INTERNATIONAL ECONOMIC AND TRADE INSTITUTIONS

UNIT I1. United Nations Organization (UNO)2. Economic and Social Council: Composition, functions and powers3. Multilateral Investment Guarantee Agency

UNIT II1. International Centre for Settlement of Investment Disputes (ICSID) 2. Bilateral investment protection agreements 3. IMF

UNIT III1. UNCTAD: composition, functions and powers2. OECD: composition, functions and powers3. UNCITRAL: composition, functions and powers

UNIT IV1. IBRA: composition, functions and powers2. IFC: composition, functions and powers3. EU: composition, functions and powers4. UNITAR: composition, functions and powers

INTERNATIONAL ECONOMIC AND TRADE INSTITUTIONS

UNIT IUNITED NATIONS ORGANIZATION (UNO)History. The existence of League of Nations (LN) did not prevent the outbreak of wars or the invasion of one country by another. Creation of a new international organization which is better than the LN for preventing the loss of property and lives and for establishing felt necessary, based on the experience of the Second World War. The following efforts were made for the establishment of a new international organization namely the United Nations Organization (UNO).

There are some important stages in the establishment of the UNO, as follow:1. London Declaration (July 12, 1941). Delegates from fourteen friendly

countries including the UK, France, the USSR, and the USA met in James Palace (London) in June 12, 1941 and expressed their wish to work with other independent nations for building a world where there is no place for aggression.

2. Atlantic Charter (August 14, 1941). Winston Churchill (PM of the UK) and F.D. Roosevelt (President of the USA) met in the North Atlantic on board of a ship in the Atlantic Ocean and signed a charter announcing their intention to create a new World Organization to establish international peace and justice and to stand up against aggression.

3. Washington Conference (January 1, 1942). Delegates from 26 nations assembled in Washington and expressed their consent for the general principles in the Atlantic Charter through the United Nation Declaration. They pledged that they would not enter in to any agreement with Germany and Japan after war.

4. The Casablanca Conference (January 14-24, 1943). This conference took place in the city of Casablanca. Winston Churchill, F.D. Roosevelt and the French delegates discussed the peace efforts after war.

5. Moscow Conference (October 30, 1943). The foreign minister of the USA, the USSR, the UK and China met in Moscow and signed a declaration called the United Nations Declaration which affirmed the necessity of establishing at the earliest practicable date a general international organization based on the principles of the sovereign equality of all peace loving states, and opened the membership by all such states, large and small, for the maintenance of peace and security.

6. Dumbarton Oaks Declaration (August 21 – October 7, 1944).delegates of the USA, the USSR, the UK and China met in Dumbarton Oaks near the city of Washington DC and the major allied powers decided on the broad structure of the new World Organization and drafted a rough copy of the constitution of the UNO. The draft constitution was sent to other 22 countries for their opinion. It is as well as called the conference for the origin of the establishment of the UNO.

7. Yalta Conference (February 11, 1945). Winston Churchill, F.D. Roosevelt and Stalin (PM of the USSR) met in Yalta (Russia) during the closing the stages of the Second World War. It was primarily concerned with the problems of the post war settlement, but as the UN was to be an important part of the post-war settlement. Yalta Conference discussed the formation of the UNO and veto in the Security Council.

8. Judicial Conference (April 1945). The Conference of Justice held in Washington and was attended by justices from 44 nations. They formulated the Code of the International Court of Justice.

9. San Francisco Conference (April 25 1945). The United Nations Conference on International Organization was convened in San Francisco with delegations from 46 states present. Later on, some other delegations were also invited. At the 5th plenary session of the conference in April 30, it adopted a report outlining the permanent organization of the conference. The conference was organized into 4 general committees, 4 commissions and 12 technical committees. The conference is of great historic importance which Charter of the United Nations Organization was adopted in June 25, 1945 as 50 states signed on the preamble of the UNO Charter. The UNO came into existence on October 24, 1945 after ratification of many countries.

The UN Charter contains 111 articles and is divided into 26 chapters. The UN has 6 principal organs, specialized agencies and other subsidiary organs which may be created of the principal organs for the realization of their different tasks.

