Download here

World Trade Organisation, World
Bank, International Monetary
Fund
• History
• Structure
• Issues
World Bank & International
Monetary Fund
• Bretton Woods Conference – 1944
• Stabilise the global economy post World
War II
World Bank
• Est. 1945
• To help reconstruct Europe
• HQ – Washington DC
• 186 members
• Now - ‘Working for a world free of Poverty’
World Bank
• The World Bank Group
– International Bank for Reconstruction and
Development (IBRD),
– International Development Association (IDA)
– International Finance Corporation (IFC)
– Multilateral Investment Guarantee Agency
(MIGA)
– International Centre for the Settlement
of Investment Disputes (ICSID).
World Bank
• IBRD
– Established 1944
– Loans to middle income countries
• The IDA
– established in 1960 as the World Bank’s
agency for concessional financial assistance
to the poorest of the developing countries
– grants to poorest countries
World Bank – How it works
• Borrows money from international markets
• Lends it to governments at low rates of
interest
International Monetary Fund
• Established 1945
• 186 members
• The IMF intergovernmental institution, established to
promote international monetary cooperation, to foster
economic growth and high levels of employment and to
provide temporary financial assistance to countries to
help ease balance of payments adjustment.
• ‘Lender of last resort’
• Global economic advisor
IMF – How it works
• Quotas for each country – ‘based broadly
on its relative size in the world economy’
– How much is paid in – ‘one dollar one vote’
– How much can be received
– Voting rights – not one country one vote!
• Use reserves to borrow on financial
markets and to lend to members
Issues - Debt
The total external debt of the
South is almost $ 3 Trillion.
Countries of the Global South
continue to pay over US$ 100
million per day in debt
repayments.
Debt – Where did it come from?
• 1973/74 Arab-Israeli War – 1st Oil Crisis. Oil
prices quadruple
• 1970s Higher Oil Prices generate surplus
Petro-dollars for oil producing countries
– Petro-dollars invested in western banks
– Dollars then leant to developing country
governments
• 1979
Second Oil Crisis. Oil prices
increase by 150% – weak developed country
growth – higher interest rates.
• 1981
Dollar interest rates reach a
high of 21.5%
• 1982
Mexican Debt Crisis – Mexico
threatens to default on its debt setting off the
Debt crisis of the 80’s and 90’s and beyond.
Why was the money borrowed?
• Investment/Industrialisation
• Arms
• Corruption
• It was cheap!
Why was the money loaned?
• Surplus dollars
• Arms!
• Recycled back to banks
Structural Adjustment
• International Monetary Fund/World Bank
conditions for new loans
• Aimed at cutting inflation
• Aimed at suppressing demand to maintain
debt repayment capacity
Size of the Debt
• By mid 1980’s Latin America transferring
5% of it’s income to rich countries in
interest payments
• By late 1980’s Africa’s debt to export ratio
was 500%
Structural Adjustment
•
•
•
•
•
•
Cut government expenditure
Raise interest rates
Devaluation
Privatisation
Import-Liberalisation
Removal of market ‘distortions’ eg labour
controls, food subsidies etc
• Export-led growth
The effect of Structural
Adjustment
• Less money on health and education introduction of ‘user fees’
• Interest rates discourage investment in
small/medium enterprises
• Devaluation - imports more expensive
• Opening of Export Processing Zones
• Exports -Much of the benefit to a few environmental destruction
• Higher food costs
Results
• Lower inflation rates
• but….
• Incomes in Africa fell by 1% a year in the
1980’s
• Latin American income fell by 10% in the
1980s
Debt relief
• 1996
Launch of Highly Indebted Poor
Countries Initiative (HIPC I)
• 1998
G8 Meeting in Birmingham UK: 70,000
people protest for Debt cancellation.
• 1999
G8 Meeting in Cologne, Germany: G8
commit to cancelling $100bn of Third World
Debt. Launch of HIPC II
• 2005 Gleneagles Debts of 18 (now 19
countries) to the IMF/World Bank/ADB
cancelled.
