INTERNATIONAL ECONOMIC ORGANISATION
13. INTERNATIONAL ECONOMIC ORGANISATION
1. WTO
It was constituted on 1st January, 1995, under the Marrakesh Agreement and took the place of GATT (General Agreement on Trade and Tariff) as an effective formal organisation. GATT was an informal organisation, which regulated world trade since 1948.
Aim: To liberalise international trade.
Headquarters: Geneva, Switzerland.
Membership: 160 member states (Yemen became 160th WTO member).
Conflict: On free trade vs protectionism and subsidies (as pushed by developing and welfare nations).
The highest decision-making body of the WTO is the Ministerial Conference, which usually meets every two years.
Few important agreements: Agreement on Agriculture (AOA), Trade Related Aspects of Intellectual Property Rights (TRIPS), Trade Related Aspects of Investment Measures (TRIMS), General Agreement on Trade in Services (GATS).
Special safeguard mechanism means the option available to countries to impose ✓ additional duties on imported products when there is surge in imports or products are imported at lower price.
Tariffication means converting non-tariff barriers into tariffs that ensures same level of protection.
< Domestic Subsidies: This provision calls for reduction of domestic subsidie that result in lower price of exported products and distort free trade. These subsidies are called Amber Box subsidies. Apart from de-minimus subsidies. following three categories of subsidies are also not included in the calculation of AMS. They are: Green box subsidies, Special and Differential treatment box (S & D Box) subsidies and Blue box subsidies.
Green Box Subsidies: Those subsidies which don't distort the free trade. These supports shall be provided through publicly funded government programme and these supports shall not provide price support to the producer.
Special and Differential Treatment Box (S & D Box) Subsidies: Essential for rural development and upliftment of poor farmers are called S & D box subsidies. While green box subsidies are available to all countries, Special and Differential treatment box subsidies are not available to developed countries.
Blue Box Subsidies: Blue box subsidies are direct payments under production limiting programmes.
Export Subsidies: The subsidies that subsidise export are called export
subsidies. These are direct subsidies given by government or government agencies either in cash or in kind to producers of agriculture products against export performance and export of non-commercial agricultural product at lower price and transport subsidies etc.
Trade Related Intellectual Property Rights (TRIPS): Intellectual properties are knowledge oriented creations, inventions and innovations. TRIPS cover Copyright and related rights, trademarks including service marks, geographical indicators, industrial designs, patents, lay out designs (topographies) of integrated circuits, trade secrets.
Copyright: Related with literary and artistic works like books, lectures, sermons, music etc. The copyright means the right conferred on creator, author and producer etc.
Trade Mark: The symbols that give unique indentity to products of particular producer. (The Trade Marks Act, 1999),
Geographical Indicator: The unique identity attached to a particular product
for the reason that particular product is produced in a particular geographical location. For example, Banaras silk sarees, Coimbatore wet grinder etc. are given geographical indication tags under and the Geographical Indications of Goods Act, 1999.
Industrial Designs: The Designs Act, 2000 observes "design" means only the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article.
Patents: Recongnition of invention and conferment of certain exclusive rights to inventor.
Trade Secret: Trade secret means the information regarding process, formula etc.
- Trade Related Aspects of Investment Measures (TRIMS): TRIMS are essentially to promote investment and equality among countries in the sphere of foreign investments.
- General Agreement on Trade in Services (GATS): GATS call for liberalisation of trade in service sector. This agreement covers only commercial service excluding air transport service and excludes government services which are not in the commercial nature.
Peace Clause: The Agreement on Agriculture (AoA) has a clause under Article 13 of AoA. The clause restrains other countries from taking counter measure against some of the subsidies given like Green Box Subsidies.
Swiss Formula: Gives the rate of tariff reduction. It calls for higher rate of reduction for countries which has higher initial tariff and lower rate for countries which has lower initial tariff.
2. IMF (INTERNATIONAL MONETARY FUND)
IMF was conceived on 22nd July, 1944 and came into existence on 27th December, 1945, when 29 countries signed the agreement. It originally had 45 members and India is one of the founding member.
The IMF has 188 member countries. It is a specialised agency of the United Nations but has its own charter, governing structure, and finances.
SDR allocations: SDRs are used as an international reserve asset. A member's share of general SDR allocations is established in proportion to its quota.
Voting power: The quota
largely determines a member's voting power in IMF decisions. Each IMF member's votes are comprised of basic votes plus one additional vote for each SDR 100,000 of quota.
Its members are represented through a quota system broadly based on their relative size in the global economy. A country must pay its subscription in full upon joining the IMF: up to 25 per cent must be paid in the IMF's own currency, called Special Drawing Right (SDRs) or widely accepted currencies (such as the dollar, the euro, the yen, or pound sterling), while the rest is paid in the member's own currency.
The member with the largest quotas is USA followed by Japan and China.
Tuvalu is the member with smallest quota. India with a quota share of 2.75% is
now placed at the eighth largest quota holding country at the IMF. For India, Finance Minister is the Ex-officio Governor of the Board of Governors of the IMF. Governor of the RBI, is India's alternate Governor.
3. WORLD BANK
➤ World Bank is one of the first institutions created at the Bretton Wood Eur Conference in 1944. Along with the IMF, it constitutes 'twin-sister' of Brette Eur Woods. World Bank has 188 members and is headquartered in Washingto DC.
The World Bank Group (WBG) is a family of five international organisation Ec that make leveraged loans to poor countries. These are:
The International Bank for Reconstruction and Development (IBRD).
The International Development Association (IDA).
The International Finance Corporation (IFC).
The Multilateral Investment Guarantee Agency (MIGA).
The International Centre for Settlement of Investment Disputes (ICSID).
The World Bank Group has set two goals for the world to achieve by 2030:
End extreme poverty by decreasing the percentage of people living on less than $1.25 a day to no more than 3%.
Promote shared prosperity by fostering the income growth of the bottom 40% for every country.
International Finance Corporation (IFC) was established in 1955, to provide loans to private industries of developing nations.
International Development Association (IDA), known as the soft loan window of the World Bank was established on 24th September, 1960.
International Centre for Settlement of Investment Disputes (ICSID) was established in 1966, to provide facilities for the conciliation and arbitration of investment disputes between member countries. It has 157 members.
Multilateral Investment Guarantee Agency (MIGA) was founded in 1988 to promote foreign direct investment into developing countries. It has 175 members.