Objectives. The objectives of the UN are enshrined in the preamble to the Charter. There are 4 major objectives:

1. To save the succeeding generations from the scourge of war;2. To reaffirm faith in fundamental human rights, in the work and dignity

of human person and equal rights of men, women and nation large and small;

3. To establish conditions under which justice and respect from the obligations arising from treaties and other sources of international law can be maintained;

4. To promote social progress and better standard of life in larger freedom.

Purposes. The purposes of the UN are set forth in Article 1 of the UN Charter which can be mentioned below:

1. Maintenance of international peace and security;2. Development of friendly relations among nations;3. International cooperation in solving problem of economic, social,

cultural and humanitarian nature; promotion and encouragement of respect for human rights and fundamental freedoms;

4. To be a centre for harmonizing the action of nations to achieve above ends.

Principles. The UNO acts in accordance with the following principles as envisaged in Article 2 of the UN Charter, in order to fulfill the purposes for which the UN was established:

1. The organization is based on the principles of the sovereign equality of all its members;

2. All members shall fulfill in good faith the obligation they have assumed under the Charter;

3. They shall settle their international dispute by peaceful means;4. They shall refrain in their international relations from the threat or use

of force in any manner inconsistent with the purposes of the UN;5. They shall give the UN every assistance with the Charter, and to

refrain from giving assistance to any state against which he organization is taking preventive or enforcement action;

6. The UN is to ensure that non-member act in accordance with these principles so far as is necessary for maintaining international peace and solidarity;

7. The organization shall not intervene in matters essentially within the domestic jurisdiction of any state. This provision shall not, however, prejudice the application of enforcement action with respect to threats to the peace, breaches of the peace and acts of aggression.

Membership. There are two kinds of membership, viz., original and new. According to Article 3 of the UN Charter, the original members of the UN shall be the states which having participated in the UN Conference on International Organization in San Francisco, or having previously signed the Declaration by the UN of January 1, 1942, sign the present charter and ratify it in accordance with Article 110.

Article 4 of the UN Charter states that membership in the UN is open to all other peace-loving state (beside 51 signatories) which accept the obligations contained in the present charter and in the judgment of the organization, are able and willing to carry out these obligations. The admission of any such state to membership in the UN will be affected by a decision of the General Assembly upon the recommendation of the Security Council.

Principal Organs. There are 6 principal organs of the UN, viz., (1) General Assembly; (2) Security Council; (3) Economic and Social Council; (4) Trusteeship Council; (5) Secretariat; and (6) International Court of Justice.

ECONOMIC AND SOCIAL COUNCIL (ECOSOC)Purposes. Article 55 states that with the view of the creation of conditions of stability and well being which are necessary for peaceful and friendly

relations among nations based on respect for the principle of equal rights and self determination of people, the UN shall promote:

1. Higher standard of living, full employment, and conditions of economic and social progress and development;

2. Solutions of international economic social health and related problems and international cultural and educational cooperation;

3. Universal respect for, and observance of, human rights and fundamental freedoms for all without distinction as to race, sex, language or religion.

Composition. Article 61 states that ECOSOC at present consists of 54 members (originally 18 which was subsequently raised to 27) of the UN elected by the GA for a term of 3 years. One-third of the members of the ECOSOC are replaced every year. A retiring member is eligible for immediate re-election. Each member of the council has one representative. No criteria have been laid down by the GA regarding the qualification, etc. for election of member of ECOSOC.

ECOSOC may take suitable arrangements for consultation with non-governmental organizations which are concerned with matters within its competence. Such arrangements may be made with international organization and, where appropriate with national organizations after consultation with the members of the UN.

ECOSOC generally meets twice a year. It shall adopt its own rules of procedure. However, when necessary, special sessions can be convened. All the decisions are taken by the Council with majority vote. ECOSOC carries out its work smoothly with functional commissions namely:1

(a) Transport and Communication Commission;(b) Statistical Commission; (c) Fiscal Commission; (d) Population Commission; (e) Social Development Commission;(f) Human Rights Commission; (g) Narcotic Drugs Commission; (h) International Commodity Trade Commission.

ECOSOC Functional Commissions as subsidiary bodies as follow:2

1. Commission on Crime Prevention and Criminal Justice;2. Commission on Narcotic Drugs;3. Commission on Science and Technology Development;4. Commission for Social Development;

1 Myneni, p. 352 ECOSOC Functional Commissions [http://www.canadainternational.gc.ca/prmny-mponu/canada_un-canada_onu/overview-survol/ECOSOC/functional-techniques.aspx?lang=eng] accessed on 23 April 2014.