Debt relief works:
Spending on public services has risen
by around 20% across all the
countries that have received debt
cancellation.
On average, there has been an
increase of around 40% on education
spending,
and a massive 70% on healthcare.
Other Issues
• WB as lender to damaging projects
• WB as ‘knowledge broker’ – private sector
supported development
• WB as ‘gatekeeper’
What is Ireland’s Role?
• Ireland is a member of the World
Bank & IMF.
• Group: Canada, Ireland, 11
Caribbean countries
• Canada (chair) most powerful
WTO
• Failed attempt to found International Trade
Organisation (1948)
• General Agreement on Tariffs and Trade – 1948
-1994
• Est. 1995
– Negotiate trade liberalisation
– Set of trade rules
– Resolve trade disputes
Trade Rounds
Year
Place/name
Countries
1947
Geneva
23
1949
Annecy
13
1951
Torquay
38
1956
Geneva
26
1960-1961
Geneva
26
Dillon Round
1964-1967
Geneva
62
Kennedy Round
1973-1979
Geneva
102
Tokyo Round
1986-1994
Geneva
Uruguay Round
123
WTO – the beginnings – the
Uruguay Round
• Established 1995
• From GATT to WTO
• Added: Agreement on Agriculture
• Added: Services,Trade Related Intellectual Property
(TRIPS), TRIMs etc
• Added: Dispute Settlement Mechanism
Structure
• 153 members
• One country one vote – decisions by consensus
• HQ in Geneva
• 3 main agreements – Goods , Services,
Intellectual Property
New Rules:
TRIPS (Trade Related Intellectual
Property)
• A part of the World Trade Organisation
agreements.
• Deals with ‘intellectual property’ ie nontangible property e.g. inventions.
• Imposed a twenty-year patent on every
member of the WTO.
• Makes technology more expensive
• Economic cost to developing countries $40
Billion p.a.
• Cost of implementation $1.5 to $2m per
country
• Introduction of patents on medicines - 20
years
• Cost of Patented Anti-Retroviral per year in
2001 $10,000
• Cost of generic Anti-Retroviral per year in
2001 $360
• In Thailand new anti-aids drugs (ARVs) 15
times the cost of generic medicines
($6737 compared to $482).
The ‘Doha Development Round’
2001
• Fast (2005 deadline)
• Broad: 9 parallel negotiations
• Development-focussed:
– ‘at the heart of the round’
– Special and Differential Treatment
– Tariff peaks and escalation
– Working groups on Debt, Tech Transfer
The Doha Round Reality, Cancun
2005
•
•
•
•
•
Slow – every deadline missed
Old Testament, not New – ‘Blood on the Floor’
Mercantilism > economics
Market access > development
The North’s attempts to pick off ‘Advanced
Developing Countries’
– China on manufacturing(NAMA)
– Brazil on agriculture (AoA)
– India on services (GATS)
• ‘Singapore Issues’ e.g. Investment
Failure to Failure
• Hong Kong – December 2005
• July 2007 – ‘suspended’
• 2009 – 2010 .....
Agriculture
• Over ¾ of world’s 1.2 billion poor are farmers
• 97% of farmers live in developing countries
• North: tariff peaks + low average; South has
high average
• OECD spend circa $300bn every year on
agricultural support – roughly = sub-Saharan
Africa’s GDP. Result: zombie agriculture and
dumping.
Case Study: Cotton
• U.S.
– 22,000 cotton producers
– Production costs per lb $0.68
– Subsidies of $3.4 billion in 2002/2003
• West Africa
– 10 million dependent on cotton production
– Production costs per lb e.g. Benin $0.30
– 2002 US aid to Burkina Faso, Togo and Chad:
$19.7m
– 2002 lost export revenue from cotton subsidies for
Burkina Faso, Togo and Chad $26.7m
What the WTO doesn’t do
• Protect labour standards
• Protect the environment