade), the WTO has seen a higher number in dispute settlements (400 in its first 10 years in comparison to the the 50 year history of the GATT). This follows through with the aims stated by the WTO of being a tool for resolving international trade disputes. Essentially becoming the legal and institutional foundation of the multilateral trade system. This case of being a mechanism for solving trade disputes, such as the 2002 United States steel tariff, in which the WTO cooperated with the United States to lift an 8-30% tariff on imported steel to prevent a major trade war with the EU, has allowed for establishing the WTO as an institute of global governance.

1.1.2. The WTO's membership represents 98% of international trade - further reinforcing the concept of a global governance considering the WTO aims include being a 'legislature' for world trade. All of these member states are united by the establishment of free trade system - which is being emphasised in the current Doha Rounds. By eliminating trade barriers, each of these states have the capability to enter relations with other states (reinforcing sovereignty) as well as creating higher competition between all members. This increase in competition translates into a greater drive in the arena of world trade - further enforcing a cycle.

1.1.3. The structure of the World Trade Organisation also allows for the development of the developing member states. By implementing a free trade system within all its members, it allows not only developing states to create a source of external income for the state, but also encourages developed states to engage in trade relations with these developing states. Even in a circumstance of a Global Financial Crisis, trade liberalisation allows countries not to restrict their actions in an isolationist fashion and engage with other states - this is supported by the phenomena of globalisation and its effect being untampered by such a crisis as states were able to continue in trade (such as Australia's mining boom).

1.2. AIMS

1.2.1. Liberalise world trade

1.2.1.1. The WTO encourages the developing states to implement a free trade system as a solution to building an economy that suffers from debt - believing that a free trade system will build the states economy as well as encourage trade relations with other countries

1.2.2. Promote economic stability

1.2.2.1. WTO believes that the key to a stable global economy is through the utilization of a free trade system that removes trade barriers to facilitate the least regulation possible to encourage trade.

1.2.3. Lay down rules for world trade

1.2.3.1. This is achieved through negotiation rounds - which has most recently been the Doha Development round, launched in 2001 with a specific focus on developing states in issues concerning farming subsidies and fair trade in the sphere of agriculture.

1.2.4. Stabilize trade relations between countries

1.2.4.1. The WTO operates in a similar fashion to a debate forum, allowing the member states to debate on topics as well as build relationships with one another to work together in problems of mutual interests

1.2.5. Resolving trade disputes between the member countries

1.2.5.1. This is achieved through dispute settlement mechanisms which saw 400 being filed in the first 10 years of the IGO's history

1.3. WEAKNESSES OF CONTRIBUTING TO GLOBAL GOVERNANCE

1.3.1. It can be argued that the WTO eliminates the power of state sovereignty - but rather this being replaced by the legislative of the WTO, it is being replaced by transnational corporations. This can be found in the case of Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS), which aims to set the standard for intellectual property and patents. However, this has been exploited by the hands of most notably pharmaceutical companies who claim IP on their generic drugs. States such as Brazil have had their sovereignty challenged in the case of a cheaper Indian import of a HIV related drug. This cheaper alternative was seized on the grounds of a violation in the context of patent infringement. This raises the question of whether TRIPS and the WTO are enhancing global cooperation and trade - or whether this is being operated by powerful transnationals.

1.3.2. Recently, the progressiveness quality of the WTO has been challenged in the context of the current Doha Rounds. The trade negotiation round, which aims in enforcing trade liberalisation on developing states to enhance the agriculture of the given states, have been a victim of a difference of interests resulting in the 2001 round still in the process of negotiations. Countries such as India have halted the process of the agreements, which argue that the details of the agreement and the characteristics of trade liberalisation will eliminate the agricultural integrity of India. Claiming that international imports will flood the Indian market - therefore eliminate the profit of the already struggling Indian farmer industry. This arises the question of whether or not the WTO really values the interests of developing states - even their famed trade dispute mechanisms seem to be exclusive to developed states. The high costs of utilizing this system has led to no African state ever acting as a compliant, as well as only one developing state filing a claim.

1.3.3. The actions of the WTO begin to show that programs such as initiating a free trade system are more beneficial for transnational corporation as opposed to member states - in this context, developing states. Farmer suicides account for 11.2% of all suicides in India, this being a result of the pressure implemented by BT cotton and its presence in the Indian agricultural market. The transnational corporation, Monsanto produces the gene known as BT cotton - this creates a crop that sprouts double that of normal cotton, as well as being compatible with the insecticides produced by Monsanto. The introduction of this branded cotton in the market brought not only a new product, but a high price tag for this cotton as its importation was unregulated. The cost is further enhanced by Intellectual Property rights, with BT cotton exclusive to Monsanto - forcing the Indian farmers to pay high costs to the TNC in order to continue to grow the crop - leading to a destruction of the local market and a collective debt for the Indian farmers. This is a case of trade liberalization going against the interests of the states and rather TNC's.

2. IMF

2.1. STRENGHTS OF CONTRIBUTING TO GLOBAL GOVERNANCE

2.1.1. Through Structural Adjustment Programs (SAP), the IMF enables developing states to contribute to the global economy. Although it may be argued that an implementation of these programs are a 'one-size-fits-all' solution, this style of implementation eliminates the possibility of free riders in the form of member states.