5. Commission on the Status of Women;6. Commission on Sustainable Development;7. Statistical Commission;8. United Nations Forum on Forests.

ECOSOC has five regional commissions namely:(a) The Economic Commission for Europe (ECE);(b) The Economic Commission for Asia and Far East;(c) The Economic Commission for Latin America (ECLA);(d) The Economic Commission for Africa (ECA);(e) The Economic Commission for America.

Functions and Powers. Functions and powers of ECOSOC can be mentioned below:

1. ECOSOC may take or initiate studies and reports with respect to international economic, social, cultural, educational, health and related matters and may make recommendations with respect to any such matters to the GA, to the members of the UN and to specialized agencies concerned (Article 62 pr. 1).

2. It may make recommendations for the purpose of promoting respect for and observance of, human rights and fundamental freedoms for all (Art. 62 pr. 2).

3. It may prepare draft conventions for submission to the GA with respect to matters falling within its competence. (Art. 62 pr. 3).

4. It may call, in accordance with the rules prescribed by the UN international conferences on matters within its competence. (Art. 62 pr. 4).

5. It may enter into agreements with the various specialized agencies established with the UN defining the terms on which the agencies concerned shall be brought into relationship with the UN. Such agreements shall be subject to approval by the GA. (Art. 63 pr. 2).

6. It may coordinate the activities of the specialized agencies through consultation with and recommendations to such agencies and through recommendation to the GA and to the members of the UN. (Art. 63 pr. 2).

7. It may take appropriate steps to obtain regular reports from the specialized agencies. It may make arrangements with the members of the UN and with the specialized agencies to obtain reports on the steps taken to give effect to its own recommendations and to recommendations on matters falling within its competence made by the GA. (Art.64 pr. 1). It may communicate its observations on the reports to the GA. (art. 64 pr. 2).

8. It may furnish information to the SC and shall assist the SC upon its request. (Art. 65).

9. It shall perform such functions as fall within its competence in connection with the carrying out of the recommendations of the GA. It

may, with the approval of the GA, perform services at he request of the UN and at the request of specialized Agencies. (Art. 66).

MULTILATERAL INVESTMENT GUARANTEE AGENCYMIGA is an international financial institution which offers political risk insurance guarantees. Such guarantees help investors protect FDI against political and non-commercial risks in developing countries. MIGA is a member of the World Bank Group and is headquartered in Washington, D.C., United States, established by the WB in 1988 aimed at encouraging foreign investment in developing countries by issuing guarantees against non-commercial risks. It offers an investment insurance facility to encourage confident investment in developing countries.

MIGA's stated mission is "to promote FDI into developing countries to support economic growth, reduce poverty, and improve people's lives". The agency focuses on member countries of the International Development Association and countries affected by armed conflict. It targets projects that endeavor to create new jobs, develop infrastructure, generate new tax revenues, and take advantage of natural resources through sustainable policies and programs.

The membership is open to all WB members. Current membership is 180, viz., 155 from developing countries and 25 from industrialized countries.3

MIGA provides guarantee to investors against the risk of transfer restriction (including inconvertibility), expropriation, war and civil disturbance and breach of contract.

Generally investors from member country, other than the host country (the country where the investment is made) are eligible for guarantees. However, MIGA may insure an investment made by a national of a host country if the funds to be invested come from outside the country and the application of coverage is made jointly by the investor and host country. MIGA also insures investments made by State-owned enterprises if they operate on a commercial basis. The guarantee is available for periods up to 15 years and occasionally up to 20 years. The guarantee coverage requires investors to adhere to social and environmental standards that are considered to be the world’s best.

MIGA is owned and governed by its member states, but has its own executive leadership and staff which carry out its daily operations. Its shareholders are member governments which provide paid-in capital and have the right to vote on its matters. It insures long-term debt and equity investments as well as other assets and contracts with long-term periods. The agency is assessed by an independent evaluator each year. Its 2011 evaluation recommended 3 MIGA Member Countries (180), at [http://www.miga.org/whoweare/index.cfm?stid=1789], accessed on 23 April 2014.

that it utilize its recently expanded investing capacity and closely monitor projects' profitability to better understand their impacts on its financial performance. MIGA's total investments amounted to $1.1 billion in 2011. It issued $2.1 billion worth of new investment guarantees in 2011 and held $1.5 billion in total assets.

