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1
Two multilateral institutions dealing with trade
A brief overview of UNCTAD and the WTO
2
Structure of the Presentation
The origins of the two organisations
The mandates of the organisations
How the two organisations function
Their respective ideas on development
Some more detail about institutional aspects of UNCTAD
3
Origins of the WTO Keynes’ ideas on post-war international economic governance (avoid
economic conflicts): The Bretton Woods agreements (1944) – Finance for
development (WB), monetary and macroeconomic stability (IMF), but not
trade (GATT negotiations started in 1945)
1947 - two agreements concluded dealing with trade:
1) the United Nations Conference on Trade and Employment (50
countries) sought to establish the ITO (adoption of the Havana Charter
– ambitious scope); and,
2) the GATT – agreed 1947 (23 countries), implemented 1948 (provisional
legal instrument)
GATT the only multilateral instrument governing trade until 1994 – birth of
the WTO
4
5
Origins of UNCTAD
The role of commodities – timeline to the birth of UNCTAD:
1927 - World Economic Conference recommends agreements as
means of cooperation (agreements on tin, wheat, sugar, tea and
rubber )
1947 – ICCICA created by ECOSOC (four agreements concluded:
coffee, tin, wheat and sugar – ICAs could stabilise prices, ensure
producer incomes and correct surpluses).
1955 – Revival of the idea of an international trade body in ECOSOC
1962 – Cairo conference on the problems of economic development:
Cairo Declaration recommending creation of UNCTAD – not enough
ICAs to solve general commodity problem
1964 – Creation of UNCTAD (‘UNCTAD I’), Geneva – takes over
mandate of ICCICA.
6
Historical Context of UNCTAD Decolonisation – new countries mainly from Africa and Asia enter the
international system (primarily the UN). No institution seen to represent their
interests
North-South and East-West tensions: ideological differences between capitalist
west and socialist east. Newly created decolonised South and former colonial
powers in the North.
Global governance, Southern initiatives: Non-Aligned Movement (1955) and
Group of 77 (founded at UNCTAD – now 133 members)
The force of personality: Raul Prebisch, first SG of UNCTAD. “Trade not aid”: link
between trade and development (Prebisch thinking: declining terms of trade
between primary commodity exporters – developing countries - and manufactured
goods exporters – developed countries)
7
MandatesWTO
Rules-based organisation, sets binding
multilateral trade law through negotiations
(“legislative” role)
Dispute settlement mechanism with mandatory
decisions, can apply sanctions (“judicial” role)
Monitors national policies – Trade Policy
Review Mechanism. Every 4 + years (“executive
role”)
Work confined to the existing trade agreements
and to the scope of the negotiations
= narrow mandate based on existing trade
rules
UNCTAD
Research on a range of trade and
development issues
Consensus-building through debates and
exchange of experiences among 192 member
States on all UNCTAD issues
Technical cooperation on all topics of
UNCTAD’s work (policy and legal advice,
training, institution building, support to
negotiations)
= wide mandate working on the integrated
treatment of trade, investment and other
related issues (dealing with issues left out of
the ITO and the GATT)
8
FunctioningWTO
Permanent secretariat in Geneva
(Ministerial Meetings). No links with the UN
machinery
Ongoing negotiations in rounds
The Secretariat provides neutral technical
support to the negotiations
Accession has to be negotiated (currently
153 members – Cape Verde latest member)
Limited role of non-governmental
stakeholders
UNCTAD
UNCTAD intergovernmental machinery (Ministerial
Conferences and Trade and Development Board)
linked to UN General Assembly and ECOSOC
UNCTAD secretariat part of the UN Secretariat (part
of same budget)
No normative role, no negotiations of binding
rules, only political role
UN membership (192 countries – Montenegro latest
member)
Strong participation of non-governmental
stakeholders
9
10
Ideas on DevelopmentWTO
Main goal is not development per se, but to
avoid commercial disputes and promote a)
trade liberalisation and b) multilateralism
as a public good. Trade liberalisation and
implementation of trade rules leads to
development
Same trade rules and reciprocity apply to
all, but…
…Special and differential treatment is
introduced with various intensities
The “Doha Development Agenda”
introduced in 2001
UNCTAD
Trade is one of the instruments leading to
development…
…but no automatic links between trade
liberalisation, growth, poverty reduction
and development: the links are
multidimensional
Special and differential treatment is key,
e.g. GSP 1968; International Commodities
Agreements; attention given to LDCs and
increase in aid; South-South cooperation
(GSTP), regional integration.
No “one size-fits-all” development models
11
Some numbers UNCTAD secretariat: 400 staff (WTO 800)
Annual Regular budget: US $ 57 million
Extra-budgetary funds: US$ 34 million (2007)
Technical Assistance programs – different from the Bank: no loans or credit. Over
300 projects.
Collaboration with other agencies, including WTO, ITC, UN regional Commissions,
other UN agencies, e.g. UNDP, FAO, as well as with civil society, private sector etc.
(No UNCTAD field offices)
6 Flagship reports:
Trade and Development Report
World Investment Report
Least Developed Countries Report
Information Economy Report
Africa Report
Review of Maritime Transport …plus many more publications…
12
UNCTAD Today Economic conditions change, new areas for research emerge, new
economic issues become urgent:
1960s and 70s: commodity prices, recognition of SDT in the GATT, and
TC
1980s: debt crisis, critique of WC (tight fiscal and monetary policies,
trade and financial liberalisation) and post-WC (macroeconomic
stablisation, social spending, good governance), trade efficiency
(trade facilitation)
1990s: investment flows (WIR), financial crisis, trade and environment,
“positive agenda” in multilateral negotiations
UNCTAD’s mandate has changed accordingly: UNCTAD XII, 2008 - wider
mandate (work on issues such as migration, climate change, commodities
and food security and the emergence of the ‘new south’)
13
Thank You
Joseph ClementsAssociate Economic Affairs Officer
UNCTAD Virtual Institute
http://vi.unctad.orghttp://www.unctad.org
[email protected]. + 41 22 91 75724
14
1. “U]nhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war…if we could get a freer flow of trade…freer in the sense of fewer discriminations and obstructions…so that one country would not be deadly jealous of another and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance of lasting peace.” Cordell Hull, US. Sec. of State 1933 – 44
2. “Trade has become the lens through which development is perceived, rather than the other way round” Dani Rodrik, Harvard Economist
3. “Financial markets have for some time had an independent capacity to destabilize developing countries; there are now increasing indications of the vulnerability of all countries to financial crisis. […] Overall, there appears to be a need for more collective control and guidance over international finance. ” (Trade and Development Report 1990).