2.1.2. As stated on their website, the IMF; 'Unlike the General Assembly of the United Nations, where each country has one vote, decision making at the IMF was designed to reflect the relative positions of its member countries in the global economy.' Although it can be argued that this representative system is unfair, this represents the global arena on an economic scale, therefore the US holds 17% of votes - this shows that the IMF operates on a system that represents each member not equally, but rather their contribution in the economy. Which can be argued to be more democratic.

2.1.3. The IMF's encouragement of its SAP's is a tool that begins to challenge the sovereignty of a state. Such an example can be found in Malawi, in which the IMF encouraged the government to reduce the value of their currency as a way to promote economic growth and trade. By eliminating sovereignty, this constitutes to a 'global governance' and keeps to the ideas of internationalism.

2.2. AIMS

2.2.1. Promote international monetary cooperation

2.2.1.1. This is achieved through 3 main aspects: Surveillance - In order to achieve a stable global economy, the IMF reviews the policies of member states - this allows them to offer alternative systems as well as encouraging policies and using this information to aid in Dispute Settlements. Financial assistance - this aspect is almost exclusive to developing states (although developed states such as Greece of Portugal have reached out to the IMF). The IMF supports these states through Structural Adjustment Programs which promotes trade liberalisation which translates to an allowance of funding from the IMF. Technical Assistance - The IMF offers states assistance not only through funding, but through a development of the states infrastructure. Fields such as tax policy, or the banking and financial system are areas that the IMF trains member states to strengthen their economic activity

2.2.2. Promote high employment and sustainable economic growth; and reduce poverty

2.2.2.1. The IMF believes that the key to achieving a promotion in economic activity between states as well as a reduction in poverty and increase in economic fortitude is through the implementation of a free trade system in developing states. This is justified through the belief that a removal of trade barriers will introduce the economy to the global state which will increase economic activity - translating to a higher emphasis in development.

2.2.3. Faciliatate the expansion and balanced growth of international trade

2.3. WEAKNESSES OF CONTRIBUTING TO GLOBAL GOVERNANCE

2.3.1. A 'one-size-fits-all' implementation of the IMF's SAP's do not create an economic independence for the states that adopt it - rather it causes a great dependence on the IMF as they rely heavily in the services and subsidies that these SAP's aim to dissipate. Rather than contributing to global governance - it is creating a homogenisation of a trade system that shows a more dictator-like operating system

2.3.2. As stated on their website, the IMF; 'Unlike the General Assembly of the United Nations, where each country has one vote, decision making at the IMF was designed to reflect the relative positions of its member countries in the global economy.' Although it may be argued that this is more representative - this lack of equality places an obstacle in the face of developing countries. If their votes are not seen as equal in comparison to their fellow members, they will see their efforts of aiming to be recognised on the global stage as much more difficult. The structure of the IMF ensures that the problems of these states are addressed as long as an SAP is introduced.

2.3.3. The introduction of a Structural Adjustment Program may allow for limited development of a developing state - however this also shifts the power of the state into the hands of transnational corporations. An elimination of tariffs along with other trade barriers allows for TNC's originating from developed states to exploit the cheap labour force or unregulated environmental regulations. Although this may help build the economy on a global stage, the demands of the state and its people begin to be muted by the activities of TNC's. Showing that sovereignty is replaced by the motives of TNC's - going against global internationalism and governance.

3. REFERENCES

3.1. Wikipedia. 2016. World Trade Organization. [ONLINE] Available at: https://en.wikipedia.org/wiki/World_Trade_Organization. [Accessed 06 March 16].

3.2. IMF. 2016. About the IMF. [ONLINE] Available at: http://www.imf.org/external/about.htm. [Accessed 06 March 16].

3.3. IMF. 2016. Resident Representative Office in Malawi. [ONLINE] Available at: https://www.imf.org/external/country/MWI/rr/index.htm. [Accessed 06 March 16].

3.4. Charles Kenny . 2014. The IMF and World Bank Are More Democratic Than They Look. [ONLINE] Available at: http://www.bloomberg.com/bw/articles/2014-04-14/the-imf-and-world-bank-are-more-democratic-than-they-look. [Accessed 06 March 16].

3.5. Wikipedia. 2016. General Agreement on Tariffs and Trade. [ONLINE] Available at: https://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Trade. [Accessed 06 March 16].

3.6. World Trade Organization. 2016. Dispute settlement. [ONLINE] Available at: https://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm. [Accessed 06 March 16].

3.7. Wikipedia. 2016. 2002 United States steel tariff. [ONLINE] Available at: https://en.wikipedia.org/wiki/2002_United_States_steel_tariff. [Accessed 06 March 16].

3.8. Wikipedia. 2016. Doha Development Round. [ONLINE] Available at: https://en.wikipedia.org/wiki/Doha_Development_Round. [Accessed 06 March 16].

3.9. Jayati Ghosh. 2014. India faces criticism for blocking global trade deal, but is it justified?. [ONLINE] Available at: http://www.theguardian.com/global-development/poverty-matters/2014/aug/22/india-criticism-blocking-global-trade-deal. [Accessed 06 March 16].

3.10. Wikipedia. 2016. Farmers' suicides in India. [ONLINE] Available at: https://en.wikipedia.org/wiki/Farmers%27_suicides_in_India. [Accessed 06 March 16].