Since, inception, MIGA has issued more than 500 guarantees for projects in 78 developing countries. As of June 2001, total coverage issued exceeds US Dollars 9 billion.

CONVENTION ON THE SETTLEMENT OF INVESTMENT DISPUTESThe convention on the Settlement of Investment Disputes between States and Nationals of other States drawn up by the IBRD in 1965, having aims at harmonizing the two principles by setting up a neutral arbitral machinery recognized as a necessary adjunct of international trade. It avowed intent is to provide a fair and binding facility for arbitration of investment disputes between contracting states and nationals of other states.

Under the convention, the parties must consent in writing to the jurisdiction of the convention’s Settlement Centre. Once, consent is given neither party can withdraw unilaterally. While this impinges on the sovereignty of the host state, the convention further provides most significantly, that the host state is obliged to comply with an award rendered under the convention. Article 54 of the convention states that the award is binding upon and it must be enforced by member states as if it was a final judgment of a court of that state.

The convention strives to avoid the bugbear of recognition of foreign arbitral awards for purposes of execution by creating what has come to be known as a supernatural award, automatically enforceable in the territories of all member states. Article 54 of the convention solves this problem by requiring member states to enforce any arbitral award certified by the Settlement Centres’ Secretary-General as final and binding and to enforce it, as if it was a court judgment of their states.

UNIT IIINTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTESUnder the Convention for the Settlement of Investment Disputes between States and the National of other States (1965), ICSID was established in 1965. It was sponsored by the IBRD and came into force in 1966. It is intended to settle the investment disputes to encourage private foreign investment. It consists, inter alia, of a plenary Administrative Council and its Chairman is the Chairman of the IBRD. It also has a General Assembly.

ICSID provides machinery and procedure for the settlement of investment disputes. In respect of investment dispute at the international level, the person making private investment dispute become a party to the investment disputes. Thus, along with states individuals are directly parties to the dispute.

The basis of jurisdiction of the ICSID is consensual which is either written in the contract or which consent may be given when the dispute arises. There also exists separate panels of conciliators nominated by the parties. The conciliators act in their personal capacity or on the basis of jurisdiction.

The major requirement in order for the ICSID to have jurisdiction over a dispute is that one of the parties should be a state; and it is important to note that the jurisdiction will extend to state entities only if the relevant state has notified ICSID that, for the purposes of the convention, the particular state entity is deemed to have the same identity as the state. Under the terms of the convention, member states agree to respect and comply with awards as if they were judgments of their own courts.

The settlement procedure is initiated by making a request in writing to the Secretary-General. The request of the party should be clear whether he wants settlement through conciliation or arbitration. The parties are free to select either conciliation or arbitration.The number of arbitrators or conciliators should be in odd number. Once the tribunal or commission is established, it works as per the rules of ICSID.

The recommendations of the conciliation commission are not binding whereas the award of the Arbitration Tribunal is binding on parties and is enforceable like a judicial decision in the states of parties to contract.

The grounds for setting an award are unjust constitution, beyond or exceeding power, corruption, different from the basic rule of procedure not to give reason or failure to give reason.

As per Article 64 of the convention, matters of interpretations of awards given by the Arbitration tribunal can be referred to the International Court of Justice, but the validity of an award cannot be challenged in the ICJ.

BILATERAL INVESTMENT PROTECTION AGREEMENTS

INTERNATIONAL MONETARY FUND (IMF)In July 1944, representatives of 44 nations at Bretton Woods, New Hampshire, USA signed an agreement to establish the International Bank of Reconstruction and Development (IBRD) and the International Monetary Fund

(IMF). IMF was established on 27th December 1945, when representatives of countries whose quotas amounted to 80% of the Fund’s resources had deposited by ratifying of the Bretton Woods Agreement.

Objectives. The Articles of Agreement of the IMF set out the following as the objectives of the IMF:

1. To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems;

2. To facilitate the expansion and balanced growth of international trade and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy;

3. To promote exchange stability, maintain orderly exchange arrangements among members and to avoid competitive exchange depreciation;

4. To assist in the establishment of a multilateral system of payment with respect to current transactions between members and in elimination of foreign exchange restrictions which hamper the growth of world trade;

5. To give confidence to members by making the general resources of the IMF temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without restoring to measure destructive of national or international prosperity;

6. To shorten the duration and lessen the degree of disequilibrium in the international balance of payments of members.

To achieve its objectives, IMF has a code of economic behavior for its members. IMF makes financing available to members in balance of payment difficulties and provides them with technical assistance to improve their economic management.

IMF maintains a large pool of financial resources that it makes available to member countries—temporarily and subject to conditions—to enable them to carry out programs to remedy their payment deficit without sorting to restrictive measures that would adversely affect national or international prosperity.

IMF helps members to coordinate their economic policies internationally. In effect, it provides a permanent international monetary forum. The focus of the IMF is not the only on the problems of individual countries, but also on the structure of the international monetary system as on the development of policies and strategies through which its members ca work together to ensure a stable world financial system and sustainable economic growth.

Structure. The central office of the IMF is in Washington. It is an autonomous body with 191/184 countries as members and is officiated to the UN. The highest authority of the IMF is the Board of Governors in which each member country is represented by a governor and an alternate governor. The Board of Governor is the policy-making body.

The tenure of the members of the Board is five years. The Board holds, usually, one meeting in a year. The members of the IMF have not been accorded equal status. The votes have been given to the members according to the weightage of their contribution. The USA and the UK enjoy a weightage of 33 and 14 percent respectively.

The International Monetary and Financial Committee consists of 24 Governors representing constituencies or groups of countries, corresponding to thise of the Executive Board. It meets twice a year, on the occasion of the IMF-WB Annual and Spring Meetings, to advise the IMF on the functioning of the international monetary system.

The administrative responsibilities and detailed functioning of the IMF are vested with the executive Board. At present there are 24 executive directors—eight executive directors represent individual countries: China, France, Germany, Japan, Russia, Saudi Arabia, the UK, and the US. The 16 other executive directors each represent groupings of the remaining countries giving due consideration to the geographical representation. The Executive Board rarely makes its decisions on the basis of formal voting, but relies instead on the formation of consensus among its members.

The executive directors have substantial powers. Decisions regarding lending changes in exchange rates and appointment of Managing Director are taken by the Executive Directors. Executive Directors meet twice or thrice a week to decide on problems that crop up. The decision can be taken only by a four-fifths majority. All of the Executive Directors possess high standard technical knowledge in economics and finance and specially foreign exchange.

The Managing Director is the chief of the organization and enjoy a position identical to the one enjoyed by the Secretary General. The main responsibility for the proper working of the IMF mainly rests with him. He is also responsible for the appointment of the staff of the IMF. He is elected by the Executive Directors. He is aso the ex-officio Chairman of the Board of Directors.

Resources. The resources of the IMF come from subscriptions by member countries, borrowing and newly created SDRs.

Quotas and Subscriptions. Every member of the IMF is required to subscribe to the IMF an amount equivalent to its quota. The IMF’s system of

quotas is one of its central features. A member’s quota reflects its economic size in relation to the total membership of the IMF. A member is generally required to pay about 23% of its quota in gold or 10% of the gold holdings of the country whichever is less and the remaining in its own currency. Quotas of al IMF members are reviewed at intervals of not more than 5 years. Several general increases have been agreed in the part to bring IMF quotas in line with the growth of the world economy and the need for additional international liquidity.

Borrowings. The IMF is authorized under its Articles of Agreement to supplement its ordinary resources by borrowing. Under the General Agreement to Borrow, eleven industrial countries have undertaken to lend to the IMF. IMF has also entered into medium term and short term borrowing agreements to supplement its ordinary resources.

The IMF provides financial assistance to low-income countries through concessional lending under the Poverty Reduction and Growth Facility (PRGF) and debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. These resources are financed through bilateral contributions and by the IMF itself. They are separate from the quota subscriptions and are administered under the PRGF and PRGEHIPC Trust, for which IMF acts as Trustee.

Utilization. For the sake of convenience, with the establishment of SDRs, the accounts of the IMF are kept into two sets, the General Account and Special Drawing Account. The ordinary transactions of the IMF relating to quota subscriptions, repurchases and payment of charges are conducted through the General Account.

Exchange Contract. Each member on joining IMF has to declare the par values of its currency in terms of gold or the US Dollars of the weight and fineness in effect on 1st July 1944. These par values are adopted as the basis for the IMF’s transactions.

Members are pledged to cooperate with the IMF to promote exchange stability to maintain orderly exchange arrangements and to avoid competitive exchange alterations. They are further required not o engage in discriminatory currency arrangements or multiple currency practices.

Role of IMF. The IMF combines 3 major functions namely regulatory, financial and consultative. In its regulatory aspect, it acts as the guardian of a code set up by its Articles. In its financial aspect, it functions as an agency with resources available for short term to medium term loans to meet balance of payments deficits of member countries. In its consultative aspect, it provides a centre for international cooperation and a source of counsel and technical assistance to its members.

The role of the IMF is mainly twofold:1. It is an organization to monitor the proper conduct of the international

monetary system.2. It is a source of liquidity for countries in need of foreign exchange to

finance temporary balance for payment deficits.The IMF maintains a large pool of financial resources that it makes available the following operations to member countries.

Drawing from IMF. IMF provides temporary assistance to members to tide over balances of payment deficits. When the country requires foreign exchange, it tends its own currency to the IMF and gets the required foreign exchange. This is known as ‘drawing’ from the IMF. When the balance of payments position of the country improves, it should ‘repurchase’ its currency from the IMF and repay the foreign exchange.

UNIT IIIUNITED NATIONS CONFERENCE ON TRADE AND DEELOPMENT (UNCTAD)

Background. ECOSOC was hardly able to provide the needed initiatives and leadership due to the existence of OEED (Organization for European Economic Cooperation) and OECD of the western power.

The developed countries are for free trade which is a tool for global exploitation. With the emergence and increased participation of a large number of developing countries and members of the UN, there was a growing focus on development problems in UN bodies ad a demand for action the UN to set up ITO for just trade. The UN appointed a committee in 1963 to consider how best this could be done because the US Congress was against for any new proposal for ITO. This UN committee recommended as a possible alternative a via media. The UNCTAD was set up in 1964 on the basis of alternative.

From the very beginning UNCTAD’s basic philosophy has been one of the compromise and cooperation, not one of confrontation, and conflict—to promote economic development and trade through international cooperation within the universal United Nations framework. At UNCTAD-I its first Secretary-General Dr. Prebishch set out this philosophy of converging measures. The essential points of his philosophy and thesis may be stated here.

UNCTAD has principal aims as follow:1. To promote international trade and economic development of

developing countries;

2. To promote trade and economic cooperation particularly between countries at different stages of economic development, between developing countries and between countries with different economic and social systems;

3. To formulate principles and policies on international trade and development and to facilitate the restructuring and adaptation of those principles and rules and the international institutions concerned;

4. To promote a more a equitable international economic order, a larger voice for developing countries in decision-making, and a developing dimension and consensus in international institutions and policies.

Role and Effectiveness of the UNCTAD. The General Assembly of the UN at its 16th Session on 19th December 1961 through its resolution 1710 (XVI) designated the present decade as United Nations Development Decade, a period which member states and their people will intensify their effort to mobilize and sustain support for measures required on the part of both developed ad developing countries to accelerate progress towards self-sustaining growth.

The goal of the development decade was that the less developed countries, attain by 1970, as minimum annual growth rate in aggregate national income of 5% and as its principal assistance component, a foreign aid contribution of 1% of the GNP of each of the developed countries. On the same day, the GA also adopted resolution 1701 (XVI), entitled “International trade as a primary instrument for economic development”.

In July, 1962, the Cairo Conference on the Problems of Economic Development strongly recommended the early convening of an International Conference on Trade and Development under the aegis of the UN. The ECOSOC resolved, under its resolution 917 (XXXIV) of 3rd August 1962, to convene a UN Conference on Trade and Development. The Council also established a preparatory committee of experts.

First Conference (Geneva, 1964). The action of the GA and ECOSOC and the work done by the Preparatory Committee, paved the way for the opening of the UNCTAD on March 23rd March 1964 in Geneva and the Conference completed its work on 16th June 1964. Among the major recommendations in this regard were that the developed countries should not erect barriers to the import of products of export interest of developing countries and that developed countries should progressively reduce existing barriers to the flow of exports from developing countries without insisting on reciprocal concessions.

Second Conference (New Delhi, 1968). It sought to attain a “broad measure of agreement on practical solutions to those major and urgent issues of trade and development appearing in its agenda”. The principles of

Generalized System of Preferences was reached which embodied preferential of free entry of manufactures and semi-manufactures of developing countries into the markets of developed countries as adopted in the Resolution 21 (11) of UNCTAD.

Third Conference (Santiago, Chile 1972). This session also considered similar matters in regard to development problems. Recommendations were made for assistance to world’s least developed countries. Some specific recommendations included those relating to assistance by developed countries to less developed countries in diversifying their economies, improving shipping and port facilities to lower transport costs, and promoting import and export trade of these countries by lowering foreign rates.

Fourth Conference (Nairobi, 1976). It took a major step towards a NIEO by adopting an integrated program for commodities. The Conference agreed upon the strategy to expand and diversify exports of manufactures and semi-manufactures of developing countries and upon measures to strengthen the technological capacity of those countries. This Conference can be described as “a success of sorts”. This produced the major results which it was held from 3 May to 31 May 1976:

1. Creation of a Common Fund for buffer stock financing;2. Ensuring stable condition for commodity trade and development of

export products from the developing countries;3. Generalized system of preferences should be improved and its terms

extended beyond the originally fixed period of 10 years;4. The least developed and locked and island developing countries should

receive high priority in assistance;5. It was also agreed that the strengthening of the UNCTAD was essential

to the creation of improved conditions for international trade and economic cooperation.

-------- Until ELEVENTH CONFERENCE in 2004

A Review of the Functioning of UNCTAD. Given the important role of primary commodities and natural resources in the external sectors of developing countries, the initial focus of UNCTAD was on commodity policy and efforts to stabilize and expand the export earning of these countries. In the process, UNCTAD adopted a group approach o negotiations living up together, the centrally planned economy of Central and Eastern Europe and the Soviet Union plus a few other similar economics forming their own groups.

Despite the debates and disagreements over the years, UNCTAD played a key role in the emergence of:

i. Generalized System of Preferences;ii. A Maritime Shipping Code;iii. Code of Restrictive Trade Practices;iv. Special International Programs to help the LDC;v. International aid targets.

During the 1970s, in time with the major changes in the international economic environment, UNCTAD became a central forum for debate between the North and South. The negotiations became politically charged, most of its session during the 1970s and 1980s reflected sharp divisions between participants. Even as global concerns seem to be emerged in the 1980s on the diagnosis for economic problems, UNCTAD did not appear to change. Yet, in UNCTAD VIII the conference brought together a virtually universal view that economic policies based on market forces were the best basis for achieving development.

UNCTAD and WTO. UNCTAD ever since its inception in 1964, has had to struggle for recognition as an institution for negotiating trading rules and principles, as well as trade policy questions because the GATT, already existed since 1 January 1948 as contractual framework of rights and obligations and had the full support of major trading countries.

There are differences and often conflicts I regard to which ideologies and policies should govern international economic and trade relations. UNCTAD stresses the development approach, whereas GATT/WTO has been promoting a liberal international trading system by removing the tariff and non-tariff barriers in international trade.

Institution. It is a permanent organ of the UN established by the GA Resolution 1995 (XIX) of December 30th 1964. This resolution defines the principal functions and membership of UNCTAD and of its permanent organ, the Trade and Development Board, and has set in motion and governing the activities of the Board and of the subsidiary bodies of the Board, which have been established since the 1964 Conference. The conference which is a plenary body of a large number of countries meets normally every four years.

Principal functions of UNCTAD according the resolution above are:a) To promote international trade, especially with a view to accelerating

economic development and particularly trade between countries at different stages of development between developing countries and between countries with different systems of economic and social organization, taking into account the functions performed by existing international organization;

b) To formulate principles and policies on international trade and related problems of economic development;

c) To make proposals for putting the said principles and policies into effect and to take such other steps within its competence as may be relevant to this and having regard to differences in economic systems and stages of development;

d) Generally to review and facilitate the coordination of activities of other institutions within the UN system and in the field of international trade and related problems of economic development, and in this regard to cooperate with the GA and ECOSOC with respect to performance of their responsibilities for coordination under the Charter of the UN;

e) To initiate action, where appropriate, in cooperation with the competent organs of the UN for the multilateral legal instruments in the field of trade, with due regard to the adequacy of existing organs of negotiation and without duplication of their activities.

f) To be available as a centre of harmonizing the trade and related development policies of Government and regional economic groupings in pursuance of Article 1 of the UN Charter;

g) To deal with any other matters within the scope of its competence.

OECD: composition, functions and powersUNCITRAL: composition, functions and powers

UNIT IVIBRA: composition, functions and powersIFC: composition, functions and powersEU: composition, functions and powersUNITAR: composition, functions